Document:

Blueprint

 

 Exhibit 10.1.1

 

 

AGREEMENT AND PLAN OF MERGER

 

BY

 

AND

 

AMONG

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.,

 

FUSION BCHI ACQUISITION LLC,

 

AND

 

 

 

BIRCH
COMMUNICATIONS HOLDINGS, INC.

 

 

DATED AUGUST 26, 2017

 

 

 

STRICTLY
PRIVATE AND CONFIDENTIAL. DRAFT FOR DISCUSSION PURPOSES ONLY. NO
LEGAL OBLIGATION OF ANY KIND WILL ARISE UNLESS AND UNTIL A
DEFINITIVE WRITTEN AGREEMENT IS EXECUTED AND
DELIVERED.

 

 

 

 

	

ARTICLE I The TRANSACTIONS  
 

	

2

	
 

	

Section 1.1

	

The Merger and Related Matters

	

2

	
 

	

Section 1.2

	

Company Matters

	

4

	
 

	

Section 1.3

	

Closing

	

4

	
 

	

Section 1.4

	

Stockholders’ Agreement

	

4

	
 

	

Section 1.5

	

Registration Rights Agreement

	

5

	
 

	

Section 1.6

	

Separation Agreements

	

5

	

ARTICLE II EFFECTS of THE Merger  
 

	

5

	
 

	

Section 2.1

	

Exchange of Shares

	

5

	
 

	

Section 2.2

	

Section 16

	

5

	
 

	

Section 2.3

	

No Liability

	

5

	
 

	

Section 2.4

	

Withholding Rights

	

5

	

ARTICLE III Representations and Warranties of the Company
 

	

6

	
 

	

Section 3.1

	

Corporate Organization

	

6

	
 

	

Section 3.2

	

Capitalization

	

7

	
 

	

Section 3.3

	

Authority; No Violation

	

8

	
 

	

Section 3.4

	

Consents and Approvals

	

9

	
 

	

Section 3.5

	

Reports

	

9

	
 

	

Section 3.6

	

Financial Statements; Liabilities

	

10

	
 

	

Section 3.7

	

Absence of Company Material Adverse Effect

	

11

	
 

	

Section 3.8

	

Legal Proceedings

	

11

	
 

	

Section 3.9

	

Taxes and Tax Returns

	

12

	
 

	

Section 3.10

	

Employee Benefit Plans; Labor

	

12

	
 

	

Section 3.11

	

Compliance with Law

	

15

	
 

	

Section 3.12

	

Environmental Matters

	

15

	
 

	

Section 3.13

	

Material Contracts

	

15

	
 

	

Section 3.14

	

Intellectual Property; Data Privacy

	

17

	
 

	

Section 3.15

	

Title to Properties; Assets

	

18

	
 

	

Section 3.16

	

Real Property

	

19

	
 

	

Section 3.17

	

Regulatory Matters

	

19

	
 

	

Section 3.18

	

Interconnection Agreements

	

20

	
 

	

Section 3.19

	

Network Facilities

	

20

 

 

 

 

	
 

	

Section 3.20

	

Insurance

	

21

	
 

	

Section 3.21

	

Opinion

	

21

	
 

	

Section 3.22

	

Application of Takeover Laws

	

21

	
 

	

Section 3.23

	

Information Supplied

	

21

	
 

	

Section 3.24

	

Affiliate Transactions

	

22

	
 

	

Section 3.25

	

Broker’s Fees

	

22

	
 

	

Section 3.26

	

Directors and Officers

	

22

	
 

	

Section 3.27

	

No Other Representations or Warranties

	

22

	

ARTICLE IV Representations and Warranties of BCHI
 

	

22

	
 

	

Section 4.1

	

Corporate Organization

	

22

	
 

	

Section 4.2

	

Capitalization

	

23

	
 

	

Section 4.3

	

Authority; No Violation

	

24

	
 

	

Section 4.4

	

Consents and Approvals

	

25

	
 

	

Section 4.5

	

Financial Statements; Liabilities

	

25

	
 

	

Section 4.6

	

Absence of BCHI Material Adverse Effect

	

26

	
 

	

Section 4.7

	

Legal Proceedings

	

26

	
 

	

Section 4.8

	

Taxes and Tax Returns

	

27

	
 

	

Section 4.9

	

Employee Benefit Plans; Labor

	

28

	
 

	

Section 4.10

	

Compliance with Law

	

30

	
 

	

Section 4.11

	

Environmental Matters

	

31

	
 

	

Section 4.12

	

Material Contracts

	

31

	
 

	

Section 4.13

	

Intellectual Property; Data Privacy

	

33

	
 

	

Section 4.14

	

Title to Properties; Assets

	

34

	
 

	

Section 4.15

	

Real Property

	

34

	
 

	

Section 4.16

	

Regulatory Matters

	

34

	
 

	

Section 4.17

	

Interconnection Agreements

	

36

	
 

	

Section 4.18

	

Network Facilities

	

36

	
 

	

Section 4.19

	

Insurance

	

37

	
 

	

Section 4.20

	

Information Supplied

	

37

	
 

	

Section 4.21

	

Affiliate Transactions

	

37

	
 

	

Section 4.22

	

Broker’s Fees

	

37

 

 

 

 

	
 

	

Section 4.23

	

Share Ownership

	

37

	
 

	

Section 4.24

	

Directors and Officers

	

37

	
 

	

Section 4.25

	

No Other Representations or Warranties

	

37

	
 

	

ARTICLE V

	

Pre-Closing Covenants

	

38

	
 

	

Section 5.1

	

Conduct of Businesses by the Company and BCHI Prior to the
Effective Time

	

38

	
 

	

Section 5.2

	

Company Forbearances

	

38

	
 

	

Section 5.3

	

BCHI Forbearances

	

41

	

ARTICLE VI Additional Agreements  
 

	

43

	
 

	

Section 6.1

	

Filings; Other Actions; Notification

	

43

	
 

	

Section 6.2

	

Preparation of Proxy Statement; Stockholders Meeting

	

44

	
 

	

Section 6.3

	

No Solicitation or Change of Recommendation

	

45

	
 

	

Section 6.4

	

Access to Information

	

49

	
 

	

Section 6.5

	

Employee Matters

	

49

	
 

	

Section 6.6

	

Indemnification; Directors’ and Officers’
Insurance

	

50

	
 

	

Section 6.7

	

NASDAQ Listing; Reverse Split

	

51

	
 

	

Section 6.8

	

Advice of Changes

	

52

	
 

	

Section 6.9

	

Control of the Other Party’s Business

	

52

	
 

	

Section 6.10

	

Subsidiary Compliance

	

52

	
 

	

Section 6.11

	

Financing

	

52

	
 

	

Section 6.12

	

Transaction Litigation

	

54

	
 

	

Section 6.13

	

Publicity

	

54

	
 

	

Section 6.14

	

Takeover Laws

	

54

	
 

	

Section 6.15

	

Actions Concerning Company Preferred Stock

	

54

	
 

	

Section 6.16

	

Separation of Consumer/SMB Business

	

55

	
 

	

Section 6.17

	

Divestiture or Dissolution of Fusion Global

	

55

	
 

	

Section 6.18

	

BCHI Financial Statements

	

55

	

ARTICLE VII Closing Conditions  
 

	

55

	
 

	

Section 7.1

	

Conditions to Each Party’s Obligation to Effect the
Merger

	

55

	
 

	

Section 7.2

	

Conditions to Obligations of BCHI

	

57

	
 

	

Section 7.3

	

Conditions to Obligations of the Company and Merger
Sub

	

57

	
 

	

Section 7.4

	

Frustration of Closing Conditions

	

58

 

 

 

 

	

ARTICLE VIII Termination and Amendment  
 

	

58

	
 

	

Section 8.1

	

Termination

	

58

	
 

	

Section 8.2

	

Effect of Termination

	

60

	
 

	

Section 8.3

	

Fees and Expenses

	

60

	

ARTICLE IX General Provisions  
 

	

60

	
 

	

Section 9.1

	

Notices

	

60

	
 

	

Section 9.2

	

Interpretation

	

62

	
 

	

Section 9.3

	

Counterparts

	

62

	
 

	

Section 9.4

	

Entire Agreement; Third Party Beneficiaries

	

62

	
 

	

Section 9.5

	

Amendment

	

63

	
 

	

Section 9.6

	

Extension; Waiver

	

63

	
 

	

Section 9.7

	

Governing Law

	

63

	
 

	

Section 9.8

	

Jurisdiction

	

63

	
 

	

Section 9.9

	

Assignment

	

64

	
 

	

Section 9.10

	

Specific Performance

	

64

	
 

	

Section 9.11

	

Waivers

	

64

	
 

	

Section 9.12

	

No Survival of Representations and Warranties

	

65

	
 

	

Section 9.13

	

Severability

	

65

	
 

	

Section 9.14

	

Non-Recourse

	

65

	
 

	

Section 9.15

	

Definitions

	

65

 

 

 

 

 

 

Exhibits

 

Exhibit
A - Amended and
Restated Certificate of Incorporation

Exhibit
B -
Stockholders’ Agreement

Exhibit
C - Registration
Rights Agreement

Exhibit
D - Consumer Business
Carve-out

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

This
AGREEMENT AND PLAN OF MERGER, dated as of August 26, 2017 (as may
be amended, supplemented or otherwise modified from time to time in
accordance with its terms, this “Agreement”), is entered
into by and among Fusion Telecommunications International, Inc., a
Delaware corporation (the “Company”), Fusion BCHI Acquisition LLC, a
Delaware limited liability company (“Merger Sub”), and Birch
Communications Holdings, Inc., a Georgia corporation
(“BCHI”). The Company,
Merger Sub and BCHI are hereinafter sometimes referred to as a
“Party” and collectively as the “Parties.”
Capitalized terms used but not otherwise defined herein have the
meanings set forth in Section 9.15.

 

RECITALS

 

A.           The
Boards of Directors of each of the Company and BCHI have deemed it
advisable and in the best interests of their respective
corporations and stockholders to enter into a business combination
by means of the Merger (as defined below).

 

B.           The
Boards of Directors of each of the Company and BCHI have approved,
and declared advisable and in the best interests of their
respective companies and stockholders, this Agreement and the
transactions contemplated hereby, including the merger of BCHI with
and into Merger Sub (the “Merger”), with Merger Sub
being the surviving company in the Merger, as more fully provided
in, and upon the terms and subject to the conditions set forth in,
this Agreement.

 

C.           The
Company, as the managing member of Merger Sub, has approved, and
declared advisable and in the best interests of Merger Sub and the
Company as its sole member, this Agreement and the transactions
contemplated hereby, including the Merger, as more fully provided
in, and upon the terms and subject to the conditions set forth in,
this Agreement.

 

D.           The
Board of Directors of the Company (the “Company Board”) has
determined to recommend that the stockholders of the Company vote
to adopt and approve this Agreement and the Merger, including the
amendment and restatement of the Company’s certificate of
incorporation and the issuance of shares of Company Common Stock
pursuant to the Merger, and (to the extent necessary to comply with
NASDAQ listing requirements) the Reverse Split upon the terms and
subject to the conditions set forth in this Agreement (the
“Company Board
Recommendation”).

 

E.           The
Board of Directors of BCHI has approved, and declared advisable and
in the best interests of BCHI and its shareholders, this Agreement
and the transactions contemplated hereby, including the Merger, as
more fully provided for in this Agreement.

 

F.           Concurrently
with the execution and delivery of this Agreement, each Principal
Company Stockholder has executed and delivered to BCHI a support
agreement in a form previously approved by BCHI (each, a
“Support
Agreement” and, collectively, the “Support Agreements”),
pursuant to which such Principal Company Stockholder has agreed,
among other things, subject to the terms and conditions of the
applicable Support Agreement, to vote his, her or its shares of
Company Common Stock in favor of the approval of the Merger, and to
take certain other actions in furtherance of the
Transactions.

 

G.           The
shareholders of BCHI have, by written consent, irrevocably adopted
this Agreement and approved the transactions contemplated hereby,
including the Merger, as required pursuant to the BCHI Charter, the
BCHI Bylaws and applicable Law.

 

 

1

 

 

H.           Each
of the shareholders of BCHI has entered into a subscription
agreement (the “Subscription Agreements”)
agreeing to (a) at the Closing, assign and transfer the right of
such shareholder to receive shares of Company Common Stock issuable
to such shareholder pursuant to the Merger to a limited liability
company organized by such shareholders to own and hold all of such
shares of Company Common Stock (referred to herein as
“Holding
LLC”) and (b) cause Holding LLC to execute and
deliver, at the Closing, the Stockholders’ Agreement and the
Registration Rights Agreement.

 

I.           In
connection with the execution and delivery of this Agreement, and
as a condition and inducement to each Party’s willingness to
enter into this Agreement, a certain financial institution has
executed and delivered a “highly confident letter” with
respect to debt facilities to be entered into by the Company and
BCHI, the proceeds of which, together with other financing
facilities, will be used to effect the Refinancing and the other
transactions contemplated by this Agreement, including paying
expenses associated with the Transactions.

 

J.           The
Parties intend the Merger to constitute a
“reorganization” within the meaning of section 368(a)
of the Code, this Agreement to constitute a “plan of
reorganization,” and BCHI, Merger Sub and the Company to
constitute parties to the reorganization.

 

The
Parties hereby agree as follows:

 

ARTICLE I

 

The TRANSACTIONS

 

Section
1.1 The Merger and Related
Matters

 

(a) The Merger. On the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the applicable provisions of the Georgia Business
Corporation Code (the “GBCC”) and the Delaware
Limited Liability Company Act (the “Act”), BCHI will be
merged with and into Merger Sub at the Effective Time. At the
Effective Time, the separate corporate existence of BCHI will
cease, and Merger Sub will continue as the surviving entity (the
“Surviving
Company”) and a wholly owned Subsidiary of the Company
and will succeed to and assume all the rights and obligations of
BCHI in accordance with the GBCC and the Act.

 

(b) Effective Time. On the Closing
Date, the Company, Merger Sub and BCHI will cause to be filed with
the Secretaries of State of the State of Georgia and the State of
Delaware a certificate of merger, or other appropriate documents
(collectively, the “Certificate of Merger”),
executed in accordance with the relevant provisions of the GBCC and
the Act, and will make all other filings or recordings required
under the GBCC and the Act to effect the Merger and the
transactions provided for herein. The Merger will become effective
at such time as the Certificate of Merger is duly filed with such
Secretaries of State, or at such other time as BCHI and the Company
will agree and specify in the Certificate of Merger (the time the
Merger becomes effective being the “Effective
Time”).

 

 

2

 

 

(c) Effects. The Merger will have
the effects provided in this Agreement, including Article II, and in the
applicable provisions of the GBCC and the Act.

 

(d) Conversion of
Securities.

 

(i) At the Effective
Time, by virtue of the Merger and without any action on the part of
BCHI, Merger Sub, the Company or the holders of the BCHI Common
Stock, all of the shares of BCHI Common Stock (each, a
“Share”) issued and
outstanding immediately prior to the Effective Time (other than any
Shares to be cancelled pursuant to Section 1.1(d)(iii)) will be
converted automatically into the right to receive, in the
aggregate, in accordance with the terms of this Agreement, a number
of fully paid and non-assessable shares of Company Common Stock
equal to three (3) times the Fully-Diluted Company Share Total (the
“Merger
Consideration”). At the Closing, all of the shares of
Company Common Stock issuable to the shareholders of BCHI pursuant
to the Merger will, pursuant to the Subscription Agreements, be
issued to Holding, LLC.

 

(ii)  From
and after the Effective Time, all Shares (other than any Shares to
be cancelled pursuant to Section 1.1(d)(iii)) will no
longer be outstanding, and, upon the conversion thereof, will
automatically be cancelled and will cease to exist. Except as set
forth in Section 1.1(d)(iii), as a
result of the Merger, each holder of a certificate or certificates
that immediately prior to the Effective Time represented
outstanding Shares (“Certificates”) will
thereafter cease to have any rights with respect to such Shares
except the right to receive the applicable shares of Company Common
Stock in consideration therefor, upon surrender of such Certificate
in accordance with Section
2.1(a).

 

(iii) At
the Effective Time, by virtue of the Merger and without any action
on the part of BCHI, Merger Sub or the Company, each Share held in
the treasury of BCHI or owned of record by any BCHI Subsidiary
immediately prior to the Effective Time will automatically be
cancelled without any conversion thereof and no payment or
distribution will be made with respect thereto.

 

(iv) All
of the limited liability company interests of Merger Sub issued and
outstanding immediately prior to the Effective Time will be
converted into and become limited liability company interests of
the Surviving Company.

 

(v) At the Effective
Time, by virtue of the Merger and without any action on the part of
BCHI, Merger Sub or the Company, all of the rights under each share
of Company Preferred Stock issued and outstanding immediately prior
to the Effective Time shall terminate and all of the shares of
Company Preferred Stock issued and outstanding immediately prior to
the Effective Time shall be deemed cancelled, as provided in the
Company Charter and the notice to the holders of shares of Company
Preferred Stock required by Section 6.15.

 

(e) Certificate of Formation and Limited
Liability Company Agreement. At the Effective Time, the
certificate of formation and limited liability company agreement of
Merger Sub will, by virtue of the Merger, be the certificate of
formation and limited liability company agreement, respectively, of
the Surviving Company until thereafter amended as provided therein
or by applicable Law.

 

 

3

 

 

(f) Directors. The Parties will
take all necessary action such that, from and after the Effective
Time, each Subsidiary of the Company will have two (2) directors
(or, in the case of a limited liability company, two (2) managers)
who are mutually acceptable to BCHI and the Company and who will
serve until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the
case may be.

 

(g) Officers. The officers of the
Surviving Company from and after the Effective Time will be
determined prior to the Closing by mutual agreement of BCHI and the
Company.

 

Section
1.2 Company Matters
.
Unless otherwise agreed to by BCHI and the Company prior to the
Effective Time, the Company will take all necessary action such
that, effective at or prior to the Effective Time:

 

(a) Certificate of Incorporation and
Bylaws. The certificate of incorporation of the Company
will, as of the Effective Time, be amended and restated to be the
form attached hereto as Exhibit A. Prior to the
Effective Time, BCHI and the Company will review and revise in good
faith the bylaws of the Company, which will be amended and
restated, effective as of the Effective Time, to be consistent with
similarly situated Delaware corporations.

 

(b) Board of Directors. The size of
the Company Board will be fixed at nine (9) members. The initial
members of the Company Board as of the Effective Time will be
determined prior to the Closing in accordance with the provisions
of the Stockholders’ Agreement; provided that such initial
members to be designated by the Company shall be determined by the
Company’s Compensation and Nominating Committee subject to
Company Board approval.

 

(c) Executive Officers. Matthew D.
Rosen will be the Chief Executive Officer of the Company and the
Chairman of the Company Board. Holcombe T. Green, Jr. will be the
Vice Chairman of the Company Board. The other officers of the
Company as of the Effective Time will be determined prior to the
Closing by mutual agreement of BCHI and the Company.

 

Section
1.3 Closing . The closing (the
“Closing”) of the Merger
will take place at the offices of Jones Day, 250 Vesey Street, New
York, New York 10281 at 10:00 a.m. local time on the later of
(a) the second Business Day following the satisfaction or, to the
extent permitted by Law, waiver of the conditions set forth in
Article VII
(other than those conditions that by their terms are to be
satisfied at the Closing, but subject to the satisfaction or, to
the extent permitted by Law, waiver of those conditions at
Closing), and (b) the earlier of (i) a date during the Marketing
Period specified by BCHI and the Company by mutual agreement, and
(ii) ten (10) Business Days following the final day of the
Marketing Period; except that if the Closing would otherwise occur
within the ten (10) Business Day period prior to the date on which
the Company’s Quarterly Report on Form 10-Q or the
Company’s Annual Report on Form 10-K (or any amendment to any
previously filed Company Report) would be required to be filed with
the SEC, the Closing will occur on the third (3rd) Business Day after
the filing by the Company of such report (subject, in each case, to
the satisfaction or waiver of such conditions as of the date
determined by this clause). In lieu of the foregoing, the Closing
may occur at such other place, time and date as may be agreed in
writing by BCHI and the Company. The date on which the Closing
occurs is referred to in this Agreement as the “Closing
Date.”

 

Section
1.4 Stockholders’
Agreement . At the Closing,
the Company, Holding LLC and the Principal Company Stockholders
will enter into a stockholders’ agreement, substantially in
the form of Exhibit
B (the “Stockholders’
Agreement”).

 

 

4

 

 

Section
1.5 Registration Rights
Agreement . At the Closing,
the Company and Holding, LLC will enter into a registration rights
agreement, substantially in the form of Exhibit C (the
“Registration Rights
Agreement”).

 

Section
1.6 Separation Agreements
. In
the interim period between the signing of this Agreement and the
Closing, the Parties will negotiate and cooperate in good faith to
reach agreement on the Separation Agreements in accordance with the
terms and conditions of Exhibit D, and BCHI and/or
certain of the BCHI Subsidiaries (other than Spinco), on the one
hand, and Spinco, on the other hand, will enter into the Separation
Agreements. BCHI hereby agrees that it will not (and will cause the
BCHI Subsidiaries not to) enter any agreement between BCHI or any
of the BCHI Subsidiaries (other than Spinco), on the one hand, and
Spinco, on the other hand, relating to the Consumer/SMB Business
without the prior written approval of the Company, not to be
unreasonably withheld, conditioned or delayed.

 

ARTICLE II

 

EFFECTS of THE
Merger

 

Section
2.1 Exchange of Shares

 

(a) Exchange Procedures. On the
Closing Date, immediately after the Effective Time, each holder of
record of Shares entitled to receive the Merger Consideration
pursuant to Section
1.1(d)(i) will surrender their Certificates to the Company
in exchange for shares of the Company Common Stock pursuant to
Section 1.1(d)(i);
provided, that, pursuant to the Subscription Agreements all of the
shares of Company Common Stock issuable to the holders of Shares
will be issued to Holding, LLC.

 

(b) No Further Rights in Shares.
All Merger Consideration issued or paid upon surrender of
Certificates in accordance with the terms of this Article II will be deemed to
have been issued or paid, as the case may be, in full satisfaction
of all rights pertaining to the Shares formerly represented by such
Certificates.

 

Section
2.2 Section 16
. The
Company will cause any disposition of shares of Company Common
Stock, Company Options or restricted shares of Company Common Stock
or acquisitions of shares of Company Common Stock, options to
purchase Company Common Stock or restricted shares of Company
Common Stock resulting from the Transactions by each officer or
director of the Company who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect
to the Company to be exempt under Rule 16b-3 promulgated under
the Exchange Act.

 

Section
2.3 No Liability
.
Notwithstanding anything in this Agreement to the contrary, none of
the Company, BCHI, Merger Sub, the Surviving Company or any other
Person will be liable to any former holder of Shares for any amount
properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.

 

Section
2.4 Withholding Rights
. Each
of the Company, the Surviving Company, BCHI and Merger Sub will be
entitled to deduct and withhold from any amounts otherwise payable
pursuant to this Agreement such amount as it is required to deduct
and withhold with respect to the making of such payment under the
Code, the rules and regulations promulgated thereunder, any
provision of applicable state, provincial, territorial, local or
foreign Tax Law or any other Law. To the extent that amounts are so
withheld and paid over to the appropriate governmental authority,
such withheld amounts will be treated for the purposes of this
Agreement as having been paid to the Person in respect of which
such deduction and withholding was made.

 

 

5

 

 

ARTICLE III

 

Representations and Warranties
of the Company

 

Except
as (x) disclosed in the disclosure letter delivered by the Company
to BCHI immediately prior to the execution of this Agreement (it
being agreed that any information set forth in one section of such
disclosure letter will be deemed to apply to each other section
thereof to which its relevance as an exception to (or disclosure
for the purposes of) such other section is reasonably apparent)
(the “Company
Disclosure Letter”) or (y) set forth in a registration
statement, prospectus, report, form, schedule or other document
(including exhibits and all other information incorporated therein)
filed by the Company with or furnished to the SEC prior to the date
hereof, but excluding any risk factor disclosure under the headings
“Risk Factors,” “Forward Looking
Statements,” or other disclosures contained or referenced
therein to the extent they are predictive or forward looking, but
only to the extent that such documents are available on the
SEC’s Electronic Data Gathering and Retrieval System no later
than the third (3rd) Business Day prior
to the date of this Agreement (it being understood that this clause
(y) shall not be applicable to Section 3.2 or Section 3.3(a)), the Company
represents and warrants to BCHI as follows:

 

Section
3.1 Corporate
Organization

 

(a) The Company is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. The Company has the
corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to have such power and authority or to be
so licensed or qualified would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.

 

(b) Copies of the
articles of incorporation of the Company, as amended and restated
(the “Company
Charter”), and the bylaws of the Company, as amended
and restated (the “Company Bylaws”), as in
effect as of the date of this Agreement, have previously been made
available to BCHI.

 

(c) Section 3.1(c) of the
Company Disclosure Letter sets forth a list of each Company
Subsidiary, together with the jurisdiction of organization or
incorporation, as the case may be, and the jurisdictions in which
each Company Subsidiary is authorized to conduct business. Each
Company Subsidiary (i) is duly organized or formed, as the case may
be, and validly existing under the Laws of its jurisdiction of
organization or formation, (ii) is duly qualified to do business
and in good standing in all jurisdictions (whether federal, state,
provincial, territorial, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to
be so qualified, and (iii) has all the corporate or limited
liability company power and authority to own or lease its
properties and assets and to carry on its business as now
conducted, in the case of clauses (ii) and (iii), except as would
not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

 

(d) Copies of the
articles of incorporation, or similar organizational document, as
applicable, of each Company Subsidiary, as amended and restated,
and the bylaws, or similar governing document, as applicable, of
each Company Subsidiary, as amended and restated, as in effect as
of the date of this Agreement, have previously been made available
to BCHI.

 

(e) Merger Sub is a
limited liability company duly organized, validly existing and in
good standing under the Laws of the State of Delaware. All of the
issued and outstanding limited liability company interests of
Merger Sub is, and at the Effective Time will be, owned by the
Company. Merger Sub has not conducted any business prior to the
date hereof and has, and prior to the Effective Time will have, no
assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and the
Transactions.

 

 

6

 

 

Section
3.2 Capitalization

 

(a) Section 3.2(a) of the
Company Disclosure Letter sets forth the authorized capital stock
of the Company, as of the date of this Agreement, by class and
series and the number of issued and outstanding shares of each such
class and series (collectively, the “Company Capital Stock”)
and, in the case of each series of Company Preferred Stock, the
number of shares of Company Common Stock, as of the date of this
Agreement, that the issued and outstanding shares in such series
are convertible into.  The number of shares of Company Common
Stock reserved for issuance pursuant to the Equity Compensation
Plans is variable in nature as, under the terms of the 2016 Equity
Compensation Plan, the number of shares available for issuance
thereunder is equal to (i) ten percent of the Company Common Stock
then outstanding, plus (ii) any shares for which options were
granted under the 2009 stock incentive plan that expire without
being exercised.   No shares of Company Capital Stock are
held in the Company’s treasury.  All of the issued and
outstanding shares of Company Capital Stock have been duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights..

 

(b) There are no
stockholders agreements, voting trusts, voting agreements or other
similar agreements or understandings with respect to the Company
Capital Stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s
stockholders. Except as contemplated under this Agreement, awards
issued pursuant to the Equity Compensation Plans and as set forth
in the certificates of designation and preferences for the Company
Preferred Stock, no Person has any outstanding commitments, rights
of first offer or refusal, anti-dilution rights, preemptive rights,
rights of participation or any similar right to participate in the
Transaction. Except for the Company Options, the Company Warrants
and the Reverse Split and except as set forth in Section 3.2(b) of the Company
Disclosure Letter, as of the date of this Agreement, there are no
outstanding subscriptions, options, warrants, scrip rights to
subscribe to, calls, restricted shares, phantom stock rights,
rights of first offer or refusal, rights to require redemption or
repurchase, preemptive rights, anti-dilution rights, registration
rights, rights of participation, commitments or other agreements to
which the Company or any of the Company Subsidiaries is a party
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire any, Equity Securities or other
securities of the Company or any of the Company Subsidiaries, or
Contracts, commitments or understandings by which the Company or
any of the Company Subsidiaries is or may become bound to issue
additional Equity Securities or other securities of the Company or
the Company Subsidiaries. Section 3.2(b)(i) of the
Company Disclosure Letter sets forth, as of the date hereof, with
respect to each unexercised Company Option (whether vested or
unvested) (i) the name of the holder of such Company Option, (ii)
whether such Company Option has vested, (iii) the number of shares
of Company Capital Stock that are issuable upon the exercise of
such Company Option, (iv) the date on which such Company Option was
granted and the term of such Company Option, (v) the vesting
schedule and vesting commencement date for such Company Option,
(vi) the exercise price per share of Company Capital Stock
purchasable under such Company Option, and (vii) whether such
Company Option has been designated an “incentive stock
option” as defined in Section 422 of the Code. Section 3.2(b)(ii) of the
Company Disclosure Letter sets forth, as of the date hereof, with
respect to each unexercised Company Warrant (A) the name of the
holder of such Company Warrant, (B) the number of shares of Company
Capital Stock that are issuable upon the exercise of such Company
Warrant, (C) the date on which such Company Warrant was issued and
the term of such Company Warrant, and (D) the exercise price per
share of Company Capital Stock purchasable under such Company
Warrant. Except as expressly contemplated by this Agreement or as
set forth in Section
3.2(b)(iii) of the Company Disclosure Letter, neither the
consummation of the Transactions nor any action taken or to be
taken by the Company or a Company Subsidiary in connection with the
Transactions will result in (x) any acceleration of vesting or
exercisability, whether or not contingent on the occurrence of any
event after consummation of the Transactions, in favor of any
holder of Company Options or (y) any additional benefits for any
holder of Company Options.

 

 

7

 

 

(c) There are no bonds,
debentures, notes or other indebtedness having the right to vote on
any matters on which stockholders of the Company may vote are
issued or outstanding as of the date of this
Agreement.

 

(d) Except as set forth
in Section 3.2(d)
of the Company Disclosure Letter, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each
Company Subsidiary are owned by the Company, directly or
indirectly, free and clear of any Liens (other than transfer
restrictions under applicable federal, state, provincial or
territorial securities Laws and Liens that will be released at
Closing), and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. No Company Subsidiary
has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any
other equity security of such Company Subsidiary or any securities
representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Company
Subsidiary. Except as set forth in Section 3.2(d) of the Company
Disclosure Letter, there are no outstanding obligations to which
the Company or any Company Subsidiary is a party (i) restricting
the transfer of or (ii) limiting the exercise of voting rights with
respect to any Equity Interest in any Company Subsidiary. Except
for the Company Subsidiaries, neither the Company nor any of the
Company Subsidiaries directly or indirectly owns any Equity
Interest in any Person. Section 3.2(d) of the Company
Disclosure Letter sets forth, for each Company Subsidiary, (i) the
number and type of any capital stock of, or other equity or voting
interests in, such Company Subsidiary that are outstanding as of
the date of this Agreement and (ii) the identity of each equity
holder of capital stock or other equity or other voting interest in
such Company Subsidiary and the number of shares or interests of
such Company Subsidiary held by each such holder as of the date of
this Agreement.

 

Section
3.3 Authority; No
Violation

 

(a) Each of the Company
and Merger Sub has full corporate or limited liability company
power and authority to enter into this Agreement and to consummate
the Transactions. The execution and delivery of this Agreement and
the consummation of the Transactions have been duly and validly
adopted by the Company Board and the Company and the managing
member of Merger Sub, and, except for the adoption of this
Agreement by the Company, as the sole member of Merger Sub, and the
filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, no other corporate or limited liability
company proceedings on the part of the Company or Merger Sub are
necessary to authorize the execution and delivery of this Agreement
or consummation of the Transactions. Except for (i) approval by the
holders of a majority of the outstanding shares of Company Common
Stock entitled to be voted in accordance with the DGCL at the
Stockholders Meeting, or any adjournment or postponement thereof,
to adopt this Agreement and approve the Merger, the amendment and
restatement of the Company’s Charter as provided by
Section 1.2(a), the
issuance of the shares of Company Common Stock as the Merger
Consideration and (to the extent necessary to comply with NASDAQ
listing requirements) the Reverse Split (ii) any approval of the
holders of the Company Preferred Stock of this Agreement or the
Transactions that is required pursuant to the Company Charter or
the Company Bylaws (collectively, the “Stockholder Approval”),
no votes or approvals of the holders of any class or series of
Equity Interests of the Company are necessary to approve this
Agreement and the consummation of the Transactions. The Company
Charter and Company Bylaws are the Company’s only
organizational documents, and there are no other Contracts defining
or governing the rights of the holders of any Company Capital Stock
or any of its other equity holders in their capacities as such,
and, to the knowledge of the Company, there are no Contracts
between or among the holders of Company Capital Stock defining or
governing the rights of the Company Capital Stock, as applicable.
The Company Board has (i) determined that this Agreement and
the Transactions are advisable and fair to and in the best
interests of the Company’s stockholders, and
(ii) resolved, subject to Section 6.3(c), to recommend
that the Company’s stockholders adopt this Agreement and
approve the Transactions. This Agreement has been duly and validly
executed and delivered by the Company and Merger Sub and, assuming
this Agreement constitutes the valid and binding agreement of BCHI
and the due authorization, execution and delivery of this Agreement
by BCHI, constitutes the valid and binding agreement of each of the
Company and Merger Sub, enforceable against the Company and Merger
Sub in accordance with its terms, except as such enforceability
(A) may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights
generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding
at Law or in equity).

 

 

8

 

 

(b) Neither the
execution and delivery of this Agreement by the Company or Merger
Sub nor the consummation of the Transactions, nor compliance by the
Company or Merger Sub with any of the terms or provisions of this
Agreement, will (i) violate any provision of the certificate
of incorporation or bylaws or other equivalent organizational
document, in each case, as amended, of the Company or any of the
Company Subsidiaries or (ii) assuming that the consents,
approvals and filings referred to in Section 3.4 are duly obtained
and/or made, (A) violate any Law or Order applicable to the
Company, any of the Company Subsidiaries or any of their respective
material properties or assets, or any material Permit of the
Company or a Company Subsidiary or by which any of the material
assets of the Company or a Company Subsidiary are bound or subject,
or (B) violate, conflict with, result in a breach of any provision
of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the
performance required by, require the consent of or notice to any
Person under, or result in the creation of any Lien (other than a
Permitted Lien) upon any of the respective properties or assets of
the Company or any of the Company Subsidiaries under, any Company
Material Contract.

 

Section
3.4 Consents and Approvals
.
Except for (a) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware pursuant to the
Act, (b) the filing of an amendment to the Company Charter to
effect the Reverse Split, (b) compliance with any applicable
requirements of the HSR Act and any other Laws analogous to the HSR
Act existing in foreign jurisdictions (together with the HSR Act,
“Antitrust
Laws”), (c) the filing with the SEC of a proxy
statement relating to the Stockholders Meeting (the
“Proxy
Statement”), and filings required by the applicable
requirements of the Securities Act or Exchange Act, (d) such
filings with and approvals of The NASDAQ Stock Market, LLC
(“NASDAQ”) to permit the
shares of Company Common Stock that are to be issued in the Merger
to be listed and issued on NASDAQ, (e) receipt of such consents
from, or registrations, declarations, notices or filings made to or
with State PSCs as are required in order to effect the transfer of
control of the Company Licenses or as are otherwise necessary to
consummate the Merger and other Transactions, including the
Financing (the “Company State
Approvals”), and (f) receipt of such consents from, or
registrations, declarations, notices or filings made to or with the
FCC as are required to in order to effect the transfer of control
of the Company Licenses or as are otherwise necessary to consummate
the Transactions, including the Financing (the “Company FCC Approval”),
no consents or approvals of or filings or registrations with or
notifications to any Governmental Entity are necessary in
connection with (i) the execution and delivery by the Company or
Merger Sub of this Agreement and (ii) the consummation by the
Company or Merger Sub of the Transactions except as would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.

 

Section
3.5 Reports

 

(a) Except as set forth
on Section 3.5(a)
of the Company Disclosure Letter, the Company has filed with or
furnished to the SEC, on a timely basis, all registration
statements, reports, forms, documents and proxy statements required
(pursuant to applicable Law or Contract) to be filed or furnished,
as applicable, since June 30, 2014, excluding the Proxy Statement
(collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein,
as such statements and reports may have been amended since the date
of their filing, the “Company Reports”). As of
their respective effective dates (in the case of Company Reports
that are registration statements filed pursuant to the requirements
of the Securities Act) and as of their respective filing or
furnished dates, as applicable (in the case of all other Company
Reports), or in the case of amendments thereto, as of the most
recent such amendment, the Company Reports complied in all material
respects with the requirements of the Securities Act, the Exchange
Act and SOX, as the case may be, and the rules and regulations of
the SEC thereunder, applicable to such Company Reports, in each
case to the extent in effect on the date of filing, and none of the
Company Reports as of such respective dates (or, if amended, the
date of the filing or furnishing, as applicable, of such amendment,
with respect to the disclosures that are amended) contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent corrected by a
subsequently filed Company Report filed with the SEC prior to the
date hereof.

 

 

9

 

 

(b) Each of the
principal executive officer of the Company and the principal
financial officer of the Company (or each former principal
executive officer of the Company and each former principal
financial officer of the Company, as applicable) has made all
applicable certifications required by Rule 13a-14 or 15d-14 under
the Exchange Act and Sections 302 and 906 of SOX with respect to
the Company Reports, and, to the knowledge of the Company, the
statements contained in such certifications are true and accurate.
For purposes of this Agreement, “principal executive
officer” and “principal financial officer” have
the meanings ascribed to such terms in SOX. Neither the Company nor
any of the Company Subsidiaries has outstanding, or has since June
30, 2014 arranged any outstanding, “extensions of
credit” to or for directors or executive officers of the
Company in violation of Section 402 of SOX.

 

(c) The Company
maintains a system of “internal control over financial
reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) sufficient to provide reasonable assurance
(i) that transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP,
consistently applied, (ii) that receipts and expenditures are
made only in accordance with the authorizations of management and
directors and (iii) regarding prevention or timely detection
of the unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the
Company’s financial statements.

 

(d) The
“disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) utilized by the
Company are reasonably designed to ensure that all material
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that all such
information required to be disclosed is accumulated and
communicated to the Company’s management as appropriate to
allow timely decisions regarding required disclosure and to enable
the principal executive officer and principal financial officer of
the Company to make the certifications required under the Exchange
Act with respect to such reports.

 

(e) Since June 30,
2014, the Company has not identified, and is not aware of, any
(i) “significant deficiency” or
(ii) “material weakness” in the design or
operation of the Company’s internal controls over financial
reporting. For purposes of this Agreement, the terms
“significant deficiency” and “material
weakness” have the meanings assigned to them in Release
2004-001 of the Public Company Accounting Oversight Board, as in
effect on the date of this Agreement.

 

(f) None of the Company
Subsidiaries is, or at any time since June 30, 2014 has been, subject to
the reporting requirements of Sections 13(a) or 15(d) of the
Exchange Act.

 

Section
3.6 Financial Statements;
Liabilities

 

(a) The consolidated
financial statements of the Company and the Company Subsidiaries
(including in each case, any related notes and schedules thereto,
where applicable) included in the Company Reports (collectively,
the “Company
Financial Statements”), fairly present in all material
respects the consolidated financial position of the Company and the
Company Subsidiaries as of the date thereof, and fairly present in
all material respects the results of the consolidated operations,
changes in stockholders’ equity, cash flows and consolidated
financial position of the Company and the consolidated Company
Subsidiaries for the respective fiscal periods or as of the date
therein set forth, except the Company Financial Statements are
subject, in the case of unaudited statements, to normal year-end
audit adjustments as permitted by GAAP and the applicable rules and
regulations of the SEC. Each of the Company Financial Statements
(including the related notes and schedules thereto, where
applicable), as of their respective dates, complied in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and
each of such statements (including the related notes and schedules
thereto, where applicable) and have been prepared, in all material
respects, in accordance with GAAP consistently applied during the
periods involved, except as indicated in such statements or in the
notes thereto and, in the case of unaudited interim financial
statements as may be permitted by the SEC for Quarterly Reports of
Form 10-Q.

 

 

10

 

 

(b) The interim
consolidated financial statements of the Company and the Company
Subsidiaries for the six months ended June 30, 2017 (collectively
the “Interim Company
Financial Statements”), fairly present in all material
respects the consolidated financial position of the Company and the
Company Subsidiaries as of the date thereof, and fairly present in
all material respects the results of the consolidated operations,
changes in stockholders’ equity, cash flows and consolidated
financial position of the Company and the consolidated Company
Subsidiaries for the respective fiscal periods or as of the date
therein set forth, except the Interim Company Financial Statements
are subject to normal year-end audit adjustments as permitted by
GAAP and the applicable rules and regulations of the SEC. The
Interim Company Financial Statements have been prepared, in all
material respects, in accordance with GAAP consistently applied,
except as indicated in such statements or in the notes
thereto.

 

(c) Except for (i)
those liabilities and obligations that are in their respective
amounts reflected or reserved against on the June 30, 2017
consolidated balance sheet of the Company and the Company
Subsidiaries included in the Company Financial Statements or
readily apparent in the notes thereto or (ii) liabilities or
obligations incurred in the ordinary course of business consistent
with past practice since the date of such balance sheet that are
immaterial in amount, neither the Company nor any of the Company
Subsidiaries have any liability or obligation of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due and including any off-balance sheet
financings, loans, indebtedness, make whole or similar liabilities
or obligations) of a type required to be reflected or reserved for
on a consolidated balance sheet of the Company and the Company
Subsidiaries prepared in accordance with GAAP, except for
liabilities or obligations that would not reasonably be expected to
have a Company Material Adverse Effect.

 

Section
3.7 Absence of Company Material Adverse
Effect . Since January 1,
2017 through the date of this Agreement, no event or events have
occurred that have had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.

 

Section
3.8 Legal Proceedings

 

(a) Except as set forth
in Section 3.8(a)
of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries is a party to any, and there are no
pending or, to the Knowledge of the Company, threatened (in
writing), legal, administrative, arbitral or other proceedings,
claims, actions, suits or governmental or regulatory investigations
of any nature (each, an “Action”), against the
Company or any of the Company Subsidiaries which would, if decided
adversely to the Company or any Company Subsidiary, prohibit the
Transactions or reasonably be expected to result in a material
liability or obligation of, or otherwise be materially adverse to,
the Company or a Company Subsidiary.

 

(b) There is no
outstanding material Order imposed upon the Company, any of the
Company Subsidiaries or the assets of the Company or any of the
Company Subsidiaries.

 

 

11

 

 

Section
3.9 Taxes and Tax Returns
. Each
of the Company and the Company Subsidiaries has duly and timely
filed all federal, state, foreign and local Tax Returns required to
be filed by any of them (all such returns being accurate and
complete in all material respects) and has duly and timely paid all
Taxes (whether or not such Taxes were shown as due and payable on
such Tax Returns) other than Taxes that are not yet delinquent or
that are being contested in good faith, have not been finally
determined and have been adequately reserved against. Any liability
with respect to deficiencies asserted as a result of any audit,
examination or similar proceeding of the Company or any Company
Subsidiary Tax Return by the IRS or any other taxing authority has
been paid or is covered by adequate reserves in accordance with
GAAP in the Company Financial Statements. There are no disputes
pending, or claims asserted in writing, for Taxes or assessments
upon the Company or any of the Company Subsidiaries, other than
disputes, claims and assessments that are not material to the
Company and the Company Subsidiaries either individually or in the
aggregate. Neither the Company nor any of the Company Subsidiaries
is a party to or is bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among the Company
and the Company Subsidiaries). Neither the Company nor any of the
Company Subsidiaries has agreed to or granted any extension or
waiver of the limitation period applicable to any Taxes or Tax
Returns. Neither the Company nor any of the Company Subsidiaries
has distributed the stock of any corporation, or had its stock
distributed, in a transaction described in or intended to satisfy
the requirements of Section 355 of the Code within the past three
(3) years. Each of the Company and the Company Subsidiaries has in
all material respects properly and timely withheld or collected and
timely paid over to the appropriate taxing authority (or each is
properly holding for such timely payment) all Taxes required to be
withheld, collected and paid over by applicable Law. There are no
Liens for Taxes upon any asset of the Company or any Company
Subsidiary other than Permitted Liens (within the meaning of clause
(c) of such term). Neither the Company nor any of the Company
Subsidiaries is a party to or bound by any advance pricing
agreement, closing agreement or other similar material agreement or
ruling relating to Taxes nor are there any pending requests for
such rulings or similar agreements by or before a taxing authority.
Neither the Company nor any of the Company Subsidiaries will be
required to include any item of income in, or exclude any item of
deduction from, taxable income for any period (or any portion
thereof) ending after the Closing Date, as a result of any: (i)
change in method of accounting for a Tax period ending on or before
the Closing Date, including under Section 481(a) of the Code or any
similar provision of applicable Law; (ii) installment sale or other
open transaction disposition made on or prior to the Closing Date;
(iii) prepaid amount received on or prior to the Closing Date; (iv)
closing agreement described in Section 7121 of the Code or any
similar provision of applicable Law executed on or prior to the
Closing Date; (v) intercompany transaction or excess loss account
described in Treasury Regulations Section 1.1502 (or any similar
provision of applicable Law); or (vi) indebtedness discharged in
connection with any election under Section 108(i) of the Code.
Other than the affiliated group of which the Company is the common
parent, neither the Company nor any of the Company Subsidiaries has
any liability under Treasury Regulations Section 1.1502-6 or any
similar provision of applicable Law, as a transferee or successor,
as a result of any contractual obligation, or otherwise for any
Taxes of any other Person. Neither the Company nor any of the
Company Subsidiaries has obtained any consent or clearance from or
entered into any settlement or arrangement with any taxing
authority that would be binding on the Surviving Company or any of
its Affiliates or result in a material Tax liability for the
Surviving Company or any of its Affiliates for any Tax period (or
portion thereof) ending after the Closing Date. Neither the Company
nor any of the Company Subsidiaries has engaged in a
“reportable transaction,” as defined in Section
6707A(c)(1) of the Code or Treasury Regulations Section
1.6011-4(b), or any transaction requiring disclosure under a
similar provision of applicable Law. Within the past three (3)
years, no written claim or nexus inquiry has been made by a taxing
authority in a jurisdiction where the Company or any Company
Subsidiary does not file Tax Returns that any of them is or may be
subject to tax by that jurisdiction or that any of them has a duty
to collect Taxes.

 

Section
3.10 Employee Benefit Plans;
Labor

 

(a) Except as set forth
in Section 3.10(a)
of the Company Disclosure Letter, none of the Company, any Company
Subsidiary, nor any Company Commonly Controlled Entity maintains or
contributes to (i) any nonqualified deferred compensation,
post-termination or retirement plans for employees, (ii) any
qualified “defined contribution plans” (as such term is
defined under Section 3(34) of ERISA (whether or not subject to
ERISA)), (iii) any other defined contribution pension plan in
the relevant country, state, province, territory or the like, (iv)
any “defined benefit plans” (as such term is defined
under Section 3(35) of ERISA (whether or not subject to ERISA)),
(v) any other defined benefit pension plan in the relevant country,
state, province, territory or the like (the plans set forth in
clauses (ii), (iii), (iv) and (v) are collectively referred to
herein as the “Company Pension Plans”),
(vi) any “employee welfare benefit plans” (as such
term is defined under Section 3(1) of ERISA, (vii) any other group
insurance benefit arrangements in the relevant country, state,
province, territory or the like (whether or not subject to ERISA)
(the “Company
Welfare Plans”), or (viii) any compensatory or
benefit plans or programs, or equity or equity-based award plans,
including written individual contracts, employee agreements, plans,
programs, or arrangements, whether funded or unfunded, written or
oral, that currently are, or within the past six (6) fiscal years
of the Company or any Company Subsidiary, as appropriate, have
been, maintained, contributed to or sponsored (or are or have been
required to be maintained, contributed to or sponsored) in whole or
in part, by any of the Company, the Company Subsidiaries and the
Company Commonly Controlled Entities, for the benefit of, providing
any remuneration or benefits to, or covering any current or former
employee or retiree, any dependent, spouse or other family member
or beneficiary of such employee or retiree, or any director,
independent contractor, member, officer, consultant of any of the
Company, the Company Subsidiaries and the Company Commonly
Controlled Entities, or under (or in connection with) which the
Company or any Company Subsidiary or any of the Company Commonly
Controlled Entities may have any liability (collectively clauses
(i) through
(viii) are referred
to as “Company
Benefit Plans”).

 

 

12

 

 

(b) Each Company
Pension Plan that is intended to meet the requirements of a
“qualified plan” under Sections 401(a) and 501(a) of
the Code has either received a favorable determination letter from
the IRS that such Company Pension Plan is so qualified or has
requested such a favorable determination letter within the remedial
amendment period of Section 401(b) of the Code, or in the case of a
Company Pension Plan that is maintained pursuant to the adoption of
a master, prototype, or volume submitter plan document, the sponsor
of such master or prototype or volume submitter plan document has
obtained from the National Office of the IRS an opinion or
notification letter stating that the form of the master, prototype
or volume submitter document is acceptable for the establishment of
a qualified retirement plan. Each Company Benefit Plan, including
any amendments thereto, that is eligible for approval by, and/or
registration for and/or qualification for special Tax status with,
the appropriate taxation, social security and/or supervisory
authorities in the relevant country, state, province, territory or
the like (each, an “Company Approval”) has
received such Company Approval, or there remains a period of time
in which to obtain such Company Approval retroactive to the date of
any amendment or change in Law that has not previously received
such Company Approval. The Company Benefit Plans comply in form and
in operation, and have been administered in all material respects
in compliance with their terms and with the requirements of, as
applicable, the Code, ERISA, the Patient Protection and Affordable
Care Act and all other applicable Laws, and none of the Company,
the Company Subsidiaries and its Company Commonly Controlled
Entities have received any notice from any Governmental Entity
questioning or challenging such compliance that has not been
resolved.

 

(c) To the knowledge of
the Company, there have been no non-exempt “prohibited
transactions” (as that term is defined in Section 406 of
ERISA or Section 4975 of the Code) involving any of the Company
Benefit Plans. Except as set forth in Section 3.10(c) of the
Company Disclosure Letter, none of the assets of any Company
Pension Plan or Company Welfare Plan trust is an “employer
security” (within the meaning of Section 407(d)(1) of ERISA)
or “employer real property” (within the meaning of
Section 407(d)(2) of ERISA).

 

(d) (i) Neither
the Company nor any other Person that, together with the Company or
any Company Subsidiary, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code or any other applicable
Law (a “Company
Commonly Controlled Entity”) (A) has sponsored,
maintained or contributed to, or been obligated to maintain or
contribute to, or has any liability under, any Company Pension Plan
that is subject to Title IV of ERISA or Section 412 or Section 430
of the Code or is otherwise a defined benefit pension plan in the
relevant country, state, province, territory or the like, and
(B) has any unsatisfied liability imposed under Title IV of
ERISA, and (ii) all contributions (including all employer
contributions and employee salary reduction contributions) or
insurance premiums that are due have been paid with respect to each
Company Benefit Plan, and all contributions or insurance premiums
for any period ending on or before the Closing Date that are not
yet due have been paid with respect to each such Company Benefit
Plan or accrued, in each case in accordance with the past custom
and practice of the Company, and with applicable Law and
administrative agency regulations.

 

(e) Neither the Company
nor any Company Subsidiary has communicated a commitment (whether
orally or in writing, whether as part of the collective bargaining
process or not) generally to employees, any employee representation
body or specifically to any employee regarding (i) any future
increase of benefit levels (or creation of new benefits) with
respect to the Company Benefit Plans beyond those reflected in such
plans, or (ii) the adoption or creation of any new benefit
plan.

 

(f) None of the
Company, the Company Subsidiaries and the Company Commonly
Controlled Entities currently contributes to or has had any
liability or potential liability with respect to (i) any
“multiemployer plan” (as defined in Section 3(37) of
ERISA) or (ii) any multi-employer pension plans or multi-employer
benefit plans in the relevant country, state, province, territory
or the like, during the five (5)-year period ending as of the
Closing Date.

 

(g) Except as set forth
in Section 3.10(g)
of the Company Disclosure Letter, none of the Company Welfare Plans
obligates the Company or any Company Subsidiary to provide any
current employee or former employee of the Company or a Company
Subsidiary (or any dependent thereof) any life insurance or medical
or health benefits after his or her termination of employment with
the Company or any Company Subsidiary, other than as required under
COBRA or any similar state Law. All amounts required to be included
in the Company’s most recent financial statements in respect
of any Company Welfare Plan have been included.

 

 

13

 

 

(h) No Company Benefit
Plan (excluding for this purpose any individual employment
agreement or arrangement) has a provision, and no commitment
(whether oral or in writing) has been made, that restricts the
Company or Company Subsidiaries from amending or terminating such
Company Benefit Plan with respect to the accrual of future
benefits; except that the legal obligation to bargain over
mandatory subjects of bargaining under any Law will not be
considered such a restriction.

 

(i) Except as set forth
in Section 3.10(i)
of the Company Disclosure Letter, no amounts payable under any
Company Benefit Plan will fail to be deductible for federal income
tax purposes by virtue of Section 280G of the Code or will fail to
be deductible for tax purposes under any other applicable Law.
Except as set forth in Section 3.10(i) of the
Company Disclosure Letter, consummation of the Transactions will
not (i) entitle any current employee or former employee (or spouse,
dependent or other family member of such employee) of the Company
or Company Subsidiaries to severance pay, unemployment
compensation, or any payment contingent upon a change in control or
ownership of the Company or Company Subsidiaries, or
(ii) accelerate the time of payment or vesting, or increase
the amount, of any compensation due to any such current employee or
former employee (or any spouse, dependent, or family member of such
employee). Neither the Company nor any Company Subsidiary has any
obligation to provide, and no Company Benefit Plan or other
agreement provides any Person with any amount of additional
compensation or gross-up if such Person is provided with amounts
subject to excise or additional taxes, interest or penalties
incurred pursuant to Sections 4999 or 409A of the Code or due to
the failure of any payment to be deductible under Section 280G of
the Code.

 

(j) (i) Each Company
Benefit Plan that is a “nonqualified deferred compensation
plan” (within the meaning of Section 409A(d)(1) of the Code)
subject to Section 409A of the Code is and has been, during the
five years prior to the date hereof, in all material respects in
documentary and operational compliance with Section 409A of the
Code and any guidance issued with respect thereto and (ii) no
Company Option is considered to be a non-qualified deferred
compensation arrangement subject to Section 409A of the
Code.

 

(k) The Company and the
Company Subsidiaries have correctly classified Persons engaged as
consultants or independent contractors for employment purposes and
have correctly administered Section 414(n) of the Code with respect
to the Company Pension Plans.

 

(l) The Company has
complied in all material respects with all Laws concerning
employment rights and obligations. Section 3.10(l) of the Company
Disclosure Letter lists each collective bargaining agreement to
which the Company or a Company Subsidiary is a party in respect of
the employees of the Company or a Company Subsidiary on the date of
this Agreement, and any membership of the Company or a Company
Subsidiary in any employers’ organization which is entitled
to conclude a collective bargaining agreement on behalf of its
member companies, and any collective bargaining agreement which,
although the Company or Company Subsidiary is not a party to it,
applies due to standard reference in employment agreements or by
state decree as a generally applicable collective bargaining
agreement. No collective bargaining agreement or shop agreement is
being negotiated or renegotiated in any material respect by the
Company or any of the Company Subsidiaries. There is no labor
dispute, work stoppage, slow down or strike against the Company or
any of the Company Subsidiaries pending or, to the knowledge of the
Company, threatened which would interfere with the respective
business activities of the Company or any of the Company
Subsidiaries (and no work stoppages, slow downs, labor disputes or
strikes occurred during the last five years). As of the date of
this Agreement, to the knowledge of the Company, neither the
Company nor any of the Company Subsidiaries has committed during
the three years prior to the date hereof any unfair labor practice
in connection with the operation of the respective businesses of
the Company or any of the Company Subsidiaries, and there is no
charge or complaint against the Company or any of the Company
Subsidiaries by the National Labor Relations Board or any
comparable Governmental Entity or in relation to any labor rules
and regulations or any other competent labor authority pending or
threatened in writing.

 

(m) Section 3.10(m) of the Company
Disclosure Letter sets forth a true and complete list of all
material (i) severance or employment agreements with
directors, officers, employees, or consultants of the Company or
any Company Subsidiary, (ii) severance programs of the Company
or any Company Subsidiary with or relating to its employees, or
(iii) plans, programs or other agreements of the Company or
any Company Subsidiary with or relating to its directors, officers,
employees or consultants which contain change in control
provisions.

 

(n) Except as set forth
in Section 3.10(n)
of the Company Disclosure Letter, there are no unresolved claims or
disputes under the terms of, or in connection with, the Company
Benefit Plans (other than routine undisputed claims for benefits
under the Company Benefit Plans or other immaterial claims or
disputes that are being handled in the normal course of plan
administration), and no action, legal or otherwise, has been
commenced with respect to any claim (including claims for benefits
under Company Benefit Plans). To the knowledge of the Company, no
facts exist which could give rise to any actions, audits, suits or
claims (other than in the ordinary course).

 

 

14

 

 

(o) No Company Benefit
Plan is or at any time was funded through a “welfare benefit
fund,” as defined in Section 419(e) of the Code, and no
benefits under any Company Benefit Plan are or at any time have
been provided through a “voluntary employees’
beneficiary association” (within the meaning of Section
501(c)(9) of the Code) or a “supplemental unemployment
benefit plan” (within the meaning of Section 501(c)(17) of
the Code).

 

Section
3.11 Compliance with
Law

 

(a) The Company and
each of the Company Subsidiaries is, and at all times during the
five (5) years prior to the date hereof, have been in compliance in
all material respects with all Laws and Orders applicable to the
Company or any of the Company Subsidiaries or by which any property
or asset of the Company or any Company Subsidiary is bound. To the
knowledge of the Company, no investigation by any Governmental
Entity with respect to the Company or any Company Subsidiary is
pending, nor has any Governmental Entity indicated to the Company
an intention to conduct any such investigation with respect to,
either individually or in the aggregate, material matters or
material liabilities.

 

(b) None of the Company
or any of the Company Subsidiaries has received any notice of any
alleged violation of any Laws that remains unresolved or
outstanding, except where any such notice, individually or in the
aggregate, would not reasonably be expected to have a Company
Material Adverse Effect.

 

Section
3.12 Environmental Matters
.
Except as disclosed in Section 3.12 of the Company
Disclosure Letter, the Company and each of the Company Subsidiaries
is, and at all times has been, in compliance in all material
respects with all Environmental Laws. The Company and the Company
Subsidiaries hold all Permits required under applicable
Environmental Laws to permit the Company and the Company
Subsidiaries to conduct their businesses as currently conducted.
The business and operations of the Company and the Company
Subsidiaries are in compliance with all such Permits. No notice of
violation, notification of liability, demand, request for
information, citation, summons or order has been received by the
Company or any Company Subsidiary, no complaint has been filed, no
penalty or fine has been assessed, and no investigation, action,
claim, suit or proceeding is pending or, to the knowledge of the
Company, threatened by any Person involving the Company or any
Company Subsidiary relating to or arising out of any Environmental
Law. No Hazardous Substances are or were located and no disposal or
Releases of Hazardous Substances have occurred at, on, above, under
or from any properties currently or, to the knowledge of the
Company at the time of the cessation of such ownership, lease,
operation or use, formerly owned, leased, operated or used by the
Company, any Company Subsidiary or any predecessors in interest
that, in each case, has resulted in or would reasonably be expected
to result in any material cost, liability or obligation of the
Company or any Company Subsidiary under any Environmental Law.
Neither the Company nor any Company Subsidiary, nor, to the
knowledge of the Company, any other Person, has caused or taken any
action that could reasonably be expected to result in any material
liability or obligation relating to (i) the environmental
conditions at, on, above, under, or about any properties or assets
currently or formerly owned, leased, operated or used by the
Company or any of their respective predecessors in interest or (ii)
the past or present use, management, handling, transport,
treatment, generation, storage, disposal, Release or threatened
Release of Hazardous Substances. The Company has provided to BCHI
all material environmental site assessments, audits, investigations
and studies in their possession, custody or control relating to
property or assets currently or formerly owned, leased, operated or
used by the Company or any Company Subsidiary. Neither the Company
nor any Company Subsidiary has been in business other than those
related to the provision of communication services that would
reasonably be expected to present environmental issues of a
materially different scope or magnitude than those presented in the
provision of communication services. Without limiting the
generality of the foregoing, neither the Company nor any Company
Subsidiary has operated or currently operates (i) any manufacturing
facilities, (ii) any facilities that are or have been permitted
under the Resource Conservation and Recovery Act or (iii) any
business that manages the hazardous wastes of any unrelated party.
The representations contained in the immediately prior sentence of
this Section 3.12
shall not be deemed to be breached unless the operation or
ownership of such other business or businesses has resulted in any
material cost, liability or obligation of the Company or any
Company Subsidiary under any Environmental Law.

 

Section
3.13 Material Contracts

 

(a) Except for
Contracts listed in Section 3.13(a) of the Company
Disclosure Letter (all Contracts set forth, or required to be set
forth, in Section
3.13(a) of the Company Disclosure Letter being referred to
herein as a “Company
Material Contract”), as of the date of this Agreement,
neither the Company nor any of the Company Subsidiaries is a party
to or bound by any Contract that is:

 

(i) a “material
contract” required to be filed as an exhibit to the
Company’s annual report on Form 10-K pursuant to Item
601(b)(10) of Regulation S-K of the SEC

 

 

15

 

 

(ii) a
“non-compete,” or similar Contract that restricts or
purports to restrict the geographic area in which the Company or
any of the Company Subsidiaries may conduct any line of business,
or that requires the referral of business opportunities by the
Company or any of the Company Subsidiaries;

 

(iii) a
joint venture, partnership or limited liability company Contract or
other similar Contract relating to the formation, creation,
operation, management or control of any joint venture, partnership
or limited liability company, other than any such Contract solely
between or among the Company and the Company
Subsidiaries;

 

(iv) a
Contract (other than a future contract, option contract or other
derivative transaction) that involves future expenditures by the
Company or any Company Subsidiary of more than $2,500,000 in any
one year period that cannot be terminated on less than 90
days’ notice without material payment or
penalty;

 

(v) an acquisition
Contract that contains “earn-out” or other contingent
payment obligations that could reasonably be expected to result in
future payments by the Company or a Company Subsidiary in excess of
$2,500,000;

 

(vi) a
Contract relating to indebtedness for borrowed money or any
financial guaranty involving an amount in excess of
$2,500,000;

 

(vii) a
Contract for the lease or sublease of real property material to the
business of the Company and the Company Subsidiaries;

 

(viii) a
Contract pursuant to which the Company or any Company Subsidiary
(A) is granted or obtains any right to use any material
Intellectual Property (excluding standard form Contracts granting
rights to use readily available shrink wrap or click wrap software
having an acquisition price of less than $100,000 per Contract),
(B) is restricted in its right to use or register any material
Company Intellectual Property, or (C) permits any other Person to
use, enforce, or register any material Company Intellectual
Property, in each case including any license agreements,
coexistence agreements, and covenants not to sue;

 

(ix) a
Contract relating to (A) the sale, outbound license or outbound
lease by the Company or any Company Subsidiary of any material
indefeasible rights of use of capacity infrastructure or peering
arrangements or (B) the purchase, inbound license or inbound lease
by the Company or any Company Subsidiary of any material
indefeasible rights of use of capacity infrastructure or peering
arrangements;

 

(x) a collective
bargaining agreement; or

 

(xi) a
Contract with material outstanding liabilities or obligations
relating to the disposition or acquisition by the Company or any
Company Subsidiary of assets or properties in excess of $2,500,000
not made in the ordinary course of business; or

 

(xii) any
employment, severance, consulting or other Contract with an
employee or former employee, officer or director of the Company or
any Company Subsidiary which will require the payment of amounts by
the Company or any Company Subsidiary in excess of $150,000 per
annum.

 

 

16

 

 

(b) Neither the Company
nor any Company Subsidiary is in breach of or default under the
terms of any Company Material Contract in any material respect. To
the knowledge of the Company, no other party to any Company
Material Contract is in breach of or default under the terms of any
Company Material Contract in any material respect. Each Company
Material Contract is a valid and binding obligation of the Company
or any Company Subsidiary that is a party thereto and, to the
knowledge of the Company, is in full force and effect, subject to
(A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws affecting or relating to
enforcement of creditors’ rights generally and (B) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at Law or in equity). True, correct and
complete copies of each Company Material Contract (including all
modifications and amendments thereto and waivers thereunder) have
been made available to BCHI.

 

Section
3.14 Intellectual Property; Data
Privacy

 

(a) Either the Company
or a Company Subsidiary owns, and has all right, title, and
interest in, duly licenses, or otherwise possesses all rights
necessary to use, all Intellectual Property used in their
respective businesses as currently conducted (collectively, the
“Company
Intellectual Property”).

 

(b) Section 3.14(b)(i) of the
Company Disclosure Letter sets forth all Company Registered
Intellectual Property. All required filings and fees related to
such Company Registered Intellectual Property have been timely
filed with and paid to the relevant Governmental Entities and
authorized registrars. Section 3.14(b)(ii) of the
Company Disclosure Letter sets forth all Intellectual Property
owned or purported to be owned by the Company or any Company
Subsidiary that is not Company Registered Intellectual Property and
which is material to the businesses of the Company and Company
Subsidiaries as currently conducted (collectively, together with
the Company Registered Intellectual Property, the
“Company Owned
Intellectual Property”).

 

(c) There are no
pending or, to the knowledge of the Company, threatened claims in
writing by any Person alleging infringement or misappropriation by
the Company or any Company Subsidiary arising from their use of the
Company Intellectual Property, and to the knowledge of the Company,
the conduct of the businesses of the Company and Company
Subsidiaries and their products and services do not infringe,
misappropriate, dilute or otherwise violate any Intellectual
Property rights of any Person.

 

(d) Neither the Company
nor any Company Subsidiary has made any claim during the past three
(3) years of any misappropriation or infringement by any third
party of its rights to or in connection with the use of any Company
Intellectual Property; and (ii) to the knowledge of the
Company, no Person is infringing or misappropriating any Company
Intellectual Property.

 

(e) The Company and the
Company Subsidiaries have taken reasonable measures to protect the
confidentiality of their material Trade Secrets including requiring
employees, contractors and other Persons having access thereto to
execute written nondisclosure agreements. To the knowledge of the
Company, none of the material Trade Secrets of the Company and the
Company Subsidiaries have been disclosed or authorized to be
disclosed by the Company or the Company Subsidiaries to any third
party other than pursuant to a valid and enforceable nondisclosure
agreement. To the knowledge of the Company, no third party to any
nondisclosure agreement with the Company or any Company Subsidiary
is in material breach, violation or default.

 

(f) Each Person who
contributed, developed or conceived any Company Owned Intellectual
Property has done so pursuant to a valid and enforceable written
agreement that (i) protects the confidential information disclosed
by the Company and its Subsidiaries and (ii) grants the Company and
its Subsidiaries exclusive ownership of the Person’s
contribution, development or conception and waives any
non-assignable interests in such contribution, development or
conception, such as moral rights.

 

 

17

 

 

(g) During the three
(3) years prior to the date hereof, to the knowledge of the
Company, there has been no act or omission in respect of the use or
enforcement of the Company Owned Intellectual Property that would
reasonably be expected to result in the abandonment, cancellation
or unenforceability of any such Intellectual Property.

 

(h) No source code for
any Company Proprietary Software has been delivered, licensed, or
made available to any escrow agent or other Person who is not an
employee of the Company or a Company Subsidiary. Neither the
Company nor any Company Subsidiary has any duty or obligation to
deliver, license, or make available the source code for any Company
Proprietary Software to any escrow agent or other Person who is not
an employee of the Company or any Company Subsidiary.

 

(i) No Company
Proprietary Software is subject to any “copyleft” or
other obligation or condition (including any obligation or
condition under any “open source” license such as the
GNU Public License, Lesser GNU Public License, or Mozilla Public
License) that has been or is used in the businesses of the Company
and its Subsidiaries in a manner that would (i) require or
condition the use or distribution of such Company Proprietary
Software on the disclosure, licensing, or distribution of any
source code for any portion of such Company Proprietary Software or
(ii) otherwise impose any limitation, restriction, or condition on
the right or ability of the Company or any Company Subsidiary to
use or distribute any Company Proprietary Software.

 

(j) The Company
Proprietary Software does not contain any program routine, device,
code or instructions (including any code or instructions provided
by third parties) or other undisclosed feature, including, without
limitation, a time bomb, virus, lock-out device, drop-dead device,
malicious logic, worm, Trojan horse, bug, error, defect or trap
door, that is designed to access, modify, delete, damage, disable,
deactivate, interfere with, or otherwise harm the Company
Proprietary Software or any of the Company’s information
technology systems, data or other electronically stored
information, or computer programs or systems.

 

(k) The Company and the
Company Subsidiaries, and to the knowledge of the Company all of
its and their providers of information technology services, have
(i) complied in all material respects with their respective
published privacy policies and internal privacy policies and
guidelines and all applicable Laws relating to privacy, data
protection, user data or Personal Data, including Personal Data of
customers, employees, contractors and third parties who have
provided information to the Company or any Company Subsidiary; and
(ii) implemented and maintained, in all material respects, a
comprehensive security plan that includes industry standard
administrative, technical and physical safeguards to ensure that
Personal Data is protected against loss, damage, unauthorized
access, unauthorized use, unauthorized modification, or other
misuse. There has been no material loss, damage, unauthorized
access, unauthorized use, unauthorized modification, or other
breach of security of Personal Data maintained by or on behalf of
the Company and the Company Subsidiaries. Within the past three (3)
years, no Person has made any material claim or commenced any
Action with respect to, and the Company and the Company
Subsidiaries have not, to the knowledge of the Company, experienced
any incident relating to, any actual or suspected loss, damage,
unauthorized access, unauthorized use, unauthorized modification,
or breach of security of Personal Data maintained or processed by
or on behalf of the Company and the Company Subsidiaries. Except
for disclosures of information permitted or required by privacy
Laws or authorized by the provider of Personal Data, to the
knowledge of the Company, neither the Company nor any of the
Company Subsidiaries has shared, sold, rented or otherwise made
available, and does not share, sell, rent or otherwise make
available, to third parties any Personal Data.

 

(l) The Company and the
Company Subsidiaries have implemented business continuity and
disaster recovery plans and have arranged for back-up data
processing services adequate to meet their data processing needs in
the event that the computer systems, networks, hardware, software,
databases, websites, and equipment of the Company or the Company
Subsidiaries or any of their material components is rendered
temporarily or permanently inoperative as a result of a natural or
other disaster. The computer systems, networks, hardware, software,
databases, websites, and equipment of the Company or the Company
Subsidiaries have not suffered any failures, errors or breakdowns
within the past three years that have caused any material
disruption or interruption in the business of the Company and the
Company Subsidiaries. The computer systems, networks, hardware,
software, databases, websites, and equipment of the Company or the
Company Subsidiaries have not suffered any failures, errors or
breakdowns within the past three (3) years that have caused any
material disruption or interruption in the business of the Company
or the Company Subsidiaries

 

Section
3.15 Title to Properties;
Assets . The Company and
each of the Company Subsidiaries have good and valid fee simple
title to, or valid leasehold interest in, its material tangible
properties and assets, except for such properties and assets as are
no longer used or useful in the conduct of its business or as have
been disposed of in the ordinary course of business. All such
material tangible properties and assets, other than properties and
assets in which the Company or any Company Subsidiary have a
leasehold interest, are free and clear of all Liens other than
Permitted Liens or Liens that will be released at
Closing.

 

 

18

 

 

Section
3.16 Real Property
.
Section 3.16 of the
Company Disclosure Letter sets forth a list of all real property
currently owned or leased by the Company or any Company
Subsidiaries and indicates whether each such parcel of real
property is owned or leased. The Company or one of the Company
Subsidiaries has good and fee simple title to all real property
owned by the Company or any of the Company Subsidiaries as of the
date of this Agreement (the “Company Owned Real
Property”) and valid leasehold estates in all real
property leased or subleased (whether as tenant or subtenant) by
the Company or any of the Company Subsidiaries as of the date of
this Agreement (including improvements thereon, the
“Company Leased Real
Property”), in each case, free and clear of all Liens,
save only for Permitted Liens. Except as would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company or one of the Company
Subsidiaries has exclusive possession of each Company Leased Real
Property and Company Owned Real Property, other than any use and
occupancy rights granted to third-party owners, tenants, guests,
hosts or licensees pursuant to agreements with respect to such real
property. There are no Contracts to sell, transfer or otherwise
dispose of any of the Company Owned Real Property or the Company
Leased Real Property, or to purchase or acquire any other interest
in real property.

 

Section
3.17 Regulatory Matters

 

(a) Except as set forth
on Section 3.17(a)
of the Company Disclosure Letter, and except with respect to
Permits required under applicable Environmental Laws (as to which
certain representations and warranties are made pursuant to
Section 3.12), the
Company and the Company Subsidiaries hold all Permits issued by the
FCC or the state public service or public utility commissions or
other similar state regulatory bodies (“State PSCs”), and all
other material regulatory Permits, including franchises, ordinances
and other agreements granting access to public rights of way,
issued or granted to the Company or any of the Company Subsidiaries
by a Governmental Entity (the “Company Licenses”) that
are required for the Company and each of the Company Subsidiaries
to conduct its business, as presently conducted in all material
respects.

 

(b) Each Company
License is in full force and effect and has not been suspended,
revoked, cancelled or adversely modified. No Company License is
subject to (i) any conditions or requirements that have not been
imposed generally upon licenses in the same service, unless such
conditions or requirements are set forth on the face of the
applicable authorization, or (ii) any pending proceeding by or
before any Governmental Entity, including the FCC or State PSCs to
suspend, revoke or cancel such Company License, or any judicial
review of a decision by any Governmental Entity, including the FCC
or State PSCs with respect thereto. To the knowledge of the
Company, there has not been any event, condition or circumstance
that would preclude any Company License from being renewed in the
ordinary course (to the extent that such Company License is
renewable by its terms).

 

(c) The licensee of
each Company License is in compliance in all material respects with
such Company License and has fulfilled and performed all of its
material obligations with respect thereto, including all reports,
notifications and applications required by any Law, including the
Communications Act of 1934 (the “Communications Act”) or
the rules, regulations, written policies and orders of the FCC
(together with the Communications Act, the “FCC Rules”) or similar
state telecommunications laws (the “State Telecommunications
Laws”) and the rules, regulations, written policies
and Orders of State PSCs (collectively with the State
Telecommunications Laws, the, “PSC Rules”), and the
payment of all regulatory fees and contributions, except as
permitted by applicable exemptions, waivers or similar concessions
or allowances. Without limiting the foregoing, the licensee of each
Company License is in material compliance with the applicable
requirements of the Federal and state Universal Service Fund
programs, the Federal Telecommunications Relay Service programs,
the Federal North American Numbering Plan Administration program,
the Federal Local Number Portability Administration program
(collectively, the “USF Programs”), the
Communications Assistance to Law Enforcement Act
(“CALEA”), and the
FCC’s regulations concerning treatment and protection of
Customer Proprietary Network Information (“CPNI”). All reports and
other submissions required in connection with the USF Programs,
CALEA, CPNI regulations, including contribution remittances, have
been timely filed in materially true, correct and complete form. To
the knowledge of the Company and the Company Subsidiaries, there
are no pending or threatened investigations, inquiries, audits,
examinations or other proceedings in connection with the
performance of the Company and the Company Subsidiaries of their
USF Programs, CALEA and CPNI obligations.

 

(d) Except as set forth
in Section 3.17(d)
of the Company Disclosure Letter, neither the Company nor any
Company Subsidiary has (i) implemented, or been alleged or found to
have implemented, an unauthorized change of an end user’s
carrier (“Slamming”) or (ii) placed
or been alleged or found to have placed an unauthorized charge on
customer billing (“Cramming”).

 

 

19

 

 

(e) Except as set forth
in Section 3.17(e)
of the Company Disclosure Letter, the Company and all Company
Subsidiaries have timely complied with any compensation,
restoration, reimbursement, reporting, or other obligations arising
in connection with public and private right-of-way access and pole
attachment agreements.

 

(f) Except as set forth
in Section 3.17(f)
of the Company Disclosure Letter, the Company and all Company
Subsidiaries have timely submitted all required international
traffic and circuit status reports in materially true, correct and
complete form.

 

(g)   Except
as set forth in Section
3.17(g) of the Company Disclosure Letter, the licensee of
each Company License is in material compliance with the applicable
requirements of federal and state network outage reporting
(“NOR”)
requirements. All reports and other submissions required in
connection with federal and state NOR requirements have been timely
filed in materially true, correct and complete form. To the
knowledge of the Company and the Company Subsidiaries, there are no
pending or threatened investigations, inquiries, audits,
examinations or other proceedings in connection with the
performance of the Company and the Company Subsidiaries of their
NOR requirements.

 

(h) Except as set forth
in Section 3.17(h)
of the Company Disclosure Letter, the Company or a wholly owned
Subsidiary of the Company directly or indirectly owns all of the
Equity Interests and controls all of the voting power and
decision-making authority of each licensee of the Company Licenses.
No Company License, Order or other agreement, obtained from, issued
by or concluded with any State PSC would impose restrictions on the
ability of any Company Subsidiary to make payments, dividends or
other distributions to the Company or any Company Subsidiary that
limits, or would reasonably be expected to limit, the cash funding
and management alternatives of the Company on a consolidated basis
in a manner disproportionate to restrictions applied by other State
PSCs.

 

Section
3.18 Interconnection
Agreements . The Company or a
Company Subsidiary has entered into, with incumbent local exchange
carriers or other non-incumbent carriers, all interconnection
agreements, line sharing agreements, line splitting agreements and
other Contracts (the “Company Interconnection
Agreements”), that are necessary to conduct their
respective businesses as currently conducted. All Company
Interconnection Agreements entered into pursuant to Sections 251
and 252 of the Telecommunications Act of 1996 (the
“Telecommunications
Act”), including amendments to implement the
FCC’s Triennial Review Remand Order, to the extent such
amendments have been adopted, include the general terms, conditions
and pricing for any unbundled network elements (“UNEs”), collocation or
other network facilities or services provided under Sections 251
and 252 of the Telecommunications Act. All Company Interconnection
Agreements have been approved by the applicable Governmental
Entity, including the applicable State PSC, when required. The
Company and any Company Subsidiary, as applicable, that is a party
to a Company Interconnection Agreement has performed, in all
material respects, all material obligations required to be
performed by it under such Company Interconnection
Agreement.

 

Section
3.19 Network Facilities
.
Except as set forth in Section 3.19 of the
Company Disclosure Letter:

 

(a) All Company Owned
Network Facilities and Company Third-Party Network Facilities:
(i) are in all material respects in good working order and
condition and are without any material defects individually and in
the aggregate; (ii) are, individually and in the aggregate,
operated, installed, and maintained by the Company, a Company
Subsidiary, or their contractors in a manner that is in compliance
in all material respects with (x) generally accepted industry
standards for the United States or Canadian communications
industry, as applicable, (y) performance requirements in
service agreements with customers of the Company and the Company
Subsidiaries, and (z) all Laws, and (iii) comply,
individually and in the aggregate, in all material respects with
applicable performance standards.

 

 

20

 

 

(b) The Company or a
Company Subsidiary owns, free and clear of all Liens (other than
Permitted Liens and Liens to be discharged at Closing), all right,
title and interest in Company Owned Network Facilities. No third
party may revoke or otherwise encumber or interfere in any material
respect with such right, title, and interest.

 

(c) (i) Each
Contract under which any third party provides Network Facilities,
including leases, licenses, indefeasible rights of use of capacity
or infrastructure, pole attachment agreements and Right-of-Way
Agreements (a “Company Network Facility
Agreement”), to which the Company or any Company
Subsidiary is a party, is a valid, legally binding and enforceable
agreement and is in full force and effect, and neither the Company
nor any Company Subsidiary is in material breach of or material
default under any Company Network Facility Agreement, (ii) no
event has occurred which, with notice or lapse of time, would
constitute a material breach or material default by the Company or
any Company Subsidiary or permit termination, revocation, other
interference with performance of, modification or acceleration by
any third party of any Company Network Facility Agreement, and
(iii) as of the date hereof, no third party has repudiated,
revoked, terminated, or otherwise materially interfered with
performance of or has the right to terminate, repudiate, revoke, or
otherwise materially interfere with the performance of any Company
Network Facility Agreement. Any notices or other actions required
to be taken to renew the term of a Company Network Facility
Agreement for any upcoming renewal term have been taken or given in
the manner and within the time provided in such Company Network
Facility Agreement (or the time period provided for giving of such
notice or to undertake such action has not expired) to effectively
renew the term of such Company Network Facility Agreement for the
upcoming term thereof to the extent that such Company Network
Facility Agreement is renewable by its terms and the Company or the
applicable Company Subsidiary intends to renew such Company Network
Facility Agreement. To the knowledge of the Company, as of the date
of this Agreement, the Company and the Company Subsidiaries hold
all Company Network Facility Agreements necessary to conduct the
Company’s business and no event has occurred, or circumstance
exists, that, but for the passage of time or giving of notice,
would preclude any Company Network Facility Agreement from being
renewed in accordance with the terms thereof to the extent the
Company or the applicable Company Subsidiary intends to renew such
Company Network Facility Agreement.

 

Section
3.20 Insurance . The Company and
the Company Subsidiaries maintain insurance in such amounts and
against such risks as the Company believes to be customary for the
industries in which it and the Company Subsidiaries operate.
Neither the Company nor any of the Company Subsidiaries has
received notice of any pending or threatened cancellation with
respect to any such material insurance policy, and each of the
Company and the Company Subsidiaries is in compliance in all
material respects with all conditions contained
therein.

 

Section
3.21 Opinion . Prior to the
execution of this Agreement, the Company Board has received an
opinion of FTI Capital Advisors, LLC to the effect that as of the
date thereof and based upon and subject to the assumptions,
qualifications, limitations and matters set forth therein, the
Merger is fair to the holders of Company Common Stock from a
financial point of view. Such opinion has not been amended or
rescinded as of the date of this Agreement.

 

Section
3.22 Application of Takeover
Laws . Subject to the
accuracy of the representations and warranties in Section 4.23 (Share Ownership),
the Company and the Company Board have taken all necessary action,
if any, in order to render inapplicable to the Transactions any
restriction on business combinations contained in any applicable
Takeover Law which is or would reasonably be expected to become
applicable to BCHI, the Company or Merger Sub as a result of the
Transactions.

 

Section
3.23 Information
Supplied 
.. None of the information supplied or to be supplied by the Company
or a Company Subsidiary specifically for inclusion or incorporation
by reference in the Proxy Statement will, at the date it is first
mailed to the Company’s stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or
misleading. Notwithstanding the foregoing sentence, no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on or
derived from information supplied by BCHI specifically for
inclusion in the Proxy Statement. The information supplied by the
Company or a Company Subsidiary for inclusion or incorporation by
reference in the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange
Act.

 

 

21

 

 

Section
3.24 Affiliate Transactions
.
Except as set forth in Section 3.24 of the Company
Disclosure Letter, there are not any transactions, agreements,
arrangements or understandings between the Company or the Company
Subsidiaries, on the one hand, and the Company’s Affiliates
(other than the Company Subsidiaries) or other Persons, on the
other hand, that would be required to be disclosed under Item 404
of Regulation S-K under the Securities Act.

 

Section
3.25 Broker’s Fees
.
Except for FTI Capital Advisors, LLC, no broker, finder or
investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company or any
Company Subsidiary.

 

Section
3.26 Directors and Officers
.
Section 3.26 of the
Company Disclosure Letter sets forth a list of all officers,
directors, partners and/or managers of the Company and each of its
Subsidiaries as of the date hereof.

 

Section
3.27 No Other Representations or
Warranties . Except for the
representations and warranties expressly made by the Company in
this Article III,
neither the Company nor any other Person makes any representation
or warranty with respect to the Company or the Company Subsidiaries
or their respective business, operations, assets, liabilities,
condition (financial or otherwise) or prospects, notwithstanding
the delivery or disclosure to BCHI or any of its Affiliates or
Representatives of any documentation, forecasts or other
information with respect to any one or more of the
foregoing.

 

ARTICLE IV

 

Representations and Warranties
of BCHI

 

Except
as disclosed in the disclosure letter delivered by BCHI to the
Company immediately prior to the execution of this Agreement (it
being agreed that any information set forth in one section of such
disclosure letter will be deemed to apply to each other section
thereof to which its relevance as an exception to (or disclosure
for the purposes of) such other section is reasonably apparent)
(the “BCHI
Disclosure Letter”), BCHI represents and warrants to
the Company as follows:

 

Section
4.1 Corporate
Organization

 

(a) BCHI is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Georgia. BCHI has the corporate
power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to have such power or authority or to be
so licensed or qualified would not reasonably be expected to have,
individually or in the aggregate, a BCHI Material Adverse
Effect.

 

 

22

 

 

(b) Copies of the
articles of incorporation of BCHI (the “BCHI Charter”), and the
bylaws of BCHI (the “BCHI Bylaws”), as in
effect as of the date of this Agreement, have previously been made
available to the Company.

 

(c) Section 4.1(c) of the BCHI
Disclosure Letter sets forth a list of each BCHI Subsidiary,
together with the jurisdiction of organization or incorporation, as
the case may be, and the jurisdictions in which each BCHI
Subsidiary is authorized to conduct business. Each BCHI Subsidiary
(i) is duly organized or formed, as the case may be, and validly
existing under the Laws of its jurisdiction of organization or
formation, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, provincial,
territorial, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so
qualified, and (iii) has all the corporate or limited liability
company power and authority to own or lease its properties and
assets and to carry on its business as now conducted, in the case
of clauses (ii) and (iii), except as would not reasonably be
expected to have, individually or in the aggregate, a BCHI Material
Adverse Effect.

 

(d) Copies of the
articles of incorporation, notice of articles, or similar
organizational document, as applicable, of each BCHI Subsidiary, as
amended and restated, and the bylaws, or similar governing
document, as applicable, of each BCHI Subsidiary, as amended and
restated, as in effect as of the date of this Agreement, have
previously been made available to the Company.

 

Section
4.2 Capitalization

 

(a) Section 4.2(a) of the BCHI
Disclosure Letter sets forth the authorized capital stock of BCHI
by class and the number of issued and outstanding shares of each
such class (collectively, the “BCHI Capital Stock”). No
shares of BCHI Capital Stock are held in BCHI’s treasury. All
of the issued and outstanding shares of BCHI Capital Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights.

 

(b) There are no
stockholders agreements, voting trusts, voting agreements or other
similar agreements or understandings with respect to BCHI Capital
Stock to which BCHI is a party or, to the knowledge of BCHI,
between or among any of BCHI’s stockholders. Except as
contemplated under this Agreement, no Person has any outstanding
commitments, rights of first offer or refusal, anti-dilution
rights, preemptive rights, rights of participation or any similar
right to participate in the Transaction. Except as set forth in
Section 4.2(b)
of the BCHI Disclosure Letter, as of the date of this Agreement,
there are no outstanding subscriptions, options, warrants, scrip
rights to subscribe to, calls, restricted shares, phantom stock
rights, rights of first offer or refusal, rights to require
redemption or repurchase, preemptive rights, anti-dilution rights,
registration rights, rights of participation, commitments or other
agreements to which BCHI or any of BCHI Subsidiaries is a party
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire any, Equity Securities or other
securities of BCHI or any of BCHI Subsidiaries, or Contracts,
commitments or understandings by which BCHI or any of BCHI
Subsidiaries is or may become bound to issue additional Equity
Securities or other securities of BCHI or BCHI
Subsidiaries.

 

(c) There are no bonds,
debentures, notes or other indebtedness having the right to vote on
any matters on which stockholders of BCHI may vote that are issued
or outstanding as of the date of this Agreement.

 

 

23

 

 

(d) All of the issued
and outstanding shares of capital stock or other equity ownership
interests of each BCHI Subsidiary are owned by BCHI, directly or
indirectly, free and clear of any Liens (other than transfer
restrictions under applicable federal, state, provincial or
territorial securities Laws and Liens that will be released at
Closing), and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. No BCHI Subsidiary has
or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other
equity security of such BCHI Subsidiary or any securities
representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such BCHI
Subsidiary. There are no outstanding obligations to which BCHI or
any BCHI Subsidiary is a party (i) restricting the transfer of or
(ii) limiting the exercise of voting rights with respect to any
Equity Interest in any BCHI Subsidiary. Except for the BCHI
Subsidiaries, neither BCHI nor any of the BCHI Subsidiaries
directly or indirectly owns any Equity Interest in any Person,
except for non-controlling investments made in the ordinary course
of business consistent with past practice in entities which are
not, individually or in the aggregate, material to BCHI and its
Subsidiaries taken as a whole. Section 4.2(d) of the BCHI
Disclosure Letter sets forth, for each BCHI Subsidiary, (i) the
number and type of any capital stock of, or other equity or voting
interests in, such BCHI Subsidiary that are outstanding as of the
date of this Agreement and (ii) the identity of each equity holder
of capital stock or other equity or other voting interest in such
BCHI Subsidiary and the number of shares or interests of such BCHI
Subsidiary held by each such holder as of the date of this
Agreement.

 

Section
4.3 Authority; No
Violation

 

(a) BCHI has all
requisite corporate power and authority to enter into this
Agreement and to consummate the Transactions. The execution and
delivery of this Agreement and the consummation of the Transactions
have been duly and validly authorized by the Board of Directors of
BCHI, and this Agreement and the transactions contemplated hereby,
including the Merger, has been duly adopted and approved by the
holders of the BCHI capital stock, as required pursuant to the BCHI
Charter, the BCHI Bylaws and applicable Law. Except for the filing
of the Certificate of Merger with the Secretary of State of the
State of Georgia, no other corporate proceedings on the part of
BCHI are necessary to authorize the execution and delivery of this
Agreement and the consummation of the Transactions. This Agreement
has been duly and validly executed and delivered by BCHI and,
assuming this Agreement constitutes the valid and binding agreement
of the Company and Merger Sub, this Agreement constitutes the valid
and binding agreement of BCHI, enforceable against BCHI in
accordance with its terms, except as such enforceability
(i) may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding
at Law or in equity). The BCHI Charter and the BCHI Bylaws are the
only governing documents of BCHI, and there are no other Contracts
defining or governing the rights of the holders of any BCHI Capital
Stock or any of its other equity holders in their capacities as
such, and there are no Contracts between or among the holders of
BCHI Capital Stock defining or governing the rights of the BCHI
Capital Stock, as applicable. The BCHI Board has determined that
this Agreement and the Transactions are advisable and fair to and
in the best interest of BCHI stockholders.

 

(b) None of the
execution and delivery of this Agreement by BCHI, the consummation
of the Transactions, nor compliance by BCHI with any of the terms
or provisions of this Agreement, will (i) violate any
provision of the BCHI Charter, the BCHI Bylaws or
(ii) assuming that the consents, approvals and filings
referred to in Section
4.4 are duly obtained and/or made, (A) violate any Law or
Order applicable to BCHI, any of the BCHI Subsidiaries or any of
their respective material properties or assets, or any material
Permit of BCHI or a BCHI Subsidiary or by which any of the material
assets of BCHI or a BCHI Subsidiary are bound or subject, or (B)
violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance
required by, require the consent of or notice to any Person under,
or result in the creation of any Lien (other than a Permitted Lien)
upon any of the respective properties or assets of BCHI or any of
the BCHI Subsidiaries under, any BCHI Material
Contract.

 

 

24

 

 

Section
4.4 Consents and Approvals
.
Except for (a) the filing of the Certificate of Merger with the
Secretary of State of the State of Georgia pursuant to the GBCC,
(b) compliance with any applicable requirements of the HSR Act and
any other Antitrust Laws, (c) the filing with the SEC of filings
required by the applicable requirements of the Securities Act or
Exchange Act, (d) such filings with and approvals of NASDAQ to
permit the shares of Company Common Stock that are to be issued in
the Merger to be listed and issued on NASDAQ, (e) receipt of
such consents from, or registrations, declarations, notices or
filings made to or with State PSCs with respect to the BCHI
Licenses as are required in order to consummate the Merger and
other Transactions, including the Financing (collectively with the
Company State Approvals, the “State Approvals”), and
(f) receipt of such consents from, or registrations, declarations,
notices or filings made to or with the FCC with respect to the BCHI
Licenses as are required in order to consummate the Merger and
other Transactions, including the Financing (collectively with the
Company FCC Approval, the “FCC Approval”) and
(e) the consents or approvals listed in Section 4.4 of the BCHI
Disclosure Letter, no consents or approvals of or filings or
registrations with or notifications to any Governmental Entity are
necessary in connection with (i) the execution and delivery by
BCHI of this Agreement and (ii) the consummation by BCHI of
the Transactions except as would not reasonably be expected to
have, individually or in the aggregate, a BCHI Material Adverse
Effect.

 

Section
4.5 Financial Statements;
Liabilities

 

(a) The consolidated
financial statements of Birch Communications, Inc.
(“BCI”)
and the other BCHI Subsidiaries (including in each case, any
related notes and schedules thereto, where applicable) set forth in
Section 4.5 of the
BCHI Disclosure Letter (collectively, the “BCHI Financial
Statements”), fairly present in all material respects
the consolidated financial position of BCI and the other BCHI
Subsidiaries as of the date thereof, and fairly present in all
material respects the results of the consolidated operations,
changes in stockholders’ equity, cash flows and consolidated
financial position of BCI and the other BCHI Subsidiaries for the
respective fiscal periods or as of the date therein set forth,
except the BCHI Financial Statements are subject, in the case of
unaudited statements, to normal year-end audit adjustments in
amounts as permitted by GAAP. Each of the BCHI Financial Statements
(including the related notes and schedules thereto, where
applicable), as of their respective dates, complied in all material
respects with applicable accounting requirements and each of such
statements (including the related notes and schedules thereto,
where applicable) and have been prepared, in all material respects,
in accordance with GAAP consistently applied during the periods
involved, except as indicated in such statements or in the notes
thereto.

 

(b) The interim
consolidated financial statements of BCI and the other BCHI
Subsidiaries for the six months ended June 30, 2017 (collectively
the “Interim BCHI
Financial Statements”), fairly present in all material
respects the consolidated financial position of BCI and the other
BCHI Subsidiaries as of the date thereof, and fairly present in all
material respects the results of the consolidated operations,
changes in stockholders’ equity, cash flows and consolidated
financial position of BCI and the other BCHI Subsidiaries for the
respective fiscal periods or as of the date therein set forth,
except the Interim BCHI Financial Statements are subject to normal
year-end audit adjustments in amounts as permitted by GAAP. The
Interim BCHI Financial Statements have been prepared, in all
material respects, in accordance with GAAP consistently applied,
except as indicated in such statements or in the notes
thereto.

 

(c) Except for (i)
those liabilities and obligations that are in their respective
amounts reflected or reserved against on the June 30, 2017
consolidated balance sheet of BCI and the other BCHI Subsidiaries,
included in the BCHI Financial Statements or readily apparent in
the notes thereto, or (ii) liabilities or obligations incurred in
the ordinary course of business consistent with past practice since
the date of such balance sheet that are immaterial in amount,
neither BCHI nor any of the BCHI Subsidiaries have any liability or
obligation of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due and
including any off-balance sheet financings, loans, indebtedness,
make whole or similar liabilities or obligations) of a type
required to be reflected or reserved for on a consolidated balance
sheet of BCHI and the BCHI Subsidiaries prepared in accordance with
GAAP, except for liabilities or obligations that would not
reasonably be expected to have a BCHI Material Adverse
Effect.

 

 

25

 

 

(d) The unaudited
consolidated financial statements of BCHI and the other BCHI
Subsidiaries (including in each case, any related notes and
schedules thereto, where applicable) set forth in Section 4.5 of the BCHI
Disclosure Letter fairly present in all material respects the
consolidated financial position of BCHI and the other BCHI
Subsidiaries as of the date thereof, and fairly present in all
material respects the results of the consolidated operations,
changes in stockholders’ equity, cash flows and consolidated
financial position of BCHI and the other BCHI Subsidiaries for the
respective fiscal periods or as of the date therein set forth,
except that such financial statements are subject to normal
year-end audit adjustments in amounts as permitted by GAAP. Such
financial statements (including the related notes and schedules
thereto, where applicable), as of their respective dates, complied
in all material respects with applicable accounting requirements
and each of such statements (including the related notes and
schedules thereto, where applicable) and have been prepared, in all
material respects, in accordance with GAAP consistently applied
during the periods involved, except as indicated in such statements
or in the notes thereto. The unaudited consolidated financial
statements of BCHI and the other BCHI Subsidiaries for the fiscal
years ended December 31, 2014 through December 31, 2016 will not
differ in any respect (other than in deminimis respects) from the
audited consolidated financial statements of BCHI and the other
BCHI Subsidiaries for the fiscal years ended December 31, 2014
through December 31, 2016.

 

Section
4.6 Absence of BCHI Material Adverse
Effect . Since January 1,
2017 through the date of this Agreement, no event or events have
occurred that have had or would reasonably be expected to have,
individually or in the aggregate, a BCHI Material Adverse
Effect.

 

Section
4.7 Legal Proceedings

 

(a) Except as set forth
in Section 4.7 of
the BCHI Disclosure Letter, neither BCHI nor any of the BCHI
Subsidiaries is a party to any, and there are no pending or, to the
knowledge of BCHI, threatened (in writing), legal, administrative,
arbitral or other proceedings, claims, actions, suits or
governmental or regulatory investigations of any nature, against
BCHI or any of the BCHI Subsidiaries which would, if decided
adversely to BCHI or any BCHI Subsidiary, prohibit the Transactions
or reasonably be expected to result in a material liability or
obligation of, or otherwise be materially adverse to, BCHI or a
BCHI Subsidiary.

 

(b) There is no
outstanding material Order imposed upon BCHI, any of the BCHI
Subsidiaries or the assets of BCHI or any of the BCHI
Subsidiaries.

 

 

26

 

 

Section
4.8 Taxes and Tax Returns
. Each
of BCHI and the BCHI Subsidiaries has duly and timely filed all
federal, state, foreign and local Tax Returns required to be filed
by any of them (all such returns being accurate and complete in all
material respects) and has duly and timely paid all Taxes (whether
or not such Taxes were shown as due and payable on such Tax
Returns) other than Taxes that are not yet delinquent or that are
being contested in good faith, have not been finally determined and
have been adequately reserved against. Any liability with respect
to deficiencies asserted as a result of any audit, examination or
similar proceeding of BCHI or any BCHI Subsidiary Tax Return by the
IRS, the CRA, or any other taxing authority is covered by adequate
reserves in accordance with GAAP in the BCHI Financial Statements.
There are no disputes pending, or claims asserted in writing, for
Taxes or assessments upon BCHI or any of the BCHI Subsidiaries,
other than disputes, claims and assessments that are not material
to BCHI and the BCHI Subsidiaries either individually or in the
aggregate. Neither BCHI nor any of the BCHI Subsidiaries is a party
to or is bound by any Tax sharing, allocation or indemnification
agreement or arrangement (other than such an agreement or
arrangement exclusively between or among BCHI and the BCHI
Subsidiaries). Neither BCHI nor any of the BCHI Subsidiaries has
agreed to or granted any extension or waiver of the limitation
period applicable to any Taxes or Tax Returns. Neither BCHI nor any
of the BCHI Subsidiaries has distributed the stock of any
corporation, or had its stock distributed, in a transaction
described in or intended to satisfy the requirements of Section 355
of the Code within the past three (3) years. Each of BCHI and the
BCHI Subsidiaries has in all material respects properly and timely
withheld or collected and timely paid over to the appropriate
taxing authority (or each is properly holding for such timely
payment) all Taxes required to be withheld, collected and paid over
by applicable Law. There are no Liens for Taxes upon any asset of
BCHI or any BCHI Subsidiary other than Permitted Liens (within the
meaning of clause (c) of such term). Neither BCHI nor any of the
BCHI Subsidiaries is a party to or bound by any advance pricing
agreement, closing agreement or other similar material agreement or
ruling relating to Taxes nor are there any pending requests for
such rulings or similar agreements by or before a taxing authority.
Neither BCHI nor any of the BCHI Subsidiaries will be required to
include any item of income in, or exclude any item of deduction
from, taxable income for any period (or any portion thereof) ending
after the Closing Date, as a result of any: (i) change in method of
accounting for a Tax period ending on or before the Closing Date,
including under Section 481(a) of the Code or any similar provision
of applicable Law; (ii) installment sale or other open transaction
disposition made on or prior to the Closing Date; (iii) prepaid
amount received on or prior to the Closing Date; (iv) closing
agreement described in Section 7121 of the Code or any similar
provision of applicable Law executed on or prior to the Closing
Date; (v) intercompany transaction or excess loss account described
in Treasury Regulations Section 1.1502 (or any similar provision of
applicable Law); or (vi) indebtedness discharged in connection with
any election under Section 108(i) of the Code. Neither BCHI nor any
of the BCHI Subsidiaries has any liability under Treasury
Regulations Section 1.1502-6 or any similar provision of applicable
Law, as a transferee or successor, as a result of any contractual
obligation, or otherwise for any Taxes of any other Person. Neither
BCHI nor any of the BCHI Subsidiaries has obtained any consent or
clearance from or entered into any settlement or arrangement with
any taxing authority that would be binding on BCHI or any of its
Affiliates or result in a material Tax liability for BCHI or any of
its Affiliates for any Tax period (or portion thereof) ending after
the Closing Date. Neither BCHI nor any of the BCHI Subsidiaries has
engaged in a “reportable transaction,” as defined in
Section 6707A(c)(1) of the Code or Treasury Regulations Section
1.6011-4(b), or any transaction requiring disclosure under a
similar provision of applicable Law. Within the past three (3)
years, no written claim or nexus inquiry has been made by a taxing
authority in a jurisdiction where BCHI or any BCHI Subsidiary does
not file Tax Returns that any of them is or may be subject to tax
by that jurisdiction or that any of them has a duty to collect
Taxes. No facts, circumstances or events exist or have existed that
have resulted in or may result in the applications of any of
sections 79 to 80,04 of the ITA to BCHI or any BCHI Subsidiary.
Neither BCHI nor any BCHI Subsidiary is liable for Taxes of any
other person, and neither BCHI nor any BCHI Subsidiary has acquired
property from any person in circumstances where BCHI did or could
become liable for any Taxes of such person. The value of the
consideration paid or received by BCHI and each BCHI Subsidiary for
the acquisition, sale, transfer or provision of property (including
intangibles) or the provision of services (including financial
transactions) from or to a person with whom BCHI or BCHI
Subsidiary, as applicable, was not dealing at arm’s length
for purposes of the ITA was equal to the estimated fair market
value of such property acquired, provided or sold or services
purchased or provided. Neither BCHI nor any BCHI Subsidiary has
claimed any reserves for purposes of the ITA (or analogous
provincial or similar provisions) for the most recent taxation year
ending prior to the date hereof. Neither BCHI nor any BCHI
Subsidiary has made any payment, or is obligated to make any
payment, and neither BCHI nor any BCHI Subsidiary is party to any
agreement under which BCHI or such BCHI Subsidiary, as applicable,
could be obligated to make any payment, that, in each case, may not
be deductible by virtue of section 67 or 78 of the ITA or any
analogous provincial or similar provision. BCHI and the BCHI
Subsidiaries have duly registered with the applicable Governmental
Authority for Sales Tax purposes and at all times complied with all
Sales Tax obligations and requirements imposed pursuant to
applicable Law. All input tax credits and refunds claimed by BCHI
and each BCHI Subsidiary for Sales Tax purposes were calculated in
accordance with applicable Law. BCHI and the BCHI Subsidiaries have
complied with all registration, reporting, payment, collection and
remittance requirements in respect of Sales Taxes in accordance
with applicable Law. Except as set forth in Section 4.8 of the BCHI
Disclosure Letter, (i) BCHI is, and has been at all times during
its existence, a validly electing S corporation within the meaning
of Sections 1361 and 1362 of the Code, (ii) each of the BCHI
Subsidiaries is, and has been during its respective existence, an
entity disregarded as separate from BCHI for tax purposes,
(iii) BCHI has no potential liability for any Tax under
Section 1374 of the Code, and (iv) neither BCHI nor any BCHI
Subsidiary has ever been a member of a consolidated, combined or
unitary group for federal, state or local income tax
purposes.

 

 

27

 

 

Section
4.9 Employee Benefit Plans;
Labor

 

(a) Except as set forth
in Section 4.9(a)
of the BCHI Disclosure Letter, none of BCHI, any BCHI Subsidiary,
nor any BCHI Commonly Controlled Entity maintains or contributes to
(i) any nonqualified deferred compensation, post-termination
or retirement plans for employees, (ii) any qualified
“defined contribution plans” (as such term is defined
under Section 3(34) of ERISA (whether or not subject to ERISA)),
(iii) any other defined contribution pension plan in the relevant
country, state, province, territory or the like, (iv) any
“defined benefit plans” (as such term is defined under
Section 3(35) of ERISA (whether or not subject to ERISA)), or (v)
any other defined benefit pension plan in the relevant country,
state, province, territory or the like (the plans set forth in
clauses (ii), (iii), (iv) and (v) are collectively referred to
herein as the “BCHI
Pension Plans”), (vi) any “employee welfare
benefit plans” (as such term is defined under Section 3(1) of
ERISA, or (vii) any other group insurance benefit arrangements in
the relevant country, state, province, territory or the like
(whether or not subject to ERISA)) (the “BCHI Welfare Plans”), or
(viii) any compensatory or benefit plans or programs, or
equity or equity-based award plans, including written individual
contracts, employee agreements, plans, programs, or arrangements,
whether funded or unfunded, written or oral, that currently are, or
within the past six (6) fiscal years of BCHI or any BCHI
Subsidiary, as appropriate, have been, maintained, contributed to
or sponsored (or are or have been required to be maintained,
contributed to or sponsored) in whole or in part, by any of BCHI,
the BCHI Subsidiaries and the BCHI Commonly Controlled Entities,
for the benefit of, providing any remuneration or benefits to, or
covering any current or former employee or retiree, any dependent,
spouse or other family member or beneficiary of such employee or
retiree, or any director, independent contractor, member, officer,
consultant of any of BCHI, the BCHI Subsidiaries and the BCHI
Commonly Controlled Entities, or under (or in connection with)
which BCHI or any BCHI Subsidiary or any of the BCHI Commonly
Controlled Entities may have any liability (collectively clauses
(i) through
(viii) are referred
to as “BCHI Benefit
Plans”).

 

(b) Each BCHI Pension
Plan that is intended to meet the requirements of a
“qualified plan” under Sections 401(a) and 501(a) of
the Code has either received a favorable determination letter from
the IRS that such BCHI Pension Plan is so qualified or has
requested such a favorable determination letter within the remedial
amendment period of Section 401(b) of the Code, or in the case of a
BCHI Pension Plan that is maintained pursuant to the adoption of a
master, prototype, or volume submitter plan document, the sponsor
of such master or prototype or volume submitter plan document has
obtained from the National Office of the IRS an opinion or
notification letter stating that the form of the master, prototype
or volume submitter document is acceptable for the establishment of
a qualified retirement plan. Each BCHI Benefit Plan, including any
amendments thereto, that is eligible for approval by, and/or
registration for and/or qualification for special Tax status with,
the appropriate taxation, social security and/or supervisory
authorities in the relevant country, state, province, territory or
the like (each, a “BCHI Approval”) has
received such BCHI Approval, or there remains a period of time in
which to obtain such BCHI Approval retroactive to the date of any
amendment or change in Law that has not previously received such
BCHI Approval. The BCHI Benefit Plans comply in form and in
operation, and have been administered in all material respects in
compliance with their terms and with the requirements of, as
applicable, the Code, ERISA, the Patient Protection and Affordable
Care Act and all other applicable Laws, and none of BCHI, the BCHI
Subsidiaries and its BCHI Commonly Controlled Entities have
received any notice from any Governmental Entity questioning or
challenging such compliance that has not been
resolved.

 

(c) To the knowledge of
BCHI, there have been no non-exempt “prohibited
transactions” (as that term is defined in Section 406 of
ERISA or Section 4975 of the Code) involving any of the BCHI
Benefit Plans. Except as set forth in Section 4.9(c) of the BCHI
Disclosure Letter, none of the assets of any BCHI Pension Plan or
BCHI Welfare Plan trust is an “employer security”
(within the meaning of Section 407(d)(1) of ERISA) or
“employer real property” (within the meaning of Section
407(d)(2) of ERISA).

 

(d) (i) Neither BCHI
nor any other Person that, together with BCHI or any BCHI
Subsidiary, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code or any other applicable Law (a
“BCHI Commonly
Controlled Entity”) (A) has sponsored, maintained
or contributed to, or been obligated to maintain or contribute to,
or has any liability under, any BCHI Pension Plan that is subject
to Title IV of ERISA or Section 412 or Section 430 of the Code or
is otherwise a defined benefit pension plan in the relevant
country, state, province, territory or the like, and (B) has any
unsatisfied liability imposed under Title IV of ERISA, and (ii) all
contributions (including all employer contributions and employee
salary reduction contributions) or insurance premiums that are due
have been paid with respect to each BCHI Benefit Plan, and all
contributions or insurance premiums for any period ending on or
before the Closing Date that are not yet due have been paid with
respect to each such BCHI Benefit Plan or accrued, in each case in
accordance with the past custom and practice of BCHI, and with
applicable Law and administrative agency regulations.

 

 

28

 

 

(e) Neither BCHI nor
any BCHI Subsidiary has communicated a commitment (whether orally
or in writing, whether as part of the collective bargaining process
or not) generally to employees, any employee representation body or
specifically to any employee regarding (i) any future increase
of benefit levels (or creation of new benefits) with respect to the
BCHI Benefit Plans beyond those reflected in such plans, or (ii)
the adoption or creation of any new benefit plan.

 

(f) None of BCHI, the
BCHI Subsidiaries and the BCHI Commonly Controlled Entities
currently contributes to or has had any liability or potential
liability with respect to (i) any “multiemployer plan”
(as defined in Section 3(37) of ERISA) or (ii) any multi-employer
pension plans or multi-employer benefit plans in the relevant
country, state, province, territory or the like, during the five
(5)-year period ending as of the Closing Date.

 

(g) Except as set forth
in Section 4.9(g)
of the BCHI Disclosure Letter, none of the BCHI Welfare Plans
obligates BCHI or any BCHI Subsidiary to provide any current
employee or former employee of BCHI or a BCHI Subsidiary (or any
dependent thereof) any life insurance or medical or health benefits
after his or her termination of employment with BCHI or any BCHI
Subsidiary, other than as required under COBRA or any similar state
Law. All amounts required to be included in BCHI’s most
recent financial statements in respect of any BCHI Welfare Plan
have been included.

 

(h) No BCHI Benefit
Plan (excluding for this purpose any individual employment
agreement or arrangement) has a provision, and no commitment
(whether oral or in writing) has been made, that restricts BCHI or
BCHI Subsidiaries from amending or terminating such BCHI Benefit
Plan with respect to the accrual of future benefits; except that
the legal obligation to bargain over mandatory subjects of
bargaining under any Law will not be considered such a
restriction.

 

(i) No amounts payable
under any BCHI Benefit Plan will fail to be deductible for federal
income tax purposes by virtue of Section 280G of the Code or will
fail to be deductible for tax purposes under any other applicable
Law. Except as set forth in Section 4.9(i) of the BCHI
Disclosure Letter, consummation of the Transactions will not (i)
entitle any current employee or former employee of BCHI or a BCHI
Subsidiary (or spouse, dependent or other family member of such
employee) to severance pay, unemployment compensation, or any
payment contingent upon a change in control or ownership of BCHI or
BCHI Subsidiaries, or (ii) accelerate the time of payment or
vesting, or increase the amount, of any compensation due to any
such current employee or former employee of BCHI or a BCHI
Subsidiary (or any spouse, dependent, or family member of such
employee). Neither BCHI nor any BCHI Subsidiary has any obligation
to provide, and no BCHI Benefit Plan or other agreement provides
any Person with any amount of additional compensation or gross-up
if such Person is provided with amounts subject to excise or
additional taxes, interest or penalties incurred pursuant to
Sections 4999 or 409A of the Code or due to the failure of any
payment to be deductible under Section 280G of the
Code.

 

(j) Each BCHI Benefit
Plan that is a “nonqualified deferred compensation
plan” (within the meaning of Section 409A(d)(1) of the Code)
subject to Section 409A of the Code is and has been, during the
five years prior to the date hereof, in all material respects in
documentary and operational compliance with Section 409A of the
Code and any guidance issued with respect thereto.

 

(k) BCHI and the BCHI
Subsidiaries have correctly classified Persons engaged as
consultants or independent contractors for employment purposes and
have correctly administered Section 414(n) of the Code with respect
to the BCHI Pension Plans.

 

 

 

29

 

 

(l) BCHI has complied
in all material respects with all Laws concerning employment rights
and obligations. Section
4.9(l) of the BCHI Disclosure Letter lists each collective
bargaining agreement to which BCHI or a BCHI Subsidiary is a party
in respect of the employees of BCHI or a BCHI Subsidiary on the
date of this Agreement, and any membership of BCHI or a BCHI
Subsidiary in any employers’ organization which is entitled
to conclude a collective bargaining agreement on behalf of its
member companies, and any collective bargaining agreement which,
although BCHI or BCHI Subsidiary is not a party to it, applies due
to standard reference in employment agreements or by state decree
as a generally applicable collective bargaining agreement. No
collective bargaining agreement or shop agreement is being
negotiated or renegotiated in any material respect by BCHI or any
of the BCHI Subsidiaries. There is no labor dispute, work stoppage,
slow down or strike against BCHI or any of the BCHI Subsidiaries
pending or, to the knowledge of BCHI, threatened which would
interfere with the respective business activities of BCHI or any of
the BCHI Subsidiaries (and no work stoppages, slow downs, labor
disputes or strikes occurred during the last five years). As of the
date of this Agreement, to the knowledge of BCHI, neither BCHI nor
any of the BCHI Subsidiaries has committed during the three years
prior to the date hereof any unfair labor practice in connection
with the operation of the respective businesses of BCHI or any of
the BCHI Subsidiaries, and there is no charge or complaint against
BCHI or any of the BCHI Subsidiaries by the National Labor
Relations Board or any comparable Governmental Entity or in
relation to any labor rules and regulations or any other competent
labor authority pending or threatened in writing.

 

(m) Section 4.9(m) of the BCHI
Disclosure Letter sets forth a true and complete list of all
material (i) severance or employment agreements with
directors, officers, employees, or consultants of BCHI or any BCHI
Subsidiary, (ii) severance programs of BCHI or any BCHI
Subsidiary with or relating to its employees, or (iii) plans,
programs or other agreements of BCHI or any BCHI Subsidiary with or
relating to its directors, officers, employees or consultants which
contain change in control provisions.

 

(n) Except as set forth
in Section 4.9(n)
of the BCHI Disclosure Letter, there are no unresolved claims or
disputes under the terms of, or in connection with, the BCHI
Benefit Plans (other than routine undisputed claims for benefits
under the BCHI Benefit Plans or other immaterial claims or disputes
that are being handled in the normal course of plan
administration), and no action, legal or otherwise, has been
commenced with respect to any claim (including claims for benefits
under BCHI Benefit Plans). To the knowledge of BCHI, no facts exist
which could give rise to any actions, audits, suits or claims
(other than in the ordinary course).

 

(o) No BCHI Benefit
Plan is or at any time was funded through a “welfare benefit
fund,” as defined in Section 419(e) of the Code, and no
benefits under any BCHI Benefit Plan are or at any time have been
provided through a “voluntary employees’ beneficiary
association” (within the meaning of Section 501(c)(9) of the
Code) or a “supplemental unemployment benefit plan”
(within the meaning of Section 501(c)(17) of the
Code).

 

Section
4.10 Compliance with
Law

 

(a) BCHI and each of
the BCHI Subsidiaries is, and at all times during the five (5)
years prior to the date hereof, have been in compliance in all
material respects with all Laws and Orders applicable to BCHI or
any of the BCHI Subsidiaries or by which any property or asset of
BCHI or any BCHI Subsidiary is bound. To the knowledge of BCHI, no
investigation by any Governmental Entity with respect to BCHI or
any BCHI Subsidiary is pending, nor has any Governmental Entity
indicated to BCHI an intention to conduct any such investigation
with respect to, either individually or in the aggregate, material
matters or material liabilities.

 

(b)  None of BCHI
or any of the BCHI Subsidiaries has received any notice of any
alleged violation of any Laws that remains unresolved or
outstanding, except where any such notice, individually or in the
aggregate, would not reasonably be expected to have a BCHI Material
Adverse Effect.

 

 

30

 

 

Section
4.11 Environmental
Matters

 

. BCHI
and each of the BCHI Subsidiaries is, and at all times have been,
in compliance in all material respects with all Environmental Laws.
BCHI and the BCHI Subsidiaries hold all Permits required under
applicable Environmental Laws to permit BCHI and the BCHI
Subsidiaries to conduct their businesses as currently conducted.
The business and operations of BCHI and the BCHI Subsidiaries are
in compliance with all such Permits. No notice of violation,
notification of liability, demand, request for information,
citation, summons or order has been received by BCHI or any BCHI
Subsidiary, no complaint has been filed, no penalty or fine has
been assessed, and no investigation, action, claim, suit or
proceeding is pending or, to the knowledge of BCHI, threatened by
any Person involving BCHI or any BCHI Subsidiary relating to or
arising out of any Environmental Law. No Hazardous Substances are
or were located and no disposal or Releases of Hazardous Substances
have occurred at, on, above, under or from any properties currently
or, to the knowledge of BCHI at the time of the cessation of such
ownership, lease, operation or use, formerly owned, leased,
operated or used by BCHI, any BCHI Subsidiary or any predecessors
in interest that, in each case, has resulted in or would reasonably
be expected to result in any material cost, liability or obligation
of BCHI or any BCHI Subsidiary under any Environmental Law. Neither
BCHI nor any BCHI Subsidiary, nor, to the knowledge of BCHI, any
other Person, has caused or taken any action that could reasonably
be expected to result in any material liability or obligation
relating to (i) the environmental conditions at, on, above, under,
or about any properties or assets currently or formerly owned,
leased, operated or used by BCHI or any BCHI Subsidiary or any of
their respective predecessors in interest or (ii) the past or
present use, management, handling, transport, treatment,
generation, storage, disposal, Release or threatened Release of
Hazardous Substances. BCHI has provided to the Company all material
environmental site assessments, audits, investigations and studies
in their possession, custody or control relating to property or
assets currently or formerly owned, leased, operated or used by
BCHI or any BCHI Subsidiary. Neither BCHI nor any BCHI Subsidiary
has been in business other than those related to the provision of
communication services that would reasonably be expected to present
environmental issues of a materially different scope or magnitude
than those presented in the provision of communication services.
Without limiting the generality of the foregoing, neither BCHI nor
any BCHI Subsidiary has operated or currently operates (i) any
manufacturing facilities, (ii) any facilities that are or have been
permitted under the Resource Conservation and Recovery Act or (iii)
any business that manages the hazardous wastes of any unrelated
party. The representations contained in the immediately prior
sentence of this Section
4.11 shall not be deemed to be breached unless the operation
or ownership of such other business or businesses has resulted in
any material cost, liability or obligation of BCHI or any BCHI
Subsidiary under any Environmental Law.

 

Section
4.12 Material Contracts

 

(a) Except for
Contracts listed in Section 4.12(a) of the BCHI
Disclosure Letter (all Contracts set forth, or required to be set
forth, in Section
4.12(a) of the BCHI Disclosure Letter being referred to
herein as a “BCHI
Material Contract”), as of the date of this Agreement,
neither BCHI nor any of the BCHI Subsidiaries is a party to or
bound by any Contract that is:

 

(i) a
“non-compete,” or similar Contract that restricts or
purports to restrict the geographic area in which BCHI or any of
the BCHI Subsidiaries may conduct any line of business, or that
requires the referral of business opportunities by BCHI or any of
the BCHI Subsidiaries;

 

(ii) a
joint venture, partnership or limited liability company Contract or
other similar Contract relating to the formation, creation,
operation, management or control of any joint venture, partnership
or limited liability company, other than any such Contract solely
between or among BCHI and the BCHI Subsidiaries;

 

(iii) a
Contract (other than a future contract, option contract or other
derivative transaction) that involves future expenditures by BCHI
or any BCHI Subsidiary of more than $2,500,000 in any one year
period that cannot be terminated on less than 90 days’ notice
without material payment or penalty;

 

(iv) an
acquisition Contract that contains “earn-out” or other
contingent payment obligations that could reasonably be expected to
result in future payments by BCHI or a BCHI Subsidiary in excess of
$2,500,000;

 

 

31

 

 

(v) a Contract relating
to indebtedness for borrowed money or any financial guaranty
involving an amount in excess of $2,500,000;

 

(vi) a
Contract for the lease or sublease of real property material to the
business of BCHI and the BCHI Subsidiaries;

 

(vii) a
Contract pursuant to which BCHI or any BCHI Subsidiary (A) is
granted or obtains any right to use any material Intellectual
Property (excluding standard form Contracts granting rights to use
readily available shrink wrap or click wrap software having an
acquisition price of less than $100,000 per Contract), (B) is
restricted in its right to use or register any material BCHI
Intellectual Property, or (C) permits any other Person to use,
enforce, or register any material BCHI Intellectual Property, in
each case including any license agreements, coexistence agreements,
and covenants not to sue;

 

(viii) a
Contract relating to (A) the sale, outbound license or outbound
lease by BCHI or any BCHI Subsidiary of any material indefeasible
rights of use of capacity infrastructure or peering arrangements or
(B) the purchase, inbound license or inbound lease by BCHI or any
BCHI Subsidiary of any material indefeasible rights of use of
capacity infrastructure or peering arrangements;

 

(ix) a
collective bargaining agreement;

 

(x) a Contract with
material outstanding liabilities or obligations relating to the
disposition or acquisition by BCHI or any BCHI Subsidiary of assets
or properties in excess of $2,500,000 not made in the ordinary
course of business; or

 

(xi) any
employment, severance, consulting or other Contract with an
employee or former employee, officer or director of BCHI or any
BCHI Subsidiary which will require the payment of amounts by BCHI
or any BCHI Subsidiary in excess of $150,000 per
annum.

 

(b) Neither BCHI nor
any BCHI Subsidiary is in breach of or default under the terms of
any BCHI Material Contract in any material respect. To the
knowledge of BCHI, no other party to any BCHI Material Contract is
in breach of or default under the terms of any BCHI Material
Contract in any material respect. Each BCHI Material Contract is a
valid and binding obligation of BCHI or any BCHI Subsidiary that is
a party thereto and, to the knowledge of BCHI, is in full force and
effect, subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at Law or in
equity). True, correct and complete copies of each BCHI Material
Contract (including all modifications and amendments thereto and
waivers thereunder) have been made available to the
Company.

 

 

32

 

 

Section
4.13 Intellectual Property; Data
Privacy

 

(a) Either BCHI or a
BCHI Subsidiary owns, and has all right, title, and interest in,
duly licenses, or otherwise possesses all rights necessary to use,
all Intellectual Property used in their respective businesses as
currently conducted (collectively, the “BCHI Intellectual
Property”).

 

(b) Section 4.13(b)(i) of the BCHI
Disclosure Letter sets forth all BCHI Registered Intellectual
Property. All required filings and fees related to such BCHI
Registered Intellectual Property have been timely filed with and
paid to the relevant Governmental Entities and authorized
registrars. Section
4.13(b)(ii) of the BCHI Disclosure Letter sets forth all
Intellectual Property owned or purported to be owned by BCHI or any
BCHI Subsidiary that is not BCHI Registered Intellectual Property
and which is material to the businesses of BCHI and BCHI
Subsidiaries as currently conducted (collectively, together with
the BCHI Registered Intellectual Property, the “BCHI Owned Intellectual
Property”).

 

(c) There are no
pending or, to the knowledge of BCHI, threatened claims in writing
by any Person alleging infringement or misappropriation by BCHI or
any BCHI Subsidiary arising from their use of the BCHI Intellectual
Property, and to the knowledge of BCHI, the conduct of the
businesses of BCHI and BCHI Subsidiaries and their products or
services do not infringe, misappropriate, dilute or otherwise
violate any Intellectual Property rights of any
Person.

 

(d) Neither BCHI nor
any BCHI Subsidiary has made any claim during the past three years
of any misappropriation or infringement by any third party of its
rights to or in connection with the use of any BCHI Intellectual
Property; and (ii) to the knowledge of BCHI, no Person is
infringing or misappropriating any BCHI Intellectual
Property.

 

(e) BCHI and the BCHI
Subsidiaries have taken reasonable measures to protect the
confidentiality of their material Trade Secrets including requiring
employees, contractors or other Persons having access thereto to
execute written nondisclosure agreements. To the knowledge of BCHI,
none of the material Trade Secrets of BCHI and the BCHI
Subsidiaries have been disclosed or authorized to be disclosed by
BCHI or the BCHI Subsidiaries to any third party other than
pursuant to a valid and enforceable nondisclosure agreement. To the
knowledge of BCHI, no third party to any nondisclosure agreement
with BCHI or any BCHI Subsidiary is in material breach, violation
or default.

 

(f) Each Person who
contributed, developed or conceived any BCHI Owned Intellectual
Property has done so pursuant to a valid and enforceable written
agreement that (i) protects the confidential information disclosed
by BCHI and its Subsidiaries and (ii) grants BCHI and its
Subsidiaries exclusive ownership of the Person’s
contribution, development or conception and waives any
non-assignable interests in such contribution, development or
conception, such as moral rights.

 

(g) During the three
(3) years prior to the date hereof, to the knowledge of BCHI, there
has been no act or omission in respect of the use or enforcement of
the BCHI Owned Intellectual Property that would reasonably be
expected to result in the abandonment, cancellation or
unenforceability of any such Intellectual Property.

 

 

33

 

 

(h) BCHI and the BCHI
Subsidiaries, and to the knowledge of BCHI all of its and their
providers of information technology services, have (i) complied in
all material respects with their respective published privacy
policies and internal privacy policies and guidelines and all
applicable Laws relating to privacy, data protection, user data or
Personal Data, including Personal Data of customers, employees,
contractors and third parties who have provided information to BCHI
or any BCHI Subsidiary; and (ii) implemented and maintained, in all
material respects, a comprehensive security plan that includes
industry standard administrative, technical and physical safeguards
to ensure that Personal Data is protected against loss, damage,
unauthorized access, unauthorized use, unauthorized modification,
or other misuse. There has been no material loss, damage,
unauthorized access, unauthorized use, unauthorized modification,
or other breach of security of Personal Data maintained by or on
behalf of BCHI and the BCHI Subsidiaries. Within the past three (3)
years, no Person has made any material claim or commenced any
Action with respect to, and BCHI and the BCHI Subsidiaries have
not, to the knowledge of BCHI, experienced any incident relating
to, any actual or suspected loss, damage, unauthorized access,
unauthorized use, unauthorized modification, or breach of security
of Personal Data maintained or processed by or on behalf of BCHI
and the BCHI Subsidiaries. Except for disclosures of information
permitted or required by privacy Laws or authorized by the provider
of Personal Data, to the knowledge of BCHI, neither BCHI nor any of
the BCHI Subsidiaries has shared, sold, rented or otherwise made
available, and does not share, sell, rent or otherwise make
available, to third parties any Personal Data.

 

(i) BCHI and the BCHI
Subsidiaries have implemented business continuity and disaster
recovery plans and have arranged for back-up data processing
services adequate to meet their data processing needs in the event
that the computer systems, networks, hardware, software, databases,
websites, and equipment of BCHI or the BCHI Subsidiaries or any of
their material components is rendered temporarily or permanently
inoperative as a result of a natural or other disaster. The
computer systems, networks, hardware, software, databases,
websites, and equipment of BCHI or the BCHI Subsidiaries have not
suffered any failures, errors or breakdowns within the past three
(3) years that have caused any material disruption or interruption
in the business of BCHI and the BCHI Subsidiaries.

 

Section
4.14 Title to Properties;
Assets . BCHI and each of
the BCHI Subsidiaries have good and valid fee simple title to, or
valid leasehold interest in, its material tangible properties and
assets, except for such properties and assets as are no longer used
or useful in the conduct of its business or as have been disposed
of in the ordinary course of business. All such material tangible
properties and assets, other than properties and assets in which
BCHI or any BCHI Subsidiary have a leasehold interest, are free and
clear of all Liens other than Permitted Liens or Liens that will be
released at Closing.

 

Section
4.15 Real Property
.
Section 4.15 of the
BCHI Disclosure Letter sets forth a list of all real property
currently owned or leased by BCHI or any BCHI Subsidiaries and
indicates whether each such parcel of real property is owned or
leased. BCHI or one of the BCHI Subsidiaries has good and fee
simple title to all real property owned by BCHI or any of the BCHI
Subsidiaries as of the date of this Agreement (the
“BCHI Owned Real
Property”) and valid leasehold estates in all real
property leased or subleased (whether as tenant or subtenant) by
BCHI or any of the BCHI Subsidiaries as of the date of this
Agreement (including improvements thereon, the “BCHI Leased Real
Property”), in each case, free and clear of all Liens,
save only for Permitted Liens. Except as would not reasonably be
expected to have, individually or in the aggregate, a BCHI Material
Adverse Effect, BCHI or one of the BCHI Subsidiaries has exclusive
possession of each BCHI Leased Real Property and BCHI Owned Real
Property, other than any use and occupancy rights granted to
third-party owners, tenants, guests, hosts or licensees pursuant to
agreements with respect to such real property. There are no
Contracts to sell, transfer or otherwise dispose of any of the BCHI
Owned Real Property or the BCHI Leased Real Property, or to
purchase or acquire any other interest in any real
property.

 

Section
4.16 Regulatory Matters

 

(a) Except as set forth
on Section 4.16(a)
of the BCHI Disclosure Letter, and except with respect to Permits,
including those required under applicable Environmental Laws (as to
which certain representations and warranties are made pursuant to
Section 4.11), BCHI
and the BCHI Subsidiaries hold all Permits issued by the FCC, State
PSCs, the CRTC or other relevant Canadian federal or provincial
Governmental Entities (“Canadian Authorities”),
and all other material regulatory Permits, including franchises,
ordinances and other agreements granting access to public rights of
way, issued or granted to BCHI or any of the BCHI Subsidiaries by a
Governmental Entity (the “BCHI Licenses”) that are
required for BCHI and each of the BCHI Subsidiaries to conduct its
business, as presently conducted, in all material
respects.

 

 

34

 

 

(b) Each BCHI License
is in full force and effect and has not been suspended, revoked,
cancelled or adversely modified. No BCHI License is subject to (i)
any conditions or requirements that have not been imposed generally
upon licenses in the same service, unless such conditions or
requirements are set forth on the face of the applicable
authorization, or (ii) any pending proceeding by or before any
Governmental Entity, including the FCC, State PSCs, the CRTC or
other Canadian Authorities to suspend, revoke or cancel such BCHI
License, or any judicial review of a decision by any Governmental
Entity, including the FCC, State PSCs, the CRTC or other Canadian
Authorities with respect thereto. To the knowledge of BCHI, there
has not been any event, condition or circumstance that would
preclude any BCHI License from being renewed in the ordinary course
(to the extent that such BCHI License is renewable by its
terms).

 

(c) The licensee of
each BCHI License is in compliance in all material respects with
such BCHI License and has fulfilled and performed all of its
material obligations with respect thereto, including all reports,
notifications and applications required by any Law, including the
Communications Act or FCC Rules or State Telecommunications Laws,
the PSC Rules, the Telecommunications Act (Canada), the
Radiocommunication Act
(Canada) and the rules, regulations, written policies and Orders of
the CRTC and other Canadian Authorities, and the payment of all
regulatory fees and contributions, except as permitted by
applicable exemptions, waivers or similar concessions or
allowances. Without limiting the foregoing, the licensee of each
BCHI License is in material compliance with the USF Programs,
CALEA, the FCC’s regulations concerning CPNI and the Canadian
competitive local exchange carrier obligations. All reports and
other submissions required in connection with the USF Programs,
CALEA, CPNI regulations and the Canadian competitive local exchange
carrier obligations, including contribution remittances, have been
timely filed in materially true, correct and complete form. To the
knowledge of BCHI and the BCHI Subsidiaries, there are no pending
or threatened investigations, inquiries, audits, examinations or
other proceedings in connection with the performance of BCHI and
the BCHI Subsidiaries of their USF Programs, CALEA, CPNI
obligations and the Canadian competitive local exchange carrier
obligations.

 

(d) Except as set forth
in Section 4.16(d)
of the BCHI Disclosure Letter, neither BCHI nor any BCHI Subsidiary
has (i) implemented, or been alleged or found to have implemented
any Slamming or (ii) Cramming.

 

(e) Except as set forth
in Section 4.16(e)
of the BCHI Disclosure Letter, BCHI and all BCHI Subsidiaries have
timely complied with any compensation, restoration, reimbursement,
reporting, or other obligations arising in connection with public
and private right-of-way access and pole attachment
agreements.

 

(f) Except as set forth
in Section 4.16(f)
of the BCHI Disclosure Letter, BCHI and all BCHI Subsidiaries have
timely submitted all required international traffic and circuit
status reports in materially true, correct and complete
form.

 

(g) Except as set forth
in Section 4.16(g)
of the BCHI Disclosure Letter, the licensee of each BCHI License is
in material compliance with the applicable requirements of federal
and state NOR requirements. All reports and other submissions
required in connection with federal and state NOR requirements have
been timely filed in materially true, correct and complete form. To
the knowledge of BCHI and the BCHI Subsidiaries, there are no
pending or threatened investigations, inquiries, audits,
examinations or other proceedings in connection with the
performance of BCHI and the BCHI Subsidiaries of their NOR
requirements.

 

(h) BCHI or a wholly
owned Subsidiary of BCHI directly or indirectly owns all of the
Equity Interests and controls all of the voting power and
decision-making authority of each licensee of the BCHI Licenses. No
BCHI License, Order or other agreement, obtained from, issued by or
concluded with any State PSC would impose restrictions on the
ability of any BCHI Subsidiary to make payments, dividends or other
distributions to BCHI or any BCHI Subsidiary that limits, or would
reasonably be expected to limit, the cash funding and management
alternatives of BCHI on a consolidated basis in a manner
disproportionate to restrictions applied by other State
PSCs.

 

 

35

 

 

Section
4.17 Interconnection
Agreements . BCHI or a BCHI
Subsidiary has entered into, with incumbent local exchange
carriers, or other non-incumbent carriers, all interconnection
agreements, line sharing agreements, line splitting agreements and
other Contracts (the “BCHI Interconnection
Agreements”) that are necessary to conduct their
respective businesses as currently conducted. All BCHI
Interconnection Agreements entered into pursuant to Sections 251
and 252 of the Telecommunications Act, including amendments to
implement the FCC’s Triennial Review Remand Order, to the
extent such amendments have been adopted, include the general
terms, conditions and pricing for any UNEs, collocation or other
network facilities or carrier services provided under Sections 251
and 252 of the Telecommunications Act. All BCHI Interconnection
Agreements have been approved by the applicable Governmental
Entity, including the CRTC or the applicable State PSC, when
required. BCHI and any BCHI Subsidiary, as applicable, that is a
party to a BCHI Interconnection Agreement has performed, in all
material respects, all material obligations required to be
performed by it under such BCHI Interconnection
Agreement.

 

Section
4.18 Network Facilities
.
Except as set forth in Section 4.18 of the BCHI
Disclosure Letter:

 

(a) All BCHI Owned
Network Facilities and BCHI Third-Party Network Facilities:
(i) are in all material respects in good working order and
condition and are without any material defects individually and in
the aggregate; (ii) are, individually and in the aggregate,
operated, installed, and maintained by BCHI, a BCHI Subsidiary, or
their contractors in a manner that is in compliance in all material
respects with (x) generally accepted industry standards for
the United States or Canadian communications industry, as
applicable, (y) performance requirements in service agreements
with customers of BCHI and the BCHI Subsidiaries, and (z) all
Laws, and (iii) comply, individually and in the aggregate, in
all material respects with applicable performance
standards.

 

(b) BCHI or a BCHI
Subsidiary owns, free and clear of all Liens (other than Permitted
Liens and Liens to be discharged at Closing), all right, title and
interest in BCHI Owned Network Facilities. No third party may
revoke or otherwise encumber or interfere in any material respect
with such right, title, and interest.

 

(c) (i) Each
Contract under which any third party provides Network Facilities,
including leases, licenses, indefeasible rights of use of capacity
or infrastructure, pole attachment agreements and Right-of-Way
Agreements (a “BCHI
Network Facility Agreement”), to which BCHI or any
BCHI Subsidiary is a party, is a valid, legally binding and
enforceable agreement and is in full force and effect, and neither
BCHI nor any BCHI Subsidiary is in material breach of or material
default under any BCHI Network Facility Agreement, (ii) no
event has occurred which, with notice or lapse of time, would
constitute a material breach or material default by BCHI or any
BCHI Subsidiary or permit termination, revocation, other
interference with performance of, modification or acceleration by
any third party of any BCHI Network Facility Agreement, and
(iii) as of the date hereof, no third party has repudiated,
revoked, terminated, or otherwise materially interfered with
performance of or has the right to terminate, repudiate, revoke, or
otherwise materially interfere with the performance of any BCHI
Network Facility Agreement. Any notices or other actions required
to be taken to renew the term of a BCHI Network Facility Agreement
for any upcoming renewal term have been taken or given in the
manner and within the time provided in such BCHI Network Facility
Agreement (or the time period provided for giving of such notice or
to undertake such action has not expired) to effectively renew the
term of such BCHI Network Facility Agreement for the upcoming term
thereof to the extent that such BCHI Network Facility Agreement is
renewable by its terms and BCHI or the applicable BCHI Subsidiary
intends to renew such BCHI Network Facility Agreement. To the
knowledge of BCHI, as of the date of this Agreement, BCHI and the
BCHI Subsidiaries hold all BCHI Network Facility Agreements
necessary to conduct BCHI’s business and no event has
occurred, or circumstance exists, that, but for the passage of time
or giving of notice, would preclude any BCHI Network Facility
Agreement from being renewed in accordance with the terms thereof
to the extent BCHI or the applicable BCHI Subsidiary intends to
renew such BCHI Network Facility Agreement.

 

 

36

 

 

Section
4.19 Insurance . BCHI and the BCHI
Subsidiaries maintain insurance in such amounts and against such
risks as BCHI believes to be customary for the industries in which
it and the BCHI Subsidiaries operate. Neither BCHI nor any of the
BCHI Subsidiaries has received notice of any pending or threatened
cancellation with respect to any such material insurance policy,
and each of BCHI and the BCHI Subsidiaries is in compliance in all
material respects with all conditions contained
therein.

 

Section
4.20 Information
Supplied 
.. None of the information supplied or to be supplied by BCHI or a
BCHI Subsidiary specifically for inclusion in the Proxy Statement
will, at the date it is first mailed to the Company’s
stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not false or misleading. Notwithstanding the
foregoing sentence, no representation or warranty is made by BCHI
with respect to statements made therein based on or derived from
information supplied by the Company specifically for inclusion or
incorporation by reference in the Proxy Statement. The information
supplied by BCHI or a BCHI Subsidiary for inclusion in the Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder.

 

Section
4.21 Affiliate Transactions
.
Except as set forth in Section 4.21 of the BCHI
Disclosure Letter, there are not any transactions, agreements,
arrangements or understandings between BCHI or the BCHI
Subsidiaries, on the one hand, and BCHI’s Affiliates (other
than the BCHI Subsidiaries), on the other hand.

 

Section
4.22 Broker’s Fees
.
Except as set forth in Section 4.22 of the BCHI
Disclosure Letter, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or
commission in connection with the Transactions based upon
arrangements made by or on behalf of BCHI or any BCHI
Subsidiary.

 

Section
4.23 Share Ownership
.
Neither BCHI nor any BCHI Subsidiary has been, at any time during
the three years prior to the date hereof, an “interested
stockholder” of the Company, as defined in Section 203 of the
DGCL. As of the date of this Agreement, none of BCHI, any of the
BCHI Subsidiaries or any of their respective Affiliates owns
(directly or indirectly, beneficially or of record) any shares of
capital stock of the Company and none of BCHI, any BCHI Subsidiary
or their respective Affiliates holds any rights to acquire shares
of capital stock of the Company except pursuant to this
Agreement.

 

Section
4.24 Directors and Officers
.
Section 4.24 of the
BCHI Disclosure Letter sets forth a list of all officers,
directors, partners and/or managers of the Company and each of its
Subsidiaries as of the date hereof.

 

Section
4.25 No Other Representations or
Warranties . Except for the
representations and warranties expressly made by BCHI in this
Article IV, neither
BCHI nor any other Person makes any representation or warranty with
respect to BCHI or the BCHI Subsidiaries or their respective
business, operations, assets, liabilities, condition (financial or
otherwise) or prospects, notwithstanding the delivery or disclosure
to BCHI or any of its Affiliates or Representatives of any
documentation, forecasts or other information with respect to any
one or more of the foregoing.

 

 

37

 

 

ARTICLE V

 

Pre-Closing
Covenants

 

Section
5.1 Conduct of Businesses by the Company
and BCHI Prior to the Effective Time . During the period
from the date of this Agreement to the earlier of the termination
of this Agreement in accordance with its terms and the Effective
Time (except as contemplated or permitted by this Agreement, as
required by a Governmental Entity or applicable Law, as the Company
or BCHI, as applicable, may otherwise consent in writing, or, in
the case of BCHI, as set forth in Section 5.3 of the BCHI
Disclosure Letter or on Exhibit D), each of the Company
and BCHI will, and will cause each of their Subsidiaries to, use
commercially reasonable efforts to (a) conduct, in all material
respects, its business in the ordinary course, including the timely
payment of all Taxes, (b) preserve intact its business organization
and its significant business relationships and to preserve
satisfactory relationships with its employees and keep available
the services of its current officers and key employees and to
maintain its current rights and franchises, (c) maintain
insurance upon all of its material assets in such amounts and of
such kinds comparable to that in effect on the date of the
Agreement, and (d) maintain all Permits and timely pay all
material fees, charges and other amounts to Governmental
Entities.

 

Section
5.2 Company Forbearances
.
Without limiting the generality of Section 5.1, during the
period from the date of this Agreement to the earlier of the
termination of this Agreement in accordance with its terms and the
Effective Time (except as permitted by this Agreement or as
required by applicable Law), the Company will not, and will cause
each of the Company Subsidiaries not to, without the prior written
consent of BCHI:

 

(a) incur any
indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the
obligations of any other Person (but not including accrual of
interest on or maturity of obligations incurred before the date of
this Agreement), or make any loan or advance, other than (A)
letters of credit, surety bonds or guarantees of payment or
performance obligations of the Company or any of the Company
Subsidiaries, (B) short-term indebtedness for borrowed money
incurred solely to refinance any existing short-term indebtedness
for borrowed money, in each case, in the ordinary course of
business, consistent with past practice, and (C) borrowings under
any revolver existing on the date of this Agreement;

 

(b) (i) issue, grant,
sell or pledge, or agree to issue, grant, sell or pledge, any
shares of its capital stock or any securities or obligations
convertible (whether currently convertible or convertible only
after the passage of time or the occurrence of certain events) into
or exchangeable for any shares of its capital stock, except (A) on
exercise or conversion of currently outstanding Company Options or
Company Warrants, (B) grants of Company Options in the ordinary
course of business under the Equity Compensation Plans in effect on
the date of this Agreement to employees hired after the date of
this Agreement, consistent with past practices; provided that (1)
the aggregate number of shares of Company Common Stock for which
such Company Options are exercisable will not exceed 200,000, (2)
the exercise price of all such Company Options will be no less than
the fair market value at the time they are granted and (3) no
Company Options will be granted to officers of the Company without
the prior written consent of BCHI or (C) as dividends in respect of
any shares of Company Preferred Stock payable in shares of Company
Common Stock in accordance with the respective certificates of
designations and preferences for the applicable series of Company
Preferred Stock, (ii) adjust, split, combine, consolidate or
reclassify any of its capital stock or other ownership interests
except for any such transaction by a wholly owned Company
Subsidiary that remains a wholly owned Company Subsidiary after the
consummation of such transaction, or (iii) make, declare or pay any
dividend, or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time
or the occurrence of certain events) into or exchangeable for any
shares of its capital stock, except (A) dividends in respect of any
shares of Company Preferred Stock payable in shares of Company
Common Stock in accordance with the respective certificates of
designations and preferences for the applicable series of Company
Preferred Stock, or (B) dividends paid by any of the Company
Subsidiaries to the Company or to any of its wholly owned
Subsidiaries;

 

 

38

 

 

(c) except as required
by Law or any Contract (including any Company Benefit Plan) in
effect on the date of this Agreement or as otherwise set forth in
Section 5.2(c)
of the Company Disclosure Letter:

 

(i) materially increase
any wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any director, executive officer
or employee with a base salary equal to or greater than
$150,000;

 

(ii) enter
into or amend any employment or severance agreements with any
director or executive officer;

 

(iii) establish
any material bonus or incentive plan;

 

(iv) pay
any pension or retirement allowance not allowed by any existing
plan or agreement or by applicable Law;

 

(v) pay any bonus to
any director or executive officer;

 

(vi) become
a party to, amend or commit itself to, any pension, retirement,
profit-sharing or welfare benefit plan or agreement with or for the
benefit of any employee of the Company or a Company Subsidiary,
except in each case, in the ordinary course of business and as
would not result in a material increase in cost or liability to the
Company; or

 

(vii) amend
any Equity Compensation Plan or agreement thereunder.

 

(d) sell, lease,
transfer or otherwise dispose of any of its properties or assets to
any Person other than a Company Subsidiary, except for the disposal
of obsolete assets or assets sold in the ordinary course of
business;

 

(e) make any
acquisition (including by merger) of the capital stock (or other
equity interests) or a material portion of the assets of any other
Person;

 

(f) enter into any new
line of business that is material to the Company and the Company
Subsidiaries, taken as a whole, or materially change any of its
technology or operating policies that are material, individually or
in the aggregate, to the Company and the Company Subsidiaries,
taken as a whole, except as required by applicable
Law;

 

(g) amend the Company
Charter or the Company Bylaws or any organizational document of a
Company Subsidiary or take any action to exempt any Person (other
than BCHI or the BCHI Subsidiaries) from DGCL Section 203 or any
similarly restrictive provisions of its organizational
documents;

 

(h) except as required
by GAAP or the SEC, make any material change in its methods or
principles of accounting;

 

 

39

 

 

(i) except as required
by applicable Law, make, change or rescind any Tax election, change
any Tax accounting period, adopt or change any Tax accounting
method, amend any material Tax Return, enter into any closing
agreement, settle any Tax claim or assessment relating to the
Company or any of the Company Subsidiaries, obtain any Tax ruling,
surrender any right to claim a refund of material Taxes, or consent
to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to the Company or any of the
Company Subsidiaries;

 

(j) enter into, renew,
amend in any material respect or waive any of its material rights
under any Company Material Contract, except in the ordinary course
of business and which would not materially and adversely affect the
business of the Company and the Company Subsidiaries;

 

(k) adopt or recommend
a plan of complete or partial dissolution, liquidation,
recapitalization, restructuring or other
reorganization;

 

(l) make any
discretionary contributions to pension or retirement plans in
excess of the minimum required contributions as required by the
Pension Protection Act of 2006 or similar legal requirements for
plans outside the United States;

 

(m) conduct the
businesses of the Company or any Company Subsidiary in a manner
that would cause the Company or any Company Subsidiary to become an
“investment company” subject to registration under the
Investment Company Act;

 

(n) terminate or permit
any material Permit of the Company or a Company Subsidiary to
lapse, other than in accordance with the terms and regular
expiration of any such Permit, or fail to apply on a timely basis
for any renewal of any renewable material Permit of the Company or
a Company Subsidiary;

 

(o) materially change
recurring or non-recurring rates, promotions, sales incentives,
commission plans, credit policies or collections
procedures;

 

(p) fail to pay or
satisfy, or delay the payment or satisfaction of, any accounts
payable or other obligations, in any manner outside of the ordinary
course of business or inconsistent with past practices of the
Company and the Company Subsidiaries (and in any event, fail to pay
or satisfy any accounts payable or other obligations when due
without imposition of any penalty or charge);

 

(q) take any action
outside the ordinary course of business consistent with past
practices that would materially diminish the working capital of the
Company and the Company Subsidiaries; or

 

(r) agree to take, make
any commitment to take, or adopt any resolutions of its board of
directors in support of, any of the actions prohibited by this
Section 5.2.

 

Notwithstanding any
of the above restrictions, the Company may, prior to the Closing,
(i) issue equity or debt securities in connection with capital
raising activities, in an aggregate amount of net proceeds to the
Company not to exceed $10,000,000 and (ii) effectuate the Reverse
Split and take all actions necessary, including amending the
Company Charter, to effectuate the Reverse Split.

 

 

40

 

 

Section
5.3 BCHI Forbearances
.
Without limiting the generality of Section 5.1, during the
period from the date of this Agreement to the earlier of the
termination of this Agreement in accordance with its terms and the
Effective Time (except as permitted by this Agreement, as required
by applicable Law, as set forth in Section 5.3 of the BCHI
Disclosure Letter or as set forth on Exhibit D), BCHI will not, and
will cause each of the BCHI Subsidiaries not to, without the prior
written consent of the Company (which consent will not be
unreasonably withheld, conditioned or delayed):

 

(a) incur any
indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the
obligations of any other Person (but not including accrual of
interest on or maturity of obligations incurred before the date of
this Agreement), or make any loan or advance, other than letters of
credit, surety bonds or guarantees of payment or performance
obligations of BCHI or any of the BCHI Subsidiaries and (B)
short-term indebtedness for borrowed money incurred solely to
refinance any existing short-term indebtedness for borrowed money,
in each case, in the ordinary course of business, consistent with
past practice;

 

(b) (i) issue, grant,
sell or pledge, or agree to issue, grant, sell or pledge, any
shares of its capital stock or any securities or obligations
convertible (whether currently convertible or convertible only
after the passage of time or the occurrence of certain events) into
or exchangeable for any shares of its capital stock; (ii) adjust,
split, combine, consolidate or reclassify any of its capital stock
or other ownership interests; or (iii) make, declare or pay any
dividend, or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time
or the occurrence of certain events) into or exchangeable for any
shares of its capital stock, except (A) pro rata stock dividends or
(B) dividends paid by any of the BCHI Subsidiaries to BCHI or to
any of its wholly owned Subsidiaries;

 

(c) except as required
by Law, a Contract (including, any BCHI Benefit Plan) in effect on
the date of this Agreement or as otherwise set forth in
Section 5.3(c)
of the BCHI Disclosure Letter:

 

(i) materially increase
any wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any director, executive officer
or employee with a base salary equal to or greater than
$150,000;

 

(ii) enter
into or amend any employment or severance agreements with any
director or executive officer;

 

(iii) establish
any material bonus or incentive plan;

 

(iv) pay
any pension or retirement allowance not allowed by any existing
plan or agreement or by applicable Law;

 

(v) pay any material
bonus to any director or executive officer; or

 

(vi) become
a party to, amend or commit itself to, any pension, retirement,
profit-sharing or welfare benefit plan or agreement with or for the
benefit of any employee of BCHI or a BCHI Subsidiary, except in
each case, in the ordinary course of business and as would not
result in a material increase in cost or liability to the
Company;

 

 

41

 

 

(d) sell, lease,
transfer or otherwise dispose of any of its properties or assets to
any Person other than a BCHI Subsidiary, except for the disposal of
obsolete assets or assets sold in the ordinary course of
business;

 

(e) make any
acquisition (including by merger) of the capital stock (or other
equity interests) or a material portion of the assets of any other
Person;

 

(f) enter into any new
line of business that is material to BCHI and the BCHI
Subsidiaries, taken as a whole, or materially change any of its
technology or operating policies that are material, individually or
in the aggregate, to BCHI and the BCHI Subsidiaries, taken as a
whole, except as required by applicable Law;

 

(g) amend the BCHI
Charter or the BCHI Bylaws or any organizational documents of any
BCHI Subsidiary;

 

(h) except as required
by GAAP or the SEC, make any material change in its methods or
principles of accounting;

 

(i) except as required
by applicable Law, make, change or rescind any Tax election, change
any Tax accounting period, adopt or change any Tax accounting
method, amend any material Tax Return, enter into any closing
agreement, settle any Tax claim or assessment relating to BCHI or
any of the BCHI Subsidiaries, obtain any Tax ruling, surrender any
right to claim a refund of material Taxes, or consent to any
extension or waiver of the limitation period applicable to any Tax
claim or assessment relating to BCHI or any of the BCHI
Subsidiaries;

 

(j) enter into, renew,
amend in any material respect or waive any of its material rights
under any BCHI Material Contract, except in the ordinary course of
business consistent with past practice and which would not
materially and adversely affect the business of BCHI and the BCHI
Subsidiaries;

 

(k) adopt or recommend
a plan of complete or partial dissolution, liquidation,
recapitalization, restructuring or other
reorganization;

 

(l) make any
discretionary contributions to pension or retirement plans in
excess of the minimum required contributions as required by the
Pension Protection Act of 2006 or similar legal requirements for
plans outside the United States;

 

(m) conduct the
businesses of BCHI or any BCHI Subsidiary in a manner that would
cause BCHI or any BCHI Subsidiary to become an “investment
company” subject to registration under the Investment Company
Act;

 

(n) terminate or permit
any material Permit of BCHI or a BCHI Subsidiary to lapse, other
than in accordance with the terms and regular expiration of any
such Permit, or fail to apply on a timely basis for any renewal of
any renewable material Permit of BCHI or a BCHI
Subsidiary;

 

 

42

 

 

(o) materially change
recurring or non-recurring rates, promotions, sales incentives,
commission plans, credit policies or collections
procedures;

 

(p) fail to pay or
satisfy, or delay the payment or satisfaction of, any accounts
payable or other obligations, in any manner outside of the ordinary
course of business or inconsistent with past practices of BCHI and
the BCHI Subsidiaries (and in any event, fail to pay or satisfy any
accounts payable or other obligations when due without imposition
of any penalty or charge);

 

(q) take any action
outside the ordinary course of business consistent with past
practices that would materially diminish the working capital of
BCHI and the BCHI Subsidiaries; or

 

(r) agree to take, make
any commitment to take, or adopt any resolutions of its board of
directors in support of, any of the actions prohibited by this
Section 5.3.

 

Notwithstanding any
of the above restrictions, BCHI may prior to the Closing cause any
or all of the BCHI Subsidiaries that are corporations to be, in
effect, converted into limited liability companies, by conversion,
merger or other means under applicable state or provincial
Law.

 

ARTICLE VI

 

Additional
Agreements

 

Section
6.1 Filings; Other Actions;
Notification

 

(a) The Parties will
use their respective reasonable best efforts to (i) take, or cause
to be taken, all appropriate action and do, or cause to be done,
all things necessary, proper or advisable under applicable Law,
including Antitrust Laws, or otherwise to consummate and make
effective the Transactions as promptly as practicable,
(ii) obtain from any Governmental Entity any consents,
licenses, permits, waivers, approvals, authorizations or Orders,
including the FCC Approval and State Approvals, required to be
obtained by a Party, or any of their respective Subsidiaries, or to
avoid any Action by any Governmental Entity (including those in
connection with the Antitrust Laws), in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Transactions and (iii) (A) as promptly as
reasonably practicable, and in any event within fifteen (15)
Business Days after the date hereof, make all necessary filings,
and thereafter make any other required submissions, with respect to
this Agreement required under the HSR Act, (B) as promptly as
reasonably practicable, and in any event within fifteen (15)
Business Days after the date hereof, make all necessary filings,
and thereafter make any other required submissions, with respect to
this Agreement required in order to obtain the FCC Approval, (C) as
promptly as reasonably practicable, and in any event within thirty
(30) Business Days after the date hereof, make all necessary
filings, and thereafter make any other required submissions, with
respect to this Agreement required in order to obtain the State
Approvals, and (D) as promptly as reasonably practicable after the
date hereof, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement required
under any other applicable Law. The Company and BCHI will furnish
to each other all information required for any application or other
filing under the rules and regulations of any applicable Law in
connection with the Transactions.

 

 

43

 

 

(b) The Company and
BCHI shall give (or shall cause their respective Subsidiaries to
give) any notices to third parties, and use, and cause their
respective Subsidiaries to use, their reasonable best efforts to
obtain any third party consents, (i) necessary, proper or advisable
to consummate the Transactions, or (ii) required to prevent a
Company Material Adverse Effect or BCHI Material Adverse Effect,
respectively, from occurring prior to or after the Effective
Time.

 

(c) Without limiting
the generality of anything contained in this Section 6.1, each Party hereto
will: (i) give the other parties prompt notice of the making or
commencement of any Action with respect to the Merger or any of the
other Transactions; (ii) keep the other parties informed as to the
status of any such request or Action; (iii) promptly inform the
other parties of any communication to or from any Governmental
Entity regarding the Merger or any of the other Transactions; (iv)
respond as promptly as practicable to any additional requests for
information received by any Party from any Antitrust Authority, the
FCC, any State PSC or any other Governmental Entity with respect to
the Transactions or filings contemplated by Section 7.1(a); and (v) use
reasonable best efforts to (A) obtain termination or expiration of
the waiting period under the HSR Act and such other approvals,
consents and clearances as may be necessary, proper or advisable
under any applicable laws and obtain such approvals, consents and
clearances as may be necessary, proper or advisable under any
applicable Laws and (B) prevent the entry in any Action brought by
a Governmental Entity or any other Person of any Order which would
prohibit, make unlawful or delay the consummation of the
Transactions. Each Party will consult and cooperate with the other
parties and will consider in good faith the views of the other
parties in connection with any filing, analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made
or submitted in connection with the Merger or any of the other
Transactions. In addition, except as may be prohibited by any
Governmental Entity or by applicable Law, in connection with any
such request or Action, each Party hereto will permit
Representatives of the other parties to be present at each meeting
or conference relating to such request or Action and to have access
to and be consulted in connection with any document, opinion or
proposal made or submitted to any Governmental Entity in connection
with such request or Action.

 

(d) Notwithstanding
anything to the contrary in this Agreement, nothing in this
Agreement will be deemed to require the Company, BCHI or any of
their respective Affiliates (i) to divest or hold separate any
assets or agree to limit its future activities, method or place of
doing business, including any assets acquired by the Company, BCHI
or any of their respective Affiliates in connection with the
Transactions, (ii) to commence any litigation against any Person in
order to facilitate the consummation of the Transactions or (iii)
to defend against any litigation filed with or brought by any
Governmental Entity seeking to prevent the consummation of, or
impose limitations on, any of the Transactions.

 

Section
6.2 Preparation of Proxy Statement;
Stockholders Meeting

 

(a) As promptly as
practicable following the date of this Agreement (but no later than
thirty (30) days after binding commitments in respect of the
Financing (or, if Alternative Financing is being used, the
Alternative Financing) have been entered into by a Financing
Source), the Company will file the Proxy Statement with the SEC.
The Company will use reasonable best efforts to have the Proxy
Statement disseminated to its stockholders as promptly as
practicable after such filing is cleared by the SEC, and in any
event no later than seven (7) Business Days after the Proxy
Statement is cleared by the SEC. BCHI will furnish to the Company
all information concerning itself and its Subsidiaries, and provide
such other assistance (including using reasonable best efforts to
assist the Company in preparing pro forma financial information
required to be included in the Proxy Statement), as may be
reasonably requested in connection with the preparation, filing and
distribution of the Proxy Statement by the Company.

 

(b) Each Party agrees
that none of the information supplied by such Party for inclusion
or incorporation by reference in the Proxy Statement shall, on the
date mailed to the stockholders of the Company and at the time of
the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading.

 

 

44

 

 

(c) The Company will
provide BCHI with a reasonable opportunity to review and comment on
the Proxy Statement, and will incorporate the reasonable comments
of BCHI therein; provided, that no filing or mailing of, or
amendment or supplement to, the Proxy Statement will be made by the
Company without BCHI’s prior written consent (which will not
be unreasonably withheld, conditioned or delayed). The Company
will, as promptly as practicable after receipt thereof, provide
BCHI with copies of any written comments and advise BCHI of any
oral comments with respect to the Proxy Statement received from the
SEC. The Company will use its reasonable best efforts, in
cooperation with BCHI, to respond as promptly as practicable to any
comments received from the SEC with respect to the Proxy
Statement.

 

(d) If at any time
prior to the Effective Time (i) any change occurs with respect to
the Parties, or any of their respective Affiliates, directors or
officers, or (ii) any information relating to the Parties, or any
of their respective Affiliates, directors or officers, is
discovered by any of the Parties, in the case of each of clauses
(i) and (ii), which should be set forth in an amendment or
supplement to the Proxy Statement so that the Proxy Statement would
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading, the Party that observes such change or discovers
such information shall promptly notify the other Party, and the
Company shall file as promptly as practicable with the SEC an
appropriate amendment or supplement to the Proxy Statement
describing such change or information and, as required by Law,
disseminate the information contained in such amendment or
supplement to the shareholders of the Company.

 

(e) The Company will
take all lawful action to call, give notice of, convene and hold a
meeting of the stockholders of the Company (the “Stockholders Meeting”),
on a date as promptly as practicable after the SEC has authorized
distribution of and has advised the Company that it has no comments
or additional comments on the Proxy Statement, for the purpose of
obtaining the Stockholder Approval and shall take all lawful action
to solicit and obtain the Stockholder Approval. Subject to
Section 6.3(c), the
Company Board will recommend to the stockholders of the Company the
adoption of this Agreement. The Company may only postpone or
adjourn the Stockholder’s Meeting (i) to solicit additional
proxies for the purpose of obtaining the Stockholder Approval, (ii)
for the absence of a quorum, and (iii) to allow reasonable
additional time for the filing and/or mailing of any supplemental
or amended disclosure that the Company has determined after
consultation with outside legal counsel is reasonably likely to be
required under applicable Law and for such supplemental or amended
disclosure to be disseminated and reviewed by stockholders of the
Company prior to the Stockholders Meeting. The only matters to be
voted upon at the Stockholders Meeting are (i) the Merger and this
Agreement, including the amendment and restatement of the
Company’s Charter, the issuance of shares of Company Common
Stock pursuant to the Merger, and (to the extent necessary to
comply with NASDAQ listing requirements) the Reverse Split (ii) any
adjournment or postponement of the Stockholders Meeting and (iii)
any other matters as are required by applicable Law.

 

Section
6.3 No Solicitation or Change of
Recommendation

 

(a) No Solicitation.

 

(i) Except as set forth
in Section
6.3(a)(ii) and Section 6.3(a)(iii), the
Company agrees that neither it nor any of the Company Subsidiaries,
nor any of their respective officers, managers or directors will,
and that they will instruct and cause their respective Affiliates
and Representatives (collectively, the “Company Non-Solicit
Parties”) not to, directly or indirectly:

 

(A) initiate, solicit
or knowingly facilitate or encourage any inquiries, discussions
regarding, or the making or submission of, any proposal, request or
offer that constitutes, or could reasonably be expected to lead to,
an Alternative Proposal;

 

 

45

 

 

(B) approve, endorse,
recommend or enter into any Contract or agreement in principle,
whether written or oral, with any Person (other than BCHI)
concerning any letter of intent, memorandum of understanding,
acquisition agreement, merger agreement, joint venture agreement,
partnership agreement or other similar Contract concerning an
Alternative Proposal (other than negotiating and entering into a
confidentiality agreement as described in Section 6.3(a)(iii)) (an
“Alternative
Acquisition Agreement”);

 

(C) terminate, amend,
release, modify, or fail to enforce any provision of, or grant any
permission, waiver or request under, any standstill,
confidentiality or similar Contract entered into by the Company or
a Company Subsidiary in respect of or in contemplation of an
Alternative Proposal (other than to the extent the Company Board
determines in good faith, after consultation with its outside
financial and legal advisors, that failure to take any such actions
under this Section
6.3(a)(i)(C) would reasonably be expected to be inconsistent
with the directors’ duties or obligations under applicable
Law);

 

(D) conduct, engage in,
continue or otherwise participate in any discussions or
negotiations to facilitate any proposal that constitutes an
Alternative Proposal;

 

(E) furnish any
non-public information relating to the Company or any of the
Company Subsidiaries, or afford access to the books or records or
Representatives of any of the Company or any of the Company
Subsidiaries, to any third party that, to the knowledge of the
Company, after consultation with its Representatives, is seeking to
make, or has made, an Alternative Proposal;

 

(F) resolve or publicly
propose or announce to do any of the foregoing.

 

(ii) Notwithstanding
anything to the contrary in this Agreement and subject to the
conditions in Section
6.3(a)(iii) and solely in response to a Bona Fide
Alternative Proposal made on or after the date of this Agreement
and prior to the Stockholder Approval, the Company Non-Solicit
Parties may, with respect to the Person that has made such Bona
Fide Alternative Proposal:

 

(A) provide information
or afford access to the books and records or Representatives of the
Company or any Company Subsidiary; and

 

(B) engage or
participate in any discussions or negotiations with such Person
(and its Representatives) with respect to such Bona Fide
Alternative Proposal.

 

 

46

 

 

(iii) The
Company may not take the actions described in Section 6.3(a)(ii) unless,
prior to taking any such action:

 

(A) the Company has (1)
received from such Person an executed confidentiality agreement on
terms that are no less restrictive than those contained in the
Confidentiality Agreement (and compliant with the last sentence of
Section 6.3(g));
provided that such confidentiality agreement (x) shall not be
required to contain standstill provisions and (y) shall not contain
any provisions that would prevent the Company from complying with
its obligation to provide the required disclosure to BCHI pursuant
to this Section
6.3, and (2) disclosed to BCHI (and, if applicable,
contemporaneously provided copies of) any non-public information to
be provided to such Person and any books or records to which such
Person will be afforded access, in each case, to the extent not
previously provided to BCHI;

 

(B) the Company has
delivered to BCHI written notice prior to taking any such action
(1) stating that the Company Board intends to take such action, (2)
stating that the Company Board has made the determination set forth
in Section
6.3(a)(iii)(C) and (3) including an unredacted copy of such
Bona Fide Alternative Proposal (including any materials relating to
such Person’s proposed equity and debt financing, if any) and
an executed copy of the confidentiality agreement described in
Section
6.3(a)(iii)(A); and

 

(C) the Company Board
has determined in good faith, after consultation with its outside
financial and legal advisors that (1) such Bona Fide Alternative
Proposal either constitutes a Superior Proposal or is reasonably
likely to result in a Superior Proposal and (2) the failure to take
such action would reasonably be expected to be inconsistent with
the directors’ duties or obligations under applicable
Law.

 

(b) No Change of Recommendation.
Except as set forth in Section 6.3(c), the Company
will not, and will cause the other Company Non-Solicit Parties not
to:

 

(i) withdraw, qualify
or modify, in a manner adverse to BCHI, the Company Board
Recommendation;

 

(ii) fail
to announce publicly, within ten (10) Business Days after a tender
offer or exchange offer relating to any securities of the Company
has been commenced, that the Company Board recommends rejection of
such tender or exchange offer;

 

(iii) fail
to include the Company Board Recommendation in the notice
distributed to the stockholders of the Company pursuant to
Section
6.2(e);

 

(iv) approve,
adopt or recommend any Alternative Proposal; or

 

 

47

 

 

(v) resolve or publicly
propose to do any of the foregoing (any such prohibited action
described in Section
6.3(b)(i) through this Section 6.3(b)(v) being
referred to as a “Change of
Recommendation”);

 

provided
that the making of any determination of the Company Board (or any
committee thereof) to provide, or the provision of, a Change of
Recommendation Notice in compliance with the terms of this
Agreement will not, in and of itself, be deemed a Change of
Recommendation.

 

(c) Certain Permitted Changes of
Recommendation. Subject to Section 6.3(d), at any time
prior to receiving the Stockholder Approval, the Company Board in
response to a Superior Proposal may effect, or cause the Company to
effect, as the case may be, a Change of Recommendation if: (i) the
Company Board determines that after complying with Section 6.3(d), a Bona Fide
Alternative Proposal constitutes a Superior Proposal and (ii) the
Company Board determines in good faith, after consultation with its
outside financial and legal advisors, that the failure to take such
action would be inconsistent with the directors’ duties or
obligations under applicable Law.

 

(d) Procedure Prior to Changes in the
Recommendation. The Company Board will be entitled to
effect, or cause the Company to effect, a Change of Recommendation
in connection with a Superior Proposal (to the extent permitted
under Section
6.3(c)), only if (A) the Company shall have delivered to
BCHI a written notice (a “Change of Recommendation
Notice”) (1) stating that the Company Board intends to
take such actions pursuant to Section 6.3(c), (2) stating
that the Company Board has made the determinations set forth in
Sections 6.3(c)(i)
and 6.3(c)(ii) and
(3) including an unredacted copy of such Superior Proposal and
unredacted form of any Alternative Acquisition Agreement related to
such Superior Proposal (including any materials relating to such
Person’s proposed equity and debt financing, if any) and (B)
the Negotiation Period shall have expired. During the five (5)
Business Day period commencing on the date of BCHI’s receipt
of such Change of Recommendation Notice (such period, as may be
extended pursuant to this Section 7.3(d), the
“Negotiation
Period”), the Company will engage, and will cause its
Representatives to be available for the purpose of engaging, in
good faith negotiations with BCHI (to the extent BCHI desires to
negotiate) regarding an amendment of this Agreement so that the
Alternative Proposal that is the subject of the Change of
Recommendation Notice ceases to be a Superior Proposal. Each time
the financial or other material terms or conditions of such Bona
Fide Alternative Proposal (or terms or conditions related thereto,
such as the proposed equity and debt financing) are amended or
modified, the Company will be required to deliver to BCHI a new
Change of Recommendation Notice (including, as attachments thereto,
amended forms of the written Alternative Acquisition Agreements
relating to such Bona Fide Alternative Proposal) and the
Negotiation Period will be extended by an additional two (2)
Business Days from the date of BCHI’s receipt of such new
Change of Recommendation Notice.

 

(e) Certain Permitted Disclosure.
Nothing contained in this Section 6.3 will be deemed to prohibit
the Company from complying with its required disclosure obligations
under applicable Law with regard to an Alternative Proposal or
making any disclosure to the stockholders of the Company if the
Company Board determines in good faith, after consultation with its
outside legal counsel, that the failure to make such disclosure
would be inconsistent with the directors’ duties or
obligations under applicable Law; provided, however, that neither
the Company nor the Company Board (or any committee thereof) will
affect any Change of Recommendation, except in accordance with
Section 6.3(c) and
Section 6.3(d); and
provided, further, that in no event will any
“Stop-Look-and-Listen” communication contemplated by
Rule 14d-9(f) under the Exchange Act be deemed to be a Change of
Recommendation or to violate this Section 6.3. Disclosure of the
type described in this Section 6.3(e) (other than the type
described in the second proviso of the foregoing sentence) that is
not an express rejection of any Alternative Proposal or an express
confirmation that the Company Board Recommendation remains in
effect will be deemed to be a Change of
Recommendation.

 

(f) Existing
Discussions. The Company will, and will cause the Company
Subsidiaries and their respective officers, managers and directors
and their respective Affiliates and Representatives to, immediately
cease and cause to be terminated any discussions or negotiations
with, or any solicitation or intentional assistance or
encouragement of, any Person with respect to any Alternative
Proposal (or that could reasonably be expected to lead to or result
in an Alternative Proposal) which are on-going as of the date of
this Agreement and request that any such Person promptly return or
destroy (and confirm destruction of) all confidential information
concerning the Company and any Company Subsidiary. The Company will
take the necessary steps to promptly inform, on the date of this
Agreement, the individuals or entities referred to in the preceding
sentence of this Section
6.3(f).

 

 

48

 

 

(g) Notice.
Without limiting anything in this Section 6.3, the Company will
promptly (and, in any event, within 24 hours) notify BCHI orally
and in writing if any inquiries, proposals or offers with respect
to an Alternative Proposal or requests for non-public information
relating to the Company or any Company Subsidiary (other than
requests for information in the ordinary course of business
consistent with past practice and unrelated to an Alternative
Proposal) are received by, or any discussions or negotiations with
respect to an Alternative Proposal are sought to be initiated or
continued with, the Company or any Company Subsidiary or any of
their respective Representatives, indicating, in connection with
such notice, the name of such Person and the material terms and
conditions of such discussions, proposals, offers or requests, and
including in the written version of such notice, an unredacted copy
of any written (including via electronic transmission) proposals,
offers or requests, in each case, including any amendments or
modifications thereto. The Company will promptly (and, in any
event, within 24 hours after any amendment or modification of, or
development with respect to, any such, proposal, offer, request or
Alternative Proposal, or at the reasonable request of BCHI) notify
BCHI orally and in writing of the status of any such inquiries,
proposals, offers or requests, including any material developments,
notifications, amendments or modifications thereto and furnish to
BCHI copies of any written inquiries, correspondence and draft
documentation in connection with such discussions, proposals,
offers or requests. The Company will not, and will cause its
respective Subsidiaries and Representatives not to, enter into any
Contract that would prohibit them from providing the information
required to be provided to BCHI pursuant to this Section 6.3(g).

 

Section
6.4 Access to
Information

 

(a) Upon reasonable
notice, BCHI and the Company will, and will cause each of their
respective Subsidiaries to, afford to BCHI or the Company, as
applicable, and to their respective officers, employees,
accountants, counsel, lenders, financial advisors and other
Representatives reasonable access during normal business hours
during the period prior to the Effective Time to all their
respective owned or leased properties, books, Contracts,
commitments, personnel (including contractors and distributors),
records, Tax Returns, work papers and all other information
concerning its business, operations, status of compliance with
Environmental Law, properties and personnel as BCHI or the Company,
as applicable, may reasonably request; except that each of BCHI and
the Company, as applicable, and its Representatives will conduct
any such activities in such a manner as not to interfere
unreasonably with the business or operations of BCHI or the
Company, as applicable, and their respective Subsidiaries; except
further that neither BCHI nor the Company, as applicable, or their
respective Subsidiaries will be required to provide any access or
disclose any information if such access or disclosure would
contravene any applicable Law or where such access or disclosure
would jeopardize the attorney-client privilege of the institution
in possession or control of such information or contravene any
fiduciary duty or binding agreement entered into prior to the date
of this Agreement; except further that the foregoing shall not
require BCHI or the Company to permit any inspection or to disclose
any information that in the reasonable judgement of BCHI or the
Company, as the case may be, would result in the disclosure of any
trade secrets of third parties.

 

(b) All information and
materials provided pursuant to this Agreement will be subject to
the provisions of the Confidentiality Agreement, dated as of May
18, 2017, by and among the Company, Birch Equity Partners, LLC and
Birch Communications, Inc. (the “Confidentiality
Agreement”).

 

(c) No investigation by
either of the Parties or their respective Representatives will
affect the representations and warranties of the other set forth in
this Agreement.

 

Section
6.5 Employee Matters

 

(a) After the Closing
Date through the date of termination for the applicable BCHI
Employee, the Company will provide, and will cause its Affiliates
to provide, each employee of BCHI or any BCHI Subsidiary as of the
Closing Date who is employed by the Company or any of the Company
Subsidiaries after the Closing Date (the “BCHI Employees”) with
such employee compensation and benefits as the Company or its
Affiliate (as applicable), in its sole discretion considers to be
appropriate, subject to the provisions of this Section 6.5 and applicable
Law.

 

 

49

 

 

(b) To the extent
commercially reasonable, and without duplication of any benefits,
the Company (i) will give, and cause its Affiliates to give,
each BCHI Employee the same service credit under any Company
Benefit Plan that covers such BCHI Employee after the Closing Date
as would have been granted to such BCHI Employee by BCHI or any
BCHI Subsidiary, as applicable, prior to the Closing under any
comparable BCHI Benefit Plan, for all purposes (including
eligibility to participate, vesting in eligible benefits and levels
of benefits) other than for benefit accrual purposes under a
defined benefit pension plan, (ii) will give, and cause its
Affiliates to give, each BCHI Employee service credit granted by
the Company or its Subsidiary, as applicable, under any Company
Benefit Plan that covers such BCHI Employee after the Closing Date
for service prior to the Closing, based upon the provisions of such
Company Benefit Plan, for purposes of entitlement to benefits
thereunder (except for purposes of benefits accrual under a defined
benefits pension plan), (iii) will allow, and cause its Affiliates
to allow, such BCHI Employees to participate in each Company
Benefit Plan providing welfare benefits (including medical, life
insurance, long-term and short-term disability insurance and
long-term care insurance) in the plan year in which the Closing
occurs without regard to preexisting-condition limitations, waiting
periods, evidence of insurability or other exclusions or
limitations, and (iv) will credit, and cause its Affiliates to
credit, the BCHI Employees with any expenses incurred within the
year in which the Closing Date occurs, but prior to the Closing
Date, that were credited by BCHI pursuant to the comparable BCHI
Benefit Plans for purposes of determining deductibles, co-pays and
other applicable limits under the Company Benefit Plans, in which
they participate and any similar replacement plans.

 

(c) For the period of
the year in which the Closing occurs that is after the Closing
Date, the Company will continue, and cause its Affiliates to
continue, to credit to each BCHI Employee all vacation and personal
holiday time that such BCHI Employee has accrued but not used
through the Closing Date and is entitled to use as of the Closing
Date, subject to the Company’s vacation day carryover
policy.

 

(d) Nothing in this
Agreement will create any right or obligation which is enforceable
by any employee, former employee, BCHI Employee or any other Person
with respect to any terms or conditions of employment, including,
but not limited to, the benefits and compensation described in this
Section 6.5. For
the avoidance of doubt, any amendments to the Company’s, the
Company Subsidiaries’, and the Surviving Company’s
benefit and compensation plans, programs or arrangements will occur
only in accordance with their respective terms and will be pursuant
to action taken by the Company, the Company Subsidiaries, or the
Surviving Company which are independent of the consummation of this
Agreement or any continuing obligations hereunder. Nothing in this
Section 6.5 shall
be construed as prohibiting the Company or its Affiliates from
terminating any BCHI Employee’s employment as the Company or
such Affiliate determines appropriate in its sole discretion,
subject to the terms of any employment agreement and applicable
Law.

 

Section
6.6 Indemnification; Directors’ and
Officers’ Insurance.

 

(a) From the Effective
Time, the Company will, and will cause its Subsidiaries to,
indemnify, defend and hold harmless (including by advancing
expenses) each current and former director, officer and employee of
(i) BCHI and its Subsidiaries and (ii) the Company and each of its
Subsidiaries (each, a “D&O Indemnified
Party” and, collectively, the “D&O Indemnified
Parties”) against all claims, liabilities, losses,
damages, judgments, fines, penalties, costs and expenses (including
fees and expenses of legal counsel) in connection with any actual
or threatened claim, suit, action, proceeding or investigation
(whether civil, criminal, administrative or investigative) (each, a
“Claim”), whenever
asserted, arising out of, relating to or in connection with any
action or omission relating to their position with BCHI or its
Subsidiaries, or the Company and its Subsidiaries, as the case may
be, occurring or alleged to have occurred before or at the
Effective Time (including any Claim relating in whole or in part to
the Agreement or the Transactions), to the fullest extent permitted
under applicable Law. Each of (x) the Company Charter, the
Company Bylaws and the respective organizational documents of each
of the Company Subsidiaries as currently in effect, and
(y) any indemnification agreements with a D&O Indemnified
Party listed on Section
6.6(a) of the Company Disclosure Letter or Section 6.6(a) of the BCHI
Disclosure Letter, which will in each case survive the Transactions
and continue in full force and effect to the extent permitted by
applicable Law, will not, from and after the Effective Time, be
amended, repealed or otherwise modified in a manner that would
adversely affect the rights thereunder of the D&O Indemnified
Parties except, in the case of clauses (x) and (y), as required by applicable
Law. Without limiting the foregoing, at the Effective Time, the
Surviving Company will, and the Company will cause the Surviving
Company to cause the certificate of formation and limited liability
company agreement of the Surviving Company to include provisions
for limitation of liabilities of directors and officers,
indemnification, advancement of expenses and exculpation of the
D&O Indemnified Parties no less favorable to the D&O
Indemnified Parties than as set forth in the Company Charter and
Company Bylaws in effect on the date of this Agreement, which
provisions will, from and after the Effective Time, not be amended,
repealed or otherwise modified in a manner that would adversely
affect the rights thereunder of the D&O Indemnified Parties
except as required by applicable Law.

 

 

50

 

 

(b) Prior to the
Effective Time, the Company will and, if it is unable to, the
Company will cause the Surviving Company as of the Effective Time
to obtain and fully pay for “tail” insurance policies
with a claims period of at least six (6) years from and after the
Effective Time from the Company’s current insurance carrier,
as applicable, or from an insurance carrier with the same or better
credit rating as such current insurance carrier with respect to
directors’ and officers’ liability insurance and
fiduciary liability insurance (the “D&O Insurance”) for
the persons who, as of the date of this Agreement, are covered by
either BCHI’s existing D&O Insurance or the
Company’s existing D&O Insurance, as applicable. Such
“tail” insurance policies will have terms, conditions,
retentions and levels of coverage at least as favorable as
BCHI’s existing D&O Insurance, with respect to matters
existing or occurring at or prior to the Effective Time (including
in connection with this Agreement and the Transactions); except
that the maximum aggregate premium for such insurance policies for
any such year will not be in excess of the Maximum Premium. The
Company will cause the Surviving Company to maintain such
“tail” insurance policies in full force and effect for
their full term. If Company for any reason fails to obtain such
“tail” insurance policies as of the Effective Time, the
Surviving Company will, and the Company will cause the Surviving
Company to, continue to maintain in effect, at no expense to the
D&O Indemnified Parties, for a period of at least six (6) years
from and after the Effective Time, each of BCHI’s D&O
Insurance and the Company’s D&O Insurance, as applicable,
in place as of the date of this Agreement with terms, conditions,
retentions and levels of coverage at least as favorable as provided
in the respective existing policies as of the date of this
Agreement, or, if such insurance is unavailable, the Surviving
Company will, and the Company will cause the Surviving Company to,
purchase the best available D&O Insurance for such six(6)-year
period from an insurance carrier with the same or better credit
rating as BCHI’s current insurance carrier with respect to
its existing D&O Insurance with terms, conditions, retentions
and with levels of coverage at least as favorable as provided in
BCHI’s existing policies as of the date of this Agreement;
except that the Surviving Company will not be required to pay an
aggregate premium for such insurance policies in excess of 150% of
the annual premium paid by BCHI for coverage for its last full
fiscal year for such insurance (the “Maximum Premium”); and if
the premiums of such insurance coverage exceed such amount, the
Surviving Company will be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such
amount.

 

(c) The provisions of
this Section 6.6
are (i) intended to be for the benefit of, and will be
enforceable by, each D&O Indemnified Party, his or her heirs
and his or her representatives and (ii) in addition to, and
not in substitution for or limitation of, any other rights to
indemnification or contribution that any such Person may have by
Contract or otherwise.

 

(d) In the event that
the Company, the Surviving Company or any of their respective
successors or assigns (i) consolidates with or merges into any
other Person and is not the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, proper provision will be
made so that the successors and assigns of the Company and the
Surviving Company will assume all of the obligations thereof set
forth in this Section
6.6.

 

Section
6.7 NASDAQ Listing; Reverse
Split . The Company will
use reasonable best efforts to cause the Company Common Stock
issued in the Merger to be approved for listing on NASDAQ, subject
to official notice of issuance, as promptly as practicable after
date of this Agreement, and in any event prior to the Closing Date.
To the extent necessary to comply with NASDAQ listing requirements,
the Company shall submit to the holders of Company Common Stock at
the Stockholders’ Meeting a proposal to approve and adopt an
amendment to the Company Certificate of Incorporation to authorize
the Company Board to effect a five-to-one reverse split of all
outstanding shares of Company Common Stock, such that each holder
of shares of Company Common Stock shall receive one share of
Company Common Stock for every five shares of Company Common Stock
held by such holder (the “Reverse Split”),
effective prior to the Effective Time.

 

 

51

 

 

Section
6.8 Advice of Changes
. Each
of BCHI and the Company will promptly advise the other of any
change or event, of which it has knowledge, (a) having or
reasonably likely to have a BCHI Material Adverse Effect or a
Company Material Adverse Effect, as the case may be, or
(b) that would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants contained in this Agreement if it would
result in the failure of closing conditions in Section 7.3(a) or
Section 7.3(b)
or Section 7.2(a) or
Section 7.2(b),
respectively, by the Outside Date, except that (i) no such
notification will affect the representations, warranties or
covenants of the Parties (or remedies with respect thereto) or the
conditions to the obligations of the Parties under this Agreement
and (ii) a failure to comply with this Section 6.8 will not
constitute the failure of any condition set forth in Article VII to be
satisfied unless the underlying BCHI Material Adverse Effect,
Company Material Adverse Effect or material breach would
independently result in the failure of a condition set forth in
Article VII to
be satisfied.

 

Section
6.9 Control of the Other Party’s
Business . Nothing contained
in this Agreement will give BCHI, directly or indirectly, the right
to control or direct the operations of the Company or the Company
Subsidiaries or will give the Company, directly or indirectly, the
right to control or direct the operations of BCHI or its
Subsidiaries prior to the Effective Time. Prior to the Effective
Time, each of BCHI and the Company will exercise, consistent with
the terms and conditions of this Agreement, complete control and
supervision over its and its Subsidiaries’ respective
operations.

 

Section
6.10 Subsidiary Compliance
. The
Company, as the sole stockholder of Merger Sub prior to the
Effective Time, will cause Merger Sub to comply with and perform
all of its obligations under or relating to this Agreement prior to
the Effective Time and to consummate the Transactions on the terms
and conditions set forth in this Agreement.

 

Section
6.11 Financing

 

(a) Subject to the
terms and conditions of this Agreement, BCHI and the Company will
use their reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary,
proper or advisable to arrange and obtain the financing in an
aggregate amount necessary to effect the Refinancing, and to
otherwise complete the Transactions, including paying expenses
associated with the Transactions, which financing will be on the
terms and conditions satisfactory to BCHI and the Company, each in
its sole and absolute discretion (the “Financing”). BCHI and the
Company will each use its reasonable best efforts to (I) negotiate
and enter into commitments for, and then definitive agreements with
respect to, the Financing as promptly as practicable (such
commitments and definitive agreements, the “Financing Agreements”),
(II) satisfy on a timely basis (taking into account the Marketing
Period) all conditions in the Financing Agreements applicable to
BCHI and the Company and their respective Subsidiaries to obtaining
the Financing as promptly as practicable, (III) consummate the
Financing at or prior to the Closing and (IV) enforce the
counterparties’ obligations and its rights under the
Financing Agreements, including by suit or other appropriate
proceeding to cause the lenders under the Financing to fund in
accordance with their respective commitments if all conditions to
funding the Financing in the applicable Financing Agreements have
been satisfied or waived. BCHI and the Company will keep each other
reasonably informed on a timely basis of the status of its
respective efforts to arrange the Financing and to satisfy the
conditions thereof. If any portion of the amount of the Financing
becomes reasonably likely to be unavailable on the material terms
and conditions contemplated by the applicable Financing Agreements,
each of BCHI and the Company will use its commercially reasonable
efforts to arrange and obtain alternative financing from
alternative sources in an amount sufficient to consummate the
Transactions with terms and conditions not materially less
favorable, taken as a whole, to the Parties than the terms and
conditions set forth in the applicable Financing Agreements
(“Alternative
Financing”) as promptly as practicable following the
occurrence of such event but no later than the final day of the
Marketing Period. In such event, (1) the term
“Financing” will be deemed to include the Alternative
Financing, and (2) the term “Financing Agreements” will
be deemed to include any commitment letters and definitive
agreement with respect to the Alternative Financing.
Notwithstanding anything contained in this Section 6.11 or in any other
provision of this Agreement, in no event will the Parties be
required (i) to amend or waive any of the terms or conditions
hereof or of the Financing Agreements or (ii) to consummate the
Closing any earlier than required under clause (b) of the first
sentence of Section
1.3.

 

 

52

 

 

(b) Each Party will
provide, and will cause its Subsidiaries to provide, and will use
reasonable best efforts to cause its Representatives to provide,
all cooperation that is customary and necessary in connection with
arranging, obtaining and syndicating the Financing and causing the
conditions in the Financing Agreements to be satisfied, including
using reasonable best efforts in (i) assisting with, and
designating one or more members of senior management of the Company
to participate in, the preparation of customary offering and
syndication documents and materials, including, including private
placement or offering memoranda, bank information memoranda, bank
syndication material and packages, lender and investor
presentations, rating agency materials and presentations and
similar documents and materials, in connection with the Financing,
and providing reasonable and customary authorization letters to the
Financing Sources authorizing the distribution of information to
prospective lenders and containing customary information (all such
documents and materials, collectively, the “Offering Documents”),
(ii) preparing and furnishing to the Financing Sources as promptly
as practicable all Required Information to the extent it is
available to such Party and all other information and disclosures
relating to such Party and its Subsidiaries (including their
businesses, operations, financial projections and prospects) as may
be reasonably necessary in preparation of the Offering Documents
(including execution of customary authorization and management
representation letters), (iii) designating one or more members of
senior management of such Party to participate in a reasonable
number of due diligence sessions in connection with the Financing,
including direct contact between such senior management and the
Financing Sources and potential lenders in the Financing, drafting
sessions, management presentations, rating agency presentations,
lender meetings and one or more road shows, (iv) requesting such
Party’s independent auditors to cooperate in obtaining
customary accountant’s comfort letters and consents from such
Party’s independent auditors, (v) assisting in the
preparation of, and executing and delivering, definitive financing
documents, including guarantee and collateral documents, hedging
agreements and other certificates and documents (including a
certificate of the chief financial officer of such Party and its
Subsidiaries with respect to solvency matters before giving effect
to the Financing or the consummation of the Transactions), (vi)
subject to any contractual agreement in effect, facilitating the
pledging of collateral for the Financing, including taking
commercially reasonable actions necessary to permit the Financing
Sources to evaluate such Party and its Subsidiaries’ real
property and current assets, cash management and accounting
systems, policies and procedures for the purpose of establishing
collateral arrangements and establishing, as of the Effective Time,
bank and other accounts and blocked account agreements and lockbox
arrangements in connection with the Financing, (vii) obtaining from
such Party’s existing lenders such consents, approvals,
authorizations and instruments which may be reasonably necessary in
connection with the Financing and collateral arrangements,
including customary payoff letters, lien releases, instruments of
termination or discharge, (viii) preparing any supplements to the
above information as may be required pursuant to the Financing
Agreements and (ix) cooperating with the other Parties to satisfy
the conditions precedent to the Financing to the extent within the
control of such Party and its Subsidiaries, and taking all
corporate or limited liability company actions, subject to the
occurrence of the Effective Time, reasonably necessary to permit
the consummation of the Financing and to permit the proceeds
thereof to be made available to the Company and the Surviving
Company immediately upon the Effective Time. In connection with the
foregoing, the Company will file with the SEC all Company Reports
for the annual and quarterly fiscal periods ending on and after the
date hereof as soon as practicable but in any event not later than
(i) 90 days following the end of the Company’s fiscal year,
in the case of annual reports on Form 10-K and (ii) 45 days
following the end of each fiscal quarter of the Company, in the
case of quarterly reports on Form 10-Q. Each of the Company and
BCHI hereby consent to the use of their and their respective
Subsidiaries’ logos in connection with the Financing in a
form and manner agreed with the Party whose logo is being used;
except that such logos are to be used solely in a manner that is
not intended, or reasonably likely, to harm or disparage the Party
whose logo is being used or the reputation or goodwill of such
Party. Each Party will use its reasonable best efforts to
periodically update any Required Information (to the extent it is
available) to be included in any Offering Document to be used in
connection with such Financing such that any such Required
Information does not contain any untrue statement of material fact
or omit to state any material fact necessary in order to make the
statements contained therein not misleading.

 

 

53

 

 

Section
6.12 Transaction Litigation
. Each
Party will give the other Party prompt notice of any Action
commenced or, to the knowledge of the Company or to the knowledge
of BCHI, as the case may be, threatened, against the such Party or
its directors, officers, managers, partners or Affiliates relating
to this Agreement or the Transactions (collectively,
“Transaction
Litigation”). The Parties will consult with each other
regarding the defense or settlement of any Transaction Litigation
and neither Party will compromise, settle, come to an arrangement
regarding or agree to compromise, settle or come to an arrangement
regarding any Transaction Litigation or consent to the same,
without the prior written consent of the other Party (which consent
will not be unreasonably withheld, conditioned or delayed). In
connection with any Transaction Litigation and the Parties’
performance of their obligations under this Section 6.12, BCHI and the
Company will enter into a customary common interest or joint
defense agreement or implement such other techniques as reasonably
required to preserve any attorney-client privilege or other
applicable legal privilege; except that no Party will be required
to provide information if doing so, in the opinion of its legal
counsel, would cause the loss of any attorney-client privilege or
other applicable legal privilege; except that, if any information
is withheld pursuant to the foregoing exception, such Party will
inform the other Party as to the general nature of what is being
withheld and the Parties will use reasonable best efforts to enable
the informing Party to provide such information without causing the
loss of any attorney-client or other applicable legal
privilege.

 

Section
6.13 Publicity . The initial press
release with respect to the execution of this Agreement will be a
joint press release to be reasonably agreed upon by BCHI and the
Company. Following such initial press release, none of the Parties
will, and neither the Company nor BCHI will permit any of its
Subsidiaries to, issue or cause the publication of any press
release or similar public announcement with respect to, or
otherwise make any public statement concerning, the Transactions
without the prior consent (which consent will not be unreasonably
withheld, conditioned or delayed) of BCHI, in the case of a
proposed announcement or statement by the Company, or the Company,
in the case of a proposed announcement or statement by BCHI; except
that either of BCHI or the Company may, without the prior consent
of the other (but after prior consultation with the other to the
extent practicable under the circumstances) issue or cause the
publication of any press release or other public announcement to
the extent such Party may reasonably conclude may be required by
applicable Law. The restrictions set forth in this Section 6.13 will not apply to
any release or public statement in connection with any dispute
between BCHI and the Company regarding this Agreement or the
Transactions; except that the foregoing will not limit the ability
of any Party to make internal announcements to their respective
employees and other stockholders that are not inconsistent in any
material respects with the prior public disclosures regarding the
Transactions.

 

Section
6.14 Takeover Laws
. If
any Takeover Law is or may become applicable to the Transactions,
the Company and BCHI, including the Company Board and the board of
directors of BCHI, will grant such approvals and take such actions
as are necessary so that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this agreement
and the Parties will otherwise act to eliminate or minimize the
effects of such Takeover Law on the Merger.

 

Section
6.15 Actions Concerning Company Preferred
Stock . The Parties will,
and will cause their Affiliates to, take all necessary action to
cause written notice as contemplated under the Company Charter to
be given to each holder of shares of Company Preferred Stock, at
least forty-five (45) days prior to the Closing Date, such that
such holder has fifteen (15) days in which to exercise its
conversion rights under the respective certificates of designations
and preferences for the applicable series of Company Preferred
Stock.

 

 

54

 

 

Section
6.16 Separation of Consumer/SMB
Business . Prior to the
Closing, the Parties will cooperate in good faith to consummate the
transactions contemplated by Exhibit D pursuant to
agreements negotiated in good faith by the Parties (the
“Separation
Agreements”) and upon the terms and subject to the
conditions mutually agreed upon by the Company and BCHI in
accordance with Exhibit
D.

 

Section
6.17 Divestiture or Dissolution of Fusion
Global . The Company will
use reasonable best efforts to effectuate, on or prior to the
Closing, (i) the divestiture of its ownership interest in Fusion
Global Services LLC, a Delaware limited liability company
(“Fusion
Global”) and the entrance into a profit sharing
arrangement with the purchaser of Fusion Global (such divestiture
and profit sharing arrangement, the “Fusion Global
Arrangement”) or (ii) the dissolution of Fusion
Global.

 

Section
6.18 BCHI Financial
Statements . As soon as
practicable after the execution of this Agreement, BCHI will
deliver to the Company audited consolidated financial statements of
BCHI and the other BCHI Subsidiaries for the fiscal years ended
December 31, 2014 through December 31, 2016.

 

ARTICLE VII

 

Closing Conditions

 

Section
7.1 Conditions to Each Party’s
Obligation to Effect the Merger . The respective
obligations of the Parties to effect the Merger will be subject to
the satisfaction (or waiver by BCHI and the Company) at or prior to
the Effective Time of the following conditions:

 

(a) Stockholder Approval. The
Company shall have obtained the Stockholder Approval.

 

 

55

 

 

(b) Regulatory Consents. Each of
the State Approvals and the FCC Approval shall have been obtained
and in effect, and any waiting period prescribed by Law with
respect to such approvals before the Transaction may be consummated
shall have expired.

 

(c) Antitrust Approvals. The
waiting period (and any extension thereof) applicable to the
consummation of the Transactions under the HSR Act shall have
expired or been terminated.

 

(d) No Injunctions or Restraints;
Illegality. No Law or Order shall be in effect or shall have
been enacted, entered, promulgated or enforced by any Governmental
Entity that prohibits or makes illegal consummation of the
Transactions.

 

(e) Financing. The Financing (or,
if Alternative Financing is being used, the Alternative Financing)
shall have been funded.

 

(f) NASDAQ Listing. The shares of
Company Common Stock issuable to Holding, LLC as contemplated by
Article II shall
have been approved for listing on NASDAQ, subject to official
notice of issuance.

 

(g) Company Preferred Stock. All of
the shares of Company Preferred Stock, and all of the shares of any
other class or series of preferred stock of the Company outstanding
as of immediately prior to the Effective Time, shall have been
cancelled or converted into shares of Company Common Stock in
accordance with the applicable provisions of the respective
certificates of designations and preferences for the applicable
series of Company Preferred Stock or other class or series of
preferred stock.

 

(h) Transaction Agreements. Each of
the Stockholders Agreement and the Registration Rights Agreement
shall have been executed and delivered by each of the parties
thereto.

 

(i) Fusion Global Arrangement or
Dissolution of Fusion Global. The Company shall have
consummated the Fusion Global Arrangement or shall have dissolved
Fusion Global.

 

 

56

 

 

(j) Separation of Consumer/SMB
Business. The Separation Agreements shall have been entered
into and the transactions contemplated by the Separation Agreements
shall have been consummated.

 

(k) Selection of Directors. All
nine of the initial members of the Company Board shall have been
determined in accordance with the provisions of the
Stockholders’ Agreement.

 

Section
7.2 Conditions to Obligations of
BCHI . The obligation of
BCHI to effect the Merger is also subject to the satisfaction, or
waiver by BCHI, at or prior to the Effective Time, of the following
conditions:

 

(a) Representations and Warranties.
The representations and warranties of the Company set forth in this
Agreement (except for the representations and warranties set forth
in Section 3.1,
Section 3.2,
Section 3.3 and
Section 3.25)
shall be true and correct as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective
Time (except that representations and warranties that by their
terms speak specifically as of the date of this Agreement or
another date will be true and correct as of such date), except that
this condition will be deemed satisfied unless all inaccuracies in
such representations and warranties in the aggregate constitute a
Company Material Adverse Effect at the Closing Date (ignoring
solely for purposes of this proviso any reference to Company
Material Adverse Effect or other materiality qualifiers contained
in such representations and warranties), and BCHI shall have
received a certificate signed on behalf of the Company by an
officer of the Company to the foregoing effect. The representations
and warranties of the Company set forth in Section 3.1, Section 3.2, Section 3.3 and Section 3.25 shall be true
and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made on and as of
the Effective Time.

 

(b) Performance of Obligations of the
Company. Each of the Company and Merger Sub shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement at or prior to
the Closing Date, and BCHI will have received a certificate signed
on behalf of the Company by an officer of the Company to such
effect.

 

(c) Company Material Adverse
Effect. There shall not have occurred at any time after the
date of this Agreement any Company Material Adverse
Effect.

 

Section
7.3 Conditions to Obligations of the
Company and Merger Sub . The obligation of
the Company and Merger Sub to effect the Merger is also subject to
the satisfaction or waiver by the Company, on behalf of itself and
Merger Sub, at or prior to the Effective Time of the following
conditions:

 

(a) Representations and Warranties.
The representations and warranties of BCHI set forth in this
Agreement (except for the representations and warranties set forth
in Section 4.1,
Section 4.2,
Section 4.3,
Section 4.5(d) and
Section 4.22)
shall be true and correct as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective
Time (except that representations and warranties that by their
terms speak specifically as of the date of this Agreement or
another date will be true and correct as of such date), except that
this condition will be deemed satisfied unless all inaccuracies in
such representations and warranties in the aggregate constitute a
BCHI Material Adverse Effect at the Closing Date (ignoring solely
for purposes of this proviso any reference to BCHI Material Adverse
Effect or other materiality qualifiers contained in such
representations and warranties), and the Company shall have
received a certificate signed on behalf of BCHI by an officer of
BCHI to the foregoing effect. The representations and warranties of
BCHI set forth in Section
4.1, Section
4.2, Section
4.3 and Section 4.22 shall be true
and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made on and as of
the Effective Time. The representation and warranty of BCHI set
forth in Section
4.5(d) shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of
the Effective Time.

 

 

57

 

 

(b) Performance of Obligations of
BCHI. BCHI shall have performed in all material respects all
covenants and agreements required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company will
have received a certificate signed on behalf of BCHI by an officer
of BCHI to such effect.

 

(c) BCHI Material Adverse Effect.
There shall not have occurred at any time after the date of this
Agreement any BCHI Material Adverse Effect.

 

(d) FIRPTA Certificate. BCHI shall
have delivered to the Company an executed notice to the IRS
prepared in accordance with the requirements of Treasury
Regulations Sections 1.897-2(h)(2) and 1.1445-2(c)(3) that is
reasonably acceptable to the Company and dated as of the Closing
Date, along with written authorization for the Company to deliver
such notice to the IRS on behalf of BCHI following the
Closing.

 

Section
7.4 Frustration of Closing
Conditions . No Party may rely
on the failure of any condition set forth in Section 7.1, Section 7.2, or Section 7.3, as the case may
be, to be satisfied, if such Party’s failure to perform any
material obligation required to be performed by it has been the
primary cause of, or primarily results in, such
failure.

 

ARTICLE VIII

 

Termination and
Amendment

 

Section
8.1 Termination . This Agreement
may be terminated and the Transactions abandoned at any time prior
to the Effective Time:

 

(a) by the mutual
written consent of the Company and BCHI duly authorized by each of
the Company Board and the board of directors of BCHI,
respectively.

 

 

58

 

 

(b) by either of the
Company or BCHI:

 

(i) by written notice
to the other Party at any time after the Outside Date, if the
Closing has not been consummated on or before the Outside Date;
except that, if on the Outside Date (A) the conditions set forth in
Section 7.1(b)
and Section 7.1(c)
not satisfied but all of the other conditions to Closing have been
satisfied or waived (other than those conditions that by their
nature are to be satisfied at the Closing) and the condition set
forth in Section 7.1(b) remains
capable of being satisfied and (B) no final and non-appealable
order imposed by any Governmental Entity preventing the
consummation of the Transactions is in effect as of such date of
determination, then the Outside Date may be extended until April
30, 2018 at the
election of either BCHI or the Company by written notice to the
other at or before 11:59 p.m., New York time, on the Outside Date;
and except that the right to terminate this Agreement under this
Section 8.1(b)(i) will not
be available (x) to a Party if the inability to satisfy such
conditions was due to the failure of such Party to perform any of
its obligations under this Agreement or (y) to a Party if another
Party has filed (and is then pursuing) an action seeking specific
performance as permitted by Section 9.10;

 

(ii) if
any Law or Order having the effect set forth in Section 7.1(c) is in
effect and has become final and nonappealable;

 

(iii) if
(x) the Stockholders Meeting (including any adjournments and
postponements thereof) shall have been held and completed and the
Company’s stockholders shall have voted on a proposal to
adopt this Agreement and (y) the Stockholder Approval shall
not have been obtained at such meeting (and shall not have been
adopted at any adjournment or postponement thereof); provided, however, that a Party shall not
be permitted to terminate this Agreement pursuant to this
Section 8.1(b)(iii)
if the failure to obtain the Stockholder Approval results from a
material breach of this Agreement by such Party; or

 

(iv) if
binding commitments in respect of the Financing (or, if Alternative
Financing is being used, the Alternative Financing) at the Closing
shall not have been entered into by a Financing Source on or before
the date that is 60 days after the date
hereof.

 

(c) by BCHI if the
Company has breached any of its representations or warranties set
forth in this Agreement (or if any such representations or
warranties fail to be true) or the Company has failed to perform
any of its covenants or agreements set forth in this Agreement,
which breach or failure (A) would (if it occurred or was
continuing as of the Closing Date) give rise to the failure of a
condition set forth in Section 7.2(a) or
Section 7.2(b)
and (B) is incapable of being cured, or is not cured by the
Company by the earlier of (1) the Outside Date and (2) 30 days
following receipt of written notice from BCHI of such breach or
failure.

 

(d) by the Company if
BCHI has breached any of its representations or warranties set
forth in this Agreement (or if any such representations or
warranties fail to be true) or BCHI has failed to perform its
covenants or agreements set forth in this Agreement, which breach
or failure (A) would (if it occurred or was continuing as of the
Closing Date) give rise to the failure of a condition set forth in
Section 7.3(a)
or Section 7.3(b) and (B) is
incapable of being cured, or is not cured, by BCHI by the earlier
of (1) the Outside Date and (2) 30 days following receipt of
written notice from the Company of such breach or
failure.

 

(e) by BCHI if (i) the
Company has breached any of its obligations under Section 6.3 (No Solicitation or
Change of Recommendation) or (ii) the Company Board has made a
Change of Recommendation (whether or not in compliance with
Section 6.3(c)
(Certain Permitted Changes of Recommendation)).

 

 

59

 

 

(f) by the Company if
the Company Board has made a Change of Recommendation and is in
compliance with, and has not breached any provisions of,
Section
6.3.

 

Section
8.2 Effect of Termination
. In
the event of the termination of this Agreement as provided in
Section 8.1,
written notice thereof will be given to the other Party or Parties,
specifying the provision of this Agreement pursuant to which such
termination is made, and this Agreement will become null and void
(other than the provisions of this Section 8.2, Section 8.3 and the provisions
in Article IX
(General Provisions), all of which will survive termination of this
Agreement). Upon termination pursuant to this Article VIII, there will
be no liability on the part of the Parties or their respective
directors, managers, officers and Affiliates; except that, upon the
termination of this Agreement nothing will be deemed to
(i) release any Party from any liability to any other Party
for any breach by such Party of this Agreement prior to such
termination or (ii) impair the right of any Party to compel
specific performance by any other Party of its obligations under
this Agreement as provided in Section 9.10 of this
Agreement.

 

Section
8.3 Fees and Expenses
.
Except as otherwise expressly provided in this Agreement, if the
Transactions are not consummated, the fees and expenses incurred by
each Party in connection with the negotiation, preparation,
execution and delivery of this Agreement and the documents and
instruments contemplated hereby and in connection with the
Transactions contemplated hereby, including all fees and
disbursements of advisors retained by any Party will be the sole
responsibility of such incurring and retaining Party.

 

ARTICLE IX

 

General Provisions

 

Section
9.1 Notices . All notices and
other communications in connection with this Agreement will be in
writing and will be deemed to have been duly given: (a) on the date
of service if served personally on the Party to whom notice is to
be given; (b) on the day of transmission if sent by e-mail to the
e-mail address given below (provided no delivery failure message is
received by the sender); (c) on the Business Day after delivery to
an overnight courier or the Express Mail service maintained by the
United States Postal Service; or (d) on the fifth day after
mailing, if mailed to the Party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid and
properly addressed, to the Party as follows:

 

(a) if to the Company,
Merger Sub, or Surviving Company to:

 

Fusion
Telecommunications International, Inc.

420
Lexington Avenue, Suite 1718

New
York, New York 10170

Attention: James P.
Prenetta, Jr., Executive Vice President and General
Counsel

Email:
jprenetta@fusionconnect.com

 

 

60

 

 

with a
copy to (which will not constitute notice):

 

Greenberg Traurig,
LLP

200
Park Avenue

New
York, New York 10166

Attention: Dennis
J. Block

Email:
dblock@gtlaw.com

 

(b) if to BCHI,
to:

 

Birch
Communications Holdings, Inc.

c/o
Birch Communications, Inc.

320
Interstate North Pkwy SE

Atlanta, Georgia
30339

Attention: Gordon
P. Williams, Jr., Senior Vice President and General
Counsel

Email:
chuck.williams@birch.com

 

with a
copy to (which will not constitute notice):

 

Jones
Day

1420
Peachtree Street, N.E.

Suite
800

Atlanta, Georgia
30309-3053

Attention: William
B. Rowland

Email:
wbrowland@jonesday.com

 

 

61

 

 

Section
9.2 Interpretation

 

(a) When a reference is
made in this Agreement to Articles, Sections, Exhibits, Schedules
or Disclosure Letters, such reference will be to an Article or
Section of or Exhibit, Schedule or Disclosure Letter to this
Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation
of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this
Agreement, they will be deemed to be followed by the words
“without limitation.” Unless the context otherwise
requires, (i) ”or” is disjunctive but not
necessarily exclusive, (ii) words in the singular include the
plural and vice versa, and (iii) the use in this Agreement of
a pronoun in reference to a Party hereto includes the masculine,
feminine or neuter, as the context may require. References to
statutes include all regulations promulgated thereunder and
references to statutes or regulations will be construed as
including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.

 

(b) The Company
Disclosure Letter and BCHI Disclosure Letter as well as all other
schedules and all exhibits hereto, will be deemed part of this
Agreement and included in any reference to this Agreement. The
representations and warranties of BCHI and the Company are made and
given, and the covenants are agreed to, subject to the disclosures
and exceptions set forth in the Company Disclosure Letter and BCHI
Disclosure Letter. In no event will the listing of any matter in
the Company Disclosure Letter or BCHI Disclosure Letter be deemed
or interpreted to expand the scope the respective Party’s
representations, warranties or covenants set forth in this
Agreement. All attachments to the Company Disclosure Letter and
BCHI Disclosure Letter are incorporated by reference into the
Company Disclosure Letter and BCHI Disclosure Letter, respectively,
in which they are directly or indirectly referenced.
Notwithstanding anything in this Agreement to the contrary, the
mere inclusion of an item therein as an exception to a
representation or warranty will not be deemed an admission that
such item represents a material exception or material fact, event
or circumstance or that such item has had or would, individually or
in the aggregate, have a Company Material Adverse Effect or BCHI
Material Adverse Effect, as the case may be.

 

(c) The Parties have
participated jointly in negotiating and drafting this Agreement. In
the event that an ambiguity or a question of intent or
interpretation arises, this Agreement will be construed as if
drafted jointly by the Parties, and no presumption or burden of
proof will arise favoring or disfavoring any Party by virtue of the
authorship of any provision of this Agreement.

 

Section
9.3 Counterparts
. This
Agreement may be executed in two or more counterparts, all of which
will be considered one and the same agreement and will become
effective when counterparts have been signed by each of the Parties
and delivered to the other Party, it being understood that each
Party need not sign the same counterpart.

 

Section
9.4 Entire Agreement; Third Party
Beneficiaries . This Agreement
(including the documents and the instruments referred to in this
Agreement), together with the Confidentiality Agreement,
(a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the
Parties with respect to the subject matter of this Agreement,
(b) is not intended to confer on any Person, other than the
Parties and their respective successors and permitted assigns, any
rights or remedies hereunder, except (i) as provided in
Section 6.6
(which is intended for the benefit of the D&O Indemnified
Parties, each of whom will be a third party beneficiary of
Section 6.6)
and (ii) for the Financing Sources and their respective
successors, legal representatives and permitted assigns (each of
which will be a third party beneficiary with respect to their
respective rights under this Section 9.4, Section 9.8 and
Section 9.11). None
of the Financing Sources will have any liability to the Company or
its Affiliates relating to or arising out of this Agreement, the
Financing or otherwise, whether at law, or equity, in contract, in
tort or otherwise, and neither the Company nor any of its
Affiliates will have any rights or claims against any of the
Financing Sources hereunder or thereunder. In no event will the
Company be entitled to seek the remedy of specific performance of
this Agreement against the Financing Sources.

 

 

62

 

 

Section
9.5 Amendment . Subject to
compliance with applicable Law, at any time prior to the Effective
Time, this Agreement may be amended or supplemented in any and all
respects, whether before or after receipt of the Stockholder Vote
by written agreement signed by each of the Parties; except that,
after receipt of the Stockholder Vote, there may not be, without
further approval of such stockholders, any amendment of this
Agreement that changes the amount or the form of the consideration
to be delivered under this Agreement to the holders of Shares,
other than as contemplated by this Agreement. This Agreement may
not be amended except by an instrument in writing signed on behalf
of each of the Parties.

 

Section
9.6 Extension; Waiver
. At
any time prior to the Effective Time, the Company (on behalf of
itself and Merger Sub), by action taken or authorized by the
Company Board and by the board of directors of BCHI, may, to the
extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other
Party, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement, and (c) waive
compliance with any of the agreements or conditions contained in
this Agreement, except that, after any approval of the Transactions
by the stockholders of the Company, there may not be, without
further approval of such stockholders, any extension or waiver of
this Agreement or any portion hereof that reduces the amount or
changes the form of the consideration to be delivered to the
holders of Shares under this Agreement, other than as contemplated
by this Agreement. Any agreement on the part of a Party to any such
extension or waiver will be valid only if set forth in a written
instrument signed on behalf of such Party, but such extension or
waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition will not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure.

 

Section
9.7 Governing Law
. This
Agreement will be governed and construed in accordance with the
internal Laws of the State of Delaware, without regard to any
applicable conflict of laws principles (whether of the State of
Delaware or any other jurisdiction).

 

Section
9.8 Jurisdiction

 

(a) Each of the Parties
hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction and venue of the Chancery
Court of the State of Delaware and, in the absence of such
jurisdiction, the United States District Court for the District of
Delaware, and, in the absence of such federal jurisdiction, the
parties consent to be subject to the exclusive jurisdiction of any
Delaware state court sitting in New Castle County (together, the
“Chosen Courts”), in
any action or proceeding arising out of or relating to this
Agreement or the Transactions or for recognition or enforcement of
any judgment relating thereto, and each of the Parties hereby
irrevocably and unconditionally (i) agrees not to commence any
such action or proceeding except in the Chosen Courts,
(ii) agrees that any claim in respect of any such action or
proceeding may be heard and determined in the Chosen Courts, and
any appellate court hearing actions or proceedings therefrom,
(iii) 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 such action or proceeding in the
Chosen Courts, and (iv) waives, to the fullest extent it may
legally and effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding in the Chosen
Courts. Each of the Parties agrees that a final judgment in any
such action or proceeding will be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by Law.

 

 

63

 

 

(b) Notwithstanding the
foregoing, each of the Parties agrees that it will not bring any
action, cause of action, claim, cross-claim or third-party claim of
any kind or description, whether in law or in equity, whether in
contract or in tort or otherwise, against the Financing Sources in
any way relating to this Agreement or any of the Transactions,
including but not limited to any dispute arising out of or relating
in any way to the Financing Agreements or the performance thereof,
in any forum other than the Supreme Court of the State of New York,
Borough of Manhattan, or, if under applicable law, exclusive
jurisdiction is vested in the federal courts of the State of New
York (and appellate courts thereof). Each of the Parties agrees
that a final judgment in any such action or proceeding will 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 HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING
AGREEMENTS OR THE PERFORMANCE THEREOF. 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 LITIGATION, SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.8(c).

 

Section
9.9 Assignment . Neither this
Agreement nor any of the rights, interests or obligations hereunder
will be assigned by any of the Parties (whether by operation of law
or otherwise) without the prior written consent of the other
Parties and any attempt to do so will be null and void; except that
each of BCHI, the Company and Merger Sub may assign its rights and
obligations hereunder to the Financing Sources providing the
Financing pursuant to the terms thereof to the extent necessary for
purposes of creating a security interest herein or otherwise
assigning as collateral in respect of such Financing, but no such
assignment will release any assigning Party from its obligations
hereunder. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the
Parties and their respective permitted successors and
assigns.

 

Section
9.10 Specific Performance
. The
Parties agree that immediate, extensive and irreparable damage, for
which monetary damages would not be an adequate remedy, would occur
in the event that the Parties do not perform their obligations
under the provisions of this Agreement in accordance with its
specified terms or otherwise breach such provisions. Accordingly,
the Parties acknowledge and agree that the Parties will be
entitled, in addition to any other remedy to which they are
entitled at law or in equity, to an injunction or injunctions,
specific performance or other equitable relief to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions hereof (including the obligation of the Parties to
consummate the Merger) in the Chosen Courts without proof of
damages or otherwise, and that such explicit rights to specific
enforcement are an integral part of the Transactions and, without
such rights, neither the Company nor BCHI would have entered into
this Agreement. Each of the Parties agrees that it will not oppose
the granting of an injunction, specific performance and other
equitable relief on the basis that the other Parties have an
adequate remedy at law or an award of specific performance is not
an appropriate remedy for any reason at law or in
equity.

 

Section
9.11 Waivers . Any failure of
any of the Parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the Party or Parties
entitled to the benefits thereof, except in the case of any express
waiver of Section
9.4, Section
9.8, Section
9.10, and this Section 9.11 which is,
individually or in the aggregate, materially adverse to any
Financing Source, which waiver will only be effective with respect
to such Financing Source if such Financing Source has consented
thereto or to the extent that the consent of such Financing Source
is not required to be obtained under the applicable provisions of
the Financing Agreements relating to waivers of this Agreement,
only by a written instrument signed by the Party granting such
waiver, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent
or other failure.

 

 

64

 

 

Section
9.12 No Survival
of Representations and Warranties 
.. The representations and warranties of contained herein and in any
certificate or other writing delivered pursuant hereto shall not
survive the Effective Time.

 

Section
9.13 Severability
. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable, such term, provision, covenant or
restriction will be deemed to be modified to the extent necessary
to render it valid, effective and enforceable, and the remainder of
the terms, provisions, covenants and restrictions of this Agreement
will remain in full force and effect and will in no way be
affected, impaired or invalidated.

 

Section
9.14 Non-Recourse
.
Except for any claim or cause of action arising under or related to
any Support Agreement, any claim or cause of action based upon,
arising out of, or related to this Agreement may only be brought
against Persons that are expressly named as Parties, and then only
with respect to the specific obligations set forth herein. Except
for any liability or obligation arising under or related to any
Support Agreement, no former, current or future direct or indirect
equityholders, controlling Persons, stockholders, directors,
officers, employees, members, managers, agents, trustees,
Affiliates, general or limited partners or assignees of the Parties
(except permitted assignees under Section 9.9) or of any former,
current or future direct or indirect equityholder, controlling
Person, stockholder, director, officer, employee, member, manager,
agent, trustee, Affiliate, general or limited partner or assignee
of any of the foregoing (collectively, but for the avoidance of
doubt excluding the Parties) will have any liability or obligation
for any of the representations, warranties, covenants, agreements,
obligations or liabilities of any Party under this Agreement or for
any Action based on, in respect of, or by reason of, the
Transactions (including the breach, termination or failure to
consummate any of the Transactions), in each case whether based on
contract, tort or strict liability, by the enforcement of any
assessment, by any legal or equitable Action, by virtue of any
statute, regulation or applicable Law or otherwise and whether by
or through attempted piercing of the corporate, limited liability
company or partnership veil, by or through a claim by or on behalf
of a Party hereto or another Person or otherwise.

 

Section
9.15 Definitions

 

. For
the purposes of this Agreement:

 

“Act” has the meaning set
forth in Section
1.1(a).

 

“Action” has the meaning
set forth in Section
3.8(a).

 

 

65

 

 

“Affiliate” means a Person
that directly or indirectly, through one or more intermediaries,
control, is controlled by, or is under common control with, the
first-mentioned Person. For this purpose, “control”
(including the terms “controlled by” and “under
common control with”) means the possession, directly or
indirectly or as trustee or executor, of the power to direct or
cause the direction of the management or policies of a Person,
whether through the ownership of stock, by Contract or
otherwise.

 

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

 

“Alternative Acquisition
Agreement” has the meaning set forth in Section
6.3(a)(i)(B).

 

“Alternative Financing”
has the meaning set forth in Section 6.11(a).

 

“Alternative Proposal”
means any proposal or offer made by a Person (other than BCHI, a
BCHI Subsidiary or an Affiliate of BCHI or a BCHI Subsidiary)
relating to (a) any direct or indirect acquisition or purchase, in
a single transaction or a series of related transactions, of (i)
15% or more of the consolidated total assets of the Company and the
Company Subsidiaries, taken as a whole, or (ii) 5% or more of the
voting securities of the Company, (b) any tender offer or exchange
offer that if consummated would result in any Person beneficially
owning, directly or indirectly, 5% or more of any class of
outstanding Equity Interests of the Company or any Company
Subsidiary, (c) any merger, consolidation, exclusive license,
business combination, joint venture, partnership, share exchange or
other transaction involving the Company or any Company Subsidiary
pursuant to which any Person or its holders of Equity Interests
would beneficially own, directly or indirectly, 5% or more of any
class of outstanding Equity Interests of the Company or any Company
Subsidiary or the surviving entity resulting, directly or
indirectly, from any such transaction or (d) concerning any
recapitalization, liquidation, dissolution or any other similar
transaction involving the Company or any Company Subsidiary, which
represents, individually or in the aggregate, 15% or more of the
Company’s consolidated assets, in each case, other than the
Transactions.

 

“Antitrust Authorities”
means the Antitrust Division of the United States Department of
Justice, the United States Federal Trade Commission or the
antitrust or competition law authorities of any other jurisdiction
(whether United States, foreign or multinational).

 

“Antitrust Laws” has the
meaning set forth in Section 3.4.

 

“Award Agreements” has the
meaning set forth in Section 2.3(b).

 

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

 

 

66

 

 

“BCHI Approval” has the
meaning set forth in Section 4.9(b).

 

“BCHI Benefit Plans” has
the meaning set forth in Section 4.9(a).

 

“BCHI Bylaws” has the
meaning set forth in Section 4.1(b).

 

“BCHI Capital Stock” has
the meaning set forth in Section 4.2(a).

 

“BCHI Charter” has the
meaning set forth in Section 4.1(b).

 

“BCHI Commonly Controlled
Entity” has the meaning set forth in Section 4.9(d).

 

“BCHI Common Stock” means
the common stock, par value $0.01 per share, of BCHI.

 

“BCHI Disclosure Letter”
has the meaning set forth in the preamble to Article IV.

 

“BCHI Employees” has the
meaning set forth in Section 6.5(a).

 

“BCHI Financial
Statements” has the meaning set forth in Section 4.5(a).

 

“BCHI Intellectual
Property” has the meaning set forth in Section 4.13(a).

 

 

67

 

 

“BCHI Interconnection
Agreements” has the meaning set forth in Section 4.17.

 

“BCHI Leased Real
Property” has the meaning set forth in Section 4.15.

 

“BCHI Licenses” has the
meaning set forth in Section 4.16(a).

 

“BCHI Material Adverse
Effect” means any change, event, effect, occurrence,
state of facts or development that, individually or in the
aggregate, (a) has had or would reasonably expected to have a
material adverse effect on the business, results of operations,
assets, liabilities or condition (financial or otherwise) of BCHI
and the BCHI Subsidiaries, taken as a whole, (b) has a material
adverse effect on the ability of BCHI to consummate the
Transactions or (c) would prevent the consummation by BCHI of the
Transactions by the Outside Date; provided, however, that in no
event will any of the following (including the effect of any of the
following) be taken into account in determining whether, with
regard to clause (a) there has been or will be, a “BCHI
Material Adverse Effect”: (i) changes, events, effects,
occurrences, states of facts or developments generally affecting
the United States or global economy or the financial, credit, debt,
securities or other capital markets in the United States or any
other jurisdiction, including changes in interest rates,
(ii) changes in GAAP or the interpretation thereof or changes
in Laws, the interpretation thereof or political, legislative or
regulatory conditions (A) applicable to BCHI or the BCHI
Subsidiaries or any of its or their respective properties or assets
or (B) generally affecting the industries in which BCHI and the
BCHI Subsidiaries operate, (iii) acts of war or terrorism (or the
escalation of the foregoing) or natural or weather-related
disasters or other force majeure events (including hurricanes,
floods or earthquakes), and (iv) any failure to meet internal
or published projections, forecasts or revenue or earnings
predictions for any period, except that the underlying causes of
such change or failure will not be excluded by this clause
(iv), except, in
the case of clauses (i), (ii) and (iii) to the extent
disproportionately affecting BCHI and the BCHI Subsidiaries when
compared to other Persons operating in the same
industries.

 

“BCHI Material Contract”
has the meaning set forth in Section 4.12(a).

 

“BCHI Network Facility
Agreement” has the meaning set forth in Section 4.18(c).

 

“BCHI Owned Network
Facilities” means Network Facilities that are owned by
BCHI or any BCHI Subsidiary.

 

“BCHI Owned Real Property”
has the meaning set forth in Section 4.15.

 

“BCHI Owned Intellectual
Property” has the meaning set forth in Section
4.13(b)(ii).

 

“BCHI Pension Plans” has
the meaning set forth in Section 4.9(a).

 

“BCHI Proprietary
Software” means all
Software owned or purported to be owned by BCHI or a BCHI
Subsidiary.

 

“BCHI Registered Intellectual
Property” means BCHI Intellectual Property owned or
purported to be owned by BCHI or any BCHI Subsidiary that is
registered or for which an application for registration has been
submitted by BCHI or any BCHI Subsidiary.

 

 

68

 

 

“BCHI Subsidiary” means
any direct or indirect Subsidiary of BCHI.

 

“BCHI Third-Party Network
Facilities” means all of the Network Facilities of
BCHI and its Subsidiaries that are not owned by BCHI or any of its
Subsidiaries but are provided under lease, license, indefeasible
rights of use of capacity or infrastructure or other BCHI Network
Facility Agreement, including Right-of-Way Agreements, between BCHI
or any BCHI Subsidiary, on the one hand, and a third party, on the
other hand.

 

“BCHI Welfare Plans” has
the meaning set forth in Section 4.9(a).

 

“BCI” has the meaning set
forth in Section
4.5(a).

 

“Bona Fide Alternative
Proposal” means an unsolicited written bona fide
Alternative Proposal that was not received or obtained in violation
of Section
6.3.

 

“Business Day” means a day
other than a Saturday, a Sunday or another day on which commercial
banking institutions in New York, New York are authorized or
required by Law to be closed.

 

“CALEA” has the meaning
set forth in Section
3.17(c).

 

“Canadian Authorities” has
the meaning set forth in Section 4.16(a).

 

“Certificate of Merger”
has the meaning set forth in Section 1.1(b).

 

“Certificates” has the
meaning set forth in Section 1.1(d)(i).

 

“Change of Recommendation”
has the meaning set forth in Section
6.3(b)(vi).

 

“Change of Recommendation
Notice” has the meaning set forth in Section 6.3(d).

 

“Chosen Courts” has the
meaning set forth in Section 9.8(a).

 

“Claim” has the meaning
set forth in Section
6.6(a).

 

 

69

 

 

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

 

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

 

“COBRA” means the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and as codified in Section 4980B of the Code and Section 601 et.
seq. of ERISA.

 

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

 

“Communications Act” has
the meaning set forth in Section 3.17(c).

 

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

 

“Company Approval” has the
meaning set forth in Section 3.10(b).

 

“Company Benefit Plans”
has the meaning set forth in Section 3.10(a).

 

“Company Board” has the
meaning set forth in the Recitals.

 

“Company Board
Recommendation” has the meaning set forth in the
Recitals.

 

“Company Bylaws” has the
meaning set forth in Section 3.1(b).

 

“Company Capital Stock”
has the meaning set forth in Section 3.2(a).

 

 

70

 

 

“Company Charter” has the
meaning set forth in Section 3.1(b).

 

“Company Common Stock”
means the common stock, par value $.01 per share, of the
Company.

 

“Company Commonly Controlled
Entity” has the meaning set forth in Section 3.10(d).

 

“Company Disclosure
Letter” has the meaning set forth in the preamble to
Article III.

 

“Company FCC Approval” has
the meaning set forth in Section 3.4.

 

“Company Financial
Statements” has the meaning set forth in Section 3.6(a).

 

“Company Intellectual
Property” has the meaning set forth in Section 3.14(a).

 

“Company Interconnection
Agreements” has the meaning set forth in Section 3.18.

 

“Company Leased Real
Property” has the meaning set forth in Section 3.16.

 

“Company Licenses” has the
meaning set forth in Section 3.17(a).

 

“Company Material Adverse
Effect” means any change, event, effect, occurrence,
state of facts or development that, individually or in the
aggregate, (a) has had or would reasonably be expected to have a
material adverse effect on the business, results of operations,
assets, liabilities or condition (financial or otherwise) of the
Company and the Company Subsidiaries, taken as a whole, (b) has a
material adverse effect on the ability of the Company to consummate
the Transactions or (c) would prevent the consummation by the
Company of the Transactions by the Outside Date; provided, however,
that in no event will any of the following (including the effect of
any of the following) be taken into account in determining whether,
with regard to clause (a), there has been or will be, a
“Company Material Adverse Effect”: (i) changes, events,
effects, occurrences, states of facts or developments generally
affecting the United States or global economy or the financial,
credit, debt, securities or other capital markets in the United
States or any other jurisdiction, including changes in interest
rates, (ii) changes in GAAP or the interpretation thereof or
changes in Laws, the interpretation thereof or political,
legislative or regulatory conditions (A) applicable to the Company
or the Company Subsidiaries or any of its or their respective
properties or assets or (B) generally affecting the industries in
which the Company and the Company Subsidiaries operate, (iii) acts
of war or terrorism (or the escalation of the foregoing) or natural
or weather-related disasters or other force majeure events
(including hurricanes, floods or earthquakes), and (iv) any
failure to meet internal or published projections, forecasts or
revenue or earnings predictions for any period, except that the
underlying causes of such change or failure will not be excluded by
this clause (iv),
except, in the case of clauses (i), (ii) and (iii) to the extent
disproportionately affecting the Company and the Company
Subsidiaries when compared to other Persons operating in the same
industries.

 

 

71

 

 

“Company Material
Contract” has the meaning set forth in Section 3.13(a).

 

“Company Network Facility
Agreement” has the meaning set forth in Section 3.19(c).

 

“Company Non-Solicit
Parties” has the meaning set forth in Section 6.3(a)(i).

 

“Company Options” means
each unexercised and unexpired option to purchase Company Capital
Stock that is outstanding immediately prior to the Effective
Time.

 

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

 

“Company Owned Network
Facilities” means Network Facilities that are owned by
the Company or any Company Subsidiary.

 

“Company Owned Real
Property” has the meaning set forth in Section 3.16.

 

“Company Pension Plans”
has the meaning set forth in Section 3.10(a).

 

“Company Preferred Stock”
means each share of Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series A-4 Preferred Stock and Series B-2
Preferred Stock of the Company.

 

“Company Proprietary
Software” means all
Software owned by the Company or a Company
Subsidiary.

 

“Company Registered Intellectual
Property” means Company Intellectual Property owned or
purported to be owned by the Company or any Company Subsidiary that
is registered or for which an application for registration has been
submitted by the Company or any Company Subsidiary.

 

“Company Reports” has the
meaning set forth in Section 3.5(a).

 

“Company State Approvals”
has the meaning set forth in Section 3.4.

 

 

72

 

 

“Company Subsidiary” means
any direct or indirect Subsidiary of the Company, and will include
Merger Sub.

 

“Company Third-Party Network
Facilities” means all of the Network Facilities of the
Company and its Subsidiaries that are not owned by the Company or
any of its Subsidiaries but are provided under lease, license,
indefeasible rights of use of capacity or infrastructure or other
Company Network Facility Agreement, including Right-of-Way
Agreements, between the Company or any Company Subsidiary, on the
one hand, and a third party, on the other hand.

 

“Company
Warrants” means each
warrant to purchase Company Common Stock that is outstanding and
unexercised as of the Effective Time.

 

“Company Welfare Plans”
has the meaning set forth in Section 3.10(a).

 

“Confidentiality
Agreement” has the meaning set forth in Section 6.4(b).

 

“Consumer/SMB Business”
has the meaning set forth in Exhibit D.

 

“Contracts” means any
contracts, agreements, arrangements, licenses (or sublicenses),
notes, bonds, mortgages, indentures, commitments, leases (or
subleases) or other instruments or obligations, whether written or
oral.

 

“CPNI” has the meaning set
forth in Section
3.17(c).

 

“CRA” means the Canada
Revenue Agency.

 

“Cramming” has the meaning
set forth in Section
3.17(d).

 

“CRTC” means the Canadian
Radio-television and Telecommunications Commission.

 

“D&O Indemnified
Parties” has the meaning set forth in Section 6.6(a).

 

“D&O Insurance” has
the meaning set forth in Section 6.6(b).

 

 

73

 

 

“DGCL” means the Delaware
General Corporation Law.

 

“Effective Time” has the
meaning set forth in Section 1.1(b).

 

“Environment” means soil,
soil vapor, surface water, groundwater, land, sediment, surface or
subsurface structures or strata or ambient air.

 

“Environmental Law” means
any Law regulating or relating to the protection of human health,
safety (as it relates to Releases of Hazardous Substances), natural
resources or the Environment, including, without limitation, laws
relating to wetlands, pollution, contamination or the use,
generation, management, handling, transport, treatment, disposal,
storage, Release or threatened Release of Hazardous
Substances.

 

“Equity Interest” means
any share, capital stock, partnership, limited liability company,
membership or similar interest in any Person.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

 

“Equity Compensation
Plans” means the equity compensation plans and
agreements of the Company and the Company Subsidiaries described in
Section 9.15
of the Company Disclosure Letter.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“FCC” means the Federal
Communications Commission.

 

“FCC Approval” has the
meaning set forth in Section 4.4.

 

“FCC Rules” has the
meaning set forth in Section 3.17(c).

 

“Financing” has the
meaning set forth in Section 6.11(a).

 

“Financing Agreements” has
the meaning set forth in Section 6.11(a).

 

 

74

 

 

“Financing Source” means,
in its capacity as such, any lender providing a binding commitment
for the Financing pursuant to a Financing Agreement, or any
Affiliates, employees, officers, directors, agents or advisors of
any such lender.

 

“Fully-Diluted Company Share
Total” means, as of immediately prior to the Effective
Time, the number of shares of Company Common Stock issued and
outstanding, plus the number of shares of Company Common Stock
issued or issuable upon the conversion of the Company Preferred
Stock and any other class or series of preferred stock of the
Company outstanding as of immediately prior to the Effective Time,
plus the number of shares of Company Common Stock issuable upon the
exercise of all In-the-Money Company Warrants (as adjusted for
stock splits and calculated using the treasury stock method). For
the avoidance of doubt, all shares of Company Common Stock that are
(a) issued after the date hereof pursuant to Section 5.2, or (b) issuable
upon the conversion of Company Preferred Stock, any other class or
series of preferred stock of the Company, or any other security or
debt instrument, in each case, issued after the date hereof
pursuant to Section
5.2, will be included in the Fully-Diluted Company Share
Total, unless otherwise agreed by the Parties.

 

“Fusion Global” has the
meaning set forth in Section 6.17.

 

“Fusion Global
Arrangement” has the meaning set forth in Section 6.17.

 

“GAAP” means U.S.
generally accepted accounting principles.

 

“GBCC” has the meaning set
forth in Section
1.1(a).

 

“Governmental Entity”
means any federal, state, provincial, territorial, municipal, local
or foreign government, governmental authority, regulatory or
administrative agency, governmental commission, department, board,
bureau, agency or instrumentality, court or tribunal, arbitration
or mediation body or appointing authority, or self-regulatory
organization.

 

“Hazardous Substances”
means any substance that: (i) is or contains asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, petroleum,
petroleum products or petroleum-derived substances or wastes, radon
gas, microbial or microbiological contamination or related
materials, (ii) requires investigation or remedial action pursuant
to any Environmental Law or (iii) is defined, listed or identified
as a “hazardous waste,” “hazardous
substance,” “toxic substance” or words of similar
import thereunder or (iv) is regulated under any Environmental
Law.

 

“Holding LLC” has the
meaning set forth in the Recitals.

 

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

 

“Intellectual Property”
means all of the following anywhere in the world and all legal
rights, title or interest in, under or in respect of the following
arising under Law, whether or not filed, perfected, registered or
recorded and whether now or later existing, filed, issued or
acquired, including all renewals: (a) all patents and
applications for patents (including all invention disclosures) and
all related reissues, reexaminations, divisions, renewals,
extensions, provisionals, continuations and continuations in part,
(b) all copyrights, copyright registrations and copyright
applications, copyrightable works and all other corresponding
rights, (c) all trade dress and trade names, logos, Internet
addresses and domain names, trademarks and service marks and
related registrations and applications, including any intent to use
applications, supplemental registrations and any renewals or
extensions, all other indicia of commercial source or origin and
all goodwill associated with any of the foregoing, (d) all
Software (including source and object code), firmware, development
tools, proprietary languages, algorithms, files, records, technical
drawings and related documentation, data and manuals and rights
therein, (e) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), know how,
technology, technical data, (f) trade secrets, confidential
business information, financial, marketing and business data,
pricing and cost information, business and marketing plans,
advertising and promotional materials, customer, distributor,
reseller and supplier lists and information, correspondence,
records, and other documentation, and other proprietary information
of every kind (collectively, if and to the extent proprietary, held
as confidential and protectable as a “trade secret”
under applicable Law, “Trade Secrets”),
(g) all databases and data collections and all rights therein,
(h) all other proprietary rights (including moral rights) and
(i) all copies and tangible embodiments of any of the
foregoing (in whatever form or medium).

 

 

75

 

 

“Interim BCHI Financial
Statements” has the meaning set forth in Section 4.5(b).

 

“Interim Company Financial
Statements” has the meaning set forth in Section 3.6(b).

 

“In-the-Money Company
Warrants” means any Company Warrant that is
outstanding and unexercised as of immediately prior to the
Effective Time and has a per share exercise price that is less than
the volume weighted average daily closing price of the Company
Common Stock, as reported by NASDAQ (or any successor to such
exchange), for the ten consecutive trading days ending on the
Business Day preceding the Closing Date (as adjusted for stock
splits); provided, that all Company Warrants issued after the
execution of this Agreement will be deemed to be In-the-Money
Company Warrants.

 

“IRS” means the Internal
Revenue Service.

 

“ITA” means the
Income Tax Act (Canada), as
amended.

 

“knowledge of the Company”
means the actual knowledge of Matthew D. Rosen, Gordon Hutchins,
Jr., Michael R. Bauer, Russell P. Markman and James Prenetta, after
reasonable investigation.

 

“knowledge of BCHI” means
the actual knowledge of Gordon P. Williams, Vincent Oddo, Kevin
Dotts, James O’Brien and Michelle Ansley, after reasonable
investigation.

 

“Law” means any federal,
state, provincial, territorial, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution,
ordinance, code, order, writ, edict, decree, rule, regulation,
judgment, ruling, policy, guideline or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by
or under the authority of any Governmental Entity.

 

“Liens” means any lien,
mortgage, pledge, conditional or installment sale agreement,
encumbrance, covenant, restriction, option, right of first refusal,
easement, security interest, deed of trust, right-of-way,
encroachment, community property interest or other claim or
restriction of any nature, whether voluntarily incurred or arising
by operation of Law.

 

“Marketing Period” means
the first period of twenty (20) consecutive days (or such other
period as may be mutually agreed upon by the Parties) throughout
and on the last day of which (a) the Financing Sources will have
received the Required Information, and (b) all conditions set forth
in Section 7.1,
Section 7.2 and
Section 7.3 (other
than those that by their nature will not be satisfied until the
Effective Time) have been satisfied and nothing has occurred and no
condition exists that would cause any of the conditions set forth
in Section 7.1,
Section 7.2 and
Section 7.3 not to
be satisfied assuming the Effective Time were to be scheduled for
any time during such consecutive 20-day period (or such other
period as may be mutually agreed upon by the Parties).
Notwithstanding the foregoing, the “Marketing Period”
will not commence and will be deemed not to have commenced if, on
or prior to the completion of such consecutive 20-day period (or
such other period as may be mutually agreed upon by the Parties),
(i) the Company will have announced any intention to restate any
financial statements or financial information included in the
Required Information or that any such restatement is under
consideration or may be a possibility, in which case the Marketing
Period will be deemed not to commence unless and until such
restatement has been completed and the applicable Required
Information has been amended or the Company has announced that it
has concluded that no restatement will be required, or (ii) the
Company will have failed to file any report with the SEC when due,
in which case the Marketing Period will be deemed not to commence
unless and until all such reports have been filed.

 

 

76

 

 

“Maximum Premium” has the
meaning set forth in Section 6.6(b).

 

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

 

“Merger Consideration” has
the meaning set forth in Section 1.1(d).

 

“Merger Sub” has the
meaning set forth in the Preamble.

 

“NASDAQ” has the meaning
set forth in Section
3.4.

 

“Negotiation Period” has
the meaning set forth in Section 6.3(d).

 

“Network Facilities” means
all material network facilities (including cables, wires, conduits,
switches, and other equipment and facilities) and related material
operating support systems, network operations centers, and land and
buildings associated therewith.

 

“NOR” has the meaning set
forth in Section
3.17(g).

 

“Offering Documents” has
the meaning set forth in Section 6.11(b).

 

“Order” means any
judgment, order, decision, writ, injunction, decree, stipulation,
award, ruling, or other finding or agency requirement of a
Governmental Entity, or arbitration award.

 

“Outside Date” means April
2, 2018, or if extended to a later date pursuant to and in
accordance with Section
8.1(b)(ii), any such later date.

 

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

 

“Permits” means all
licenses, franchises, permits, variances, Orders, approvals,
certificates, authorizations, registrations and rights of or with
all Governmental Entities.

 

 

77

 

 

“Permitted Lien” means
(a) Liens in respect of any liabilities and obligations
reflected in the financial statements of the Company and the
Company Subsidiaries included in the Company Reports or the BCHI
Financial Statements, (b) with respect to owned real property
and leased real property, (i) defects, exceptions,
restrictions, rights of way, easements, covenants, encroachments
and other similar encumbrances or imperfections of title, none of
which materially impair or interfere with the present users of such
property, and (ii) zoning, entitlement, land use,
environmental regulations, and building restrictions, none of which
materially impair or interfere with the present uses of such
property, (c) Liens for current Taxes not yet delinquent or
being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with
GAAP on the Company’s or BCHI’s, as applicable,
financial statements, and (d) pledges or deposits in
connection with workers’ compensation or unemployment
insurance, (e) mechanics’, carriers’, workmen’s,
repairmen’s or other like Liens that arise or are incurred in
the ordinary course of business for amounts not yet due and payable
and (f) any other Liens that, in the aggregate, do not materially
impair the continued use and operation of the assets or properties
to which they relate.

 

“Person” means any
individual (in any capacity) or legal entity, including a
Governmental Entity.

 

“Personal Data” means any
data or information from, about, or related to an identified or
identifiable individual that (i) alone or in combination with other
data information could be used, directly or indirectly, to identify
an individual or otherwise facilitate decisions regarding
individuals, (ii) constitutes personal data or personal information
under any applicable Law or any applicable privacy policy,
including, individual’s combined first and last name, home
address, telephone number, fax number, email address, Social
Security number or other Government Entity-issued identifier
(including state identification number, driver’s license
number, or passport number), geolocation information of an
individual or device, biometric data, medical or health
information, credit card or other financial information (including
bank account information), cookie identifiers associated with
registration information, or any other browser- or device-specific
number or identifier not controllable by the end user, and web or
mobile browsing or usage information that is linked to the
foregoing.

 

“Proxy Statement” has the
meaning set forth in Section 3.4.

 

“Principal Company
Stockholders” means Marvin S. Rosen, Matthew D. Rosen,
Philip D. Turits, Michael J. Del Giudice, Jack Rosen, Larry Blum,
Paul C. O’Brien and William Rubin.

 

“PSC Rules” has the
meaning set forth in Section 3.17(c).

 

“Refinancing” means (i)
the repayment in full and termination of (x) the principal debt
facilities of the Company and BCHI, (y) the subordinated notes of
BCHI, dated October 28, 2016, in favor of Holcombe T. Green, Jr.,
R. Kirby Godsey and the Holcombe T. Green, Jr. 2013 Five-Year
Annuity Trust, and (z) the subordinated note of the Company, dated
November 14, 2016, in favor of Marvin S. Rosen, in each case, with
the proceeds of the Financing and (ii) the release and termination
of any and all security interests and liens in connection with any
of the foregoing.

 

“Registration Rights
Agreement” has the meaning set forth in Section 1.5.

 

“Release” means any
releasing, disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, emptying, seeping, dispersal,
migration, transporting, placing and the like, including, without
limitation, the moving of any materials through, into or upon, any
land, soil, surface water, groundwater or air, or otherwise
entering into the indoor or outdoor environment.

 

“Representatives” means
any officer, director, employee, investment bank, accountant,
attorney or other advisor or representative of a
Person.

 

“Required Information”
means all customary financial and other information regarding BCHI,
the Company and their respective Subsidiaries as may be reasonably
requested by a Party or a Financing Source in connection with the
Financing, including financial statements prepared in accordance
with GAAP, financial information necessary for the preparation of
pro forma financial statements customary for debt offerings under
Rule 144A under the Securities Act, projections, audit reports, a
draft of a customary comfort letter (including “negative
assurance comfort”) with respect to such financial
information by auditors of the Company which such auditors are
prepared to issue upon completion of customary procedures
letter.

 

 

78

 

 

“Reverse Split” has the
meaning set forth in Section 6.7.

 

“Right-of-Way Agreement”
means a right-of-way agreement, license agreement or other
agreement permitting or requiring a Person to lay, build, operate,
maintain or place cable, wires, conduits or other equipment and
facilities over land, underwater or underground.

 

“Sales Taxes” means the
goods and services tax and the harmonized sales tax imposed under
Part IX of the Excise Tax
Act (Canada), the Quebec sales tax imposed under
An Act Respecting the Quebec Sales
Tax and the provincial sales tax imposed under the
Provincial Sales Tax Act
(British Columbia), the Provincial
Sales Tax Act (Saskatchewan) and the Retail Sales Tax Act
(Manitoba).

 

“SEC” means the Securities
and Exchange Commission.

 

“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

 

“Separation Agreements”
has the meaning set forth in Section 6.16.

 

“Share” has the meaning
set forth in Section
1.1(d)(i).

 

“Slamming” has the meaning
set forth in Section
3.17(d).

 

“Software” means any
computer software program, together with any error corrections,
updates, modifications, or enhancements thereto, in both
machine-readable form and human readable form, including all
comments and any procedural code.

 

“SOX” means the
Sarbanes-Oxley Act of 2002.

 

“Spinco” has the meaning
set forth in Exhibit
D.

 

“State Approvals” has the
meaning set forth in Section 4.4.

 

“State PSCs” has the
meaning set forth in Section 3.17(a).

 

 

79

 

 

“State Telecommunications
Laws” has the meaning set forth in Section 3.17(c).

 

“Stockholder Approval” has
the meaning set forth in Section 3.3(a).

 

“Stockholders’
Agreement” has the meaning set forth in Section 1.4.

 

“Stockholders Meeting” has
the meaning set forth in Section 6.2(e).

 

“Subscription Agreements”
has the meaning set forth in the Recitals.

 

“Subsidiary” means, with
respect to a Person, another Person in which such first Person
owns, directly or indirectly, (a) any amount of the voting
securities, other voting rights or voting partnership interests of
which is sufficient to elect at least a majority of its board of
directors or other governing body or (b) a majority of the Equity
Interests of such other Person.

 

“Superior Proposal” means
a Bona Fide Alternative Proposal that the Company Board has
determined in good faith, after consultation with its outside
financial and legal advisors (taking into account the various
legal, financial, regulatory and other aspects of such Bona Fide
Alternative Proposal, including the financing terms thereof, the
nature of the consideration offered, the expected timing and risk
and likelihood of consummation), (a) is reasonably likely to be
consummated in accordance with its terms and (b) if consummated,
would result in a transaction more favorable to each of the
stockholders of the Company from a financial point of view than the
Transactions (after taking into account any revisions to the terms
of the Transactions proposed by BCHI, whether pursuant to
Section 6.3(d) or
otherwise); provided, however, that for purposes of the definition
of “Superior Proposal,” the references to “20% or
more” in the definition of Alternative Proposal will be
deemed to be references to “more than
95%.”

 

“Support Agreements” has
the meaning set forth in the Recitals.

 

“Surviving Company” has
the meaning set forth in Section 1.1(a).

 

“Takeover Laws” means any
state takeover Law or other state Law that purports to limit or
restrict business combinations or the ability to acquire or vote
Company Common Stock, including any “business
combination,” “control share acquisition,”
“fair price,” “moratorium” or other similar
anti-takeover Law.

 

“Tax” or
“Taxes”
means any (a) federal, state, local and foreign income, excise,
gross receipts, gross income, ad valorem, profits, gains, property,
estimated, capital, sales, transfer, use, value added, payroll,
employment, unemployment, workers’ compensation, severance,
withholding, duties, intangibles, franchise, backup withholding and
other taxes of any kind, charges, levies or like assessments,
including escheat, together with all penalties, and additions and
interest thereto, whether disputed or not, and whether liability is
imposed directly or by virtue of an obligation to indemnify or
otherwise assume or succeed to the Taxes of another Person and (b)
liability for the payment of any amounts of the type described in
clause (a) of this
sentence as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any taxable
period.

 

“Tax Return” includes all
returns, reports, claims for refund and forms (including elections,
designations, attachments, declarations, disclosures, schedules,
estimates, information returns and TD Form 90-22.1, and its
successor form FinCEN Form 114) relating to Taxes, including any
amendment thereof and any document with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such
return, report, document or declaration.

 

 

80

 

 

“Telecommunications Act”
has the meaning set forth in Section 3.18.

 

“Trade Secrets” has the
meaning set forth in the definition of Intellectual
Property.

 

“Transaction Litigation”
has the meaning set forth in Section 6.12.

 

“Transactions” means the
Merger, the matters described in Section 1.2 and the other
transactions contemplated by this Agreement.

 

“Treasury Regulations”
means the regulations promulgated under the Code by the U.S.
Department of the Treasury.

 

“UNEs” has the meaning set
forth in Section
3.18.

 

“USF Programs” has the
meaning set forth in Section 3.17(c).

 

[Remainder of Page Intentionally Left Blank]

 

 

81

 

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

 

Fusion
Telecom:

 

/s/  Gordon Hutchins, Jr.

     
Gordon Hutchins, Jr.

     
President and Chief Operating Officer

 

Fusion BCHI
Acquisition

 

/s/  Gordon Hutchins, Jr.

     
Gordon Hutchins, Jr.

     
Manager

 

Birch
Communications Holdings

 

/s/   Gordon Williams, Jr.

      
Gordon Williams, Jr.

    
  Senior Vice President and General Counsel

 

 

 

82

 

 

Exhibit A

 

 

SECOND AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION

 

OF

 

[FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.]1

 

 

 

The
name of the corporation is [Fusion Telecommunications
International, Inc.] (the “Company”).

 

The
address of the Company’s registered office in the State of
Delaware is 251 Little Falls Drive, County of New Castle, City of
Wilmington 19808. The name of the Company’s registered agent
at such address is Corporation Service Company.

 

The
purpose of the Company is to engage in any lawful act or activity
for which corporations may be organized under the General
Corporation Law of the State of Delaware, as amended (the
“DGCL”).

 

Authorized Capital Stock. The
Company is authorized to issue two classes of capital stock,
designated Common Stock and Preferred Stock. The total number of
shares of capital stock that the Company is authorized to issue is
160,000,000 shares, consisting of 150,000,000 shares of Common
Stock, par value $0.01 per share, and 10,000,000 shares of
Preferred Stock, par value $0.01 per share.

 

Preferred Stock. The Preferred
Stock may be issued in one or more series. The Board of Directors
of the Company (the “Board”) is hereby
authorized to issue the shares of Preferred Stock in such series
and to fix from time to time before issuance the number of shares
to be included in any such series and the designation, powers,
preferences and relative participating, optional or other rights,
if any, and the qualifications, limitations or restrictions
thereof. The authority of the Board with respect to each such
series will include, without limiting the generality of the
foregoing, the determination of any or all of the
following:

 

the
number of shares of any series and the designation to distinguish
the shares of such series from the shares of all other
series;

 

the
voting powers, if any, and whether such voting powers are full or
limited in such series;

 

the
redemption provisions, if any, applicable to such series, including
the redemption price or prices to be paid;

 

whether
dividends, if any, will be cumulative or noncumulative, the
dividend rate of such series, and the dates and preferences of
dividends on such series;

 

 

A-1

 

 

the
rights of such series upon the voluntary or involuntary dissolution
of, or upon any distribution of the assets of, the
Company;

 

the
provisions, if any, pursuant to which the shares of such series are
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any other class or
classes of stock, or any other security, of the Company or any
other corporation or other entity, and the rates or other
determinants of conversion or exchange applicable
thereto;

 

the
right, if any, to subscribe for or to purchase any securities of
the Company or any other corporation or other entity;

 

the
provisions, if any, of a sinking fund applicable to such series;
and

 

any
other relative, participating, optional, or other special powers,
preferences or rights and qualifications, limitations, or
restrictions thereof;

 

all as
may be determined from time to time by the Board and stated or
expressed in the resolution or resolutions providing for the
issuance of such Preferred Stock (collectively, a
“Preferred Stock
Designation”).

 

Common Stock. Subject to the
rights of the holders of any series of Preferred Stock, the holders
of Common Stock will be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders for each share of
Common Stock held of record by such holder as of the record date
for such meeting.

 

The
Board may make, amend, and repeal the Bylaws of the Company;
provided, that nothing herein will limit the power of the
stockholders of the Company to make, amend and repeal Bylaws. Any
Bylaw made by the Board under the powers conferred hereby may be
amended or repealed by the Board (except as specified in any such
Bylaw so made or amended) or by the stockholders in the manner
provided in the Bylaws of the Company. The Company may in its
Bylaws confer powers upon the Board in addition to the foregoing
and in addition to the powers and authorities expressly conferred
upon the Board by applicable law.

 

Subject
to the rights of the holders of any series of Preferred
Stock:

 

(a) any action required
or permitted to be taken by the stockholders of the Company may be
taken at a duly called annual or special meeting of stockholders of
the Company or without a meeting by means of any consent in writing
of such stockholders; and

 

(b) special meetings of
stockholders of the Company may be called only (i) by the
Chairman of the Board (the “Chairman”), (ii) by
the Chief Executive Officer of the Company (the “Chief Executive
Officer”), or (iii) by the Secretary of the
Company (the “Secretary”) acting at the
request of the Chairman, the Chief Executive Officer, a majority of
the total number of Directors that the Company would have if there
were no vacancies on the Board (the “Whole Board”), or
stockholders of the Company holding at least a majority of voting
power of the outstanding Voting Stock. For the purposes of this
Certificate of Incorporation, “Voting Stock” means stock
of the Company of any class or series entitled to vote generally in
the election of Directors.

 

 

A-2

 

 

At any
annual meeting or special meeting of stockholders of the Company,
only such business will be conducted or considered as has been
brought before such meeting in the manner provided in the Bylaws of
the Company.

 

Number, Election, and Terms of
Directors. Subject to the rights, if any, of the holders of
any series of Preferred Stock to elect additional Directors under
circumstances specified in a Preferred Stock Designation, the
number of the Directors of the Company will not be less than one
nor more than nine and will be fixed from time to time by, or in
the manner provided in, the Bylaws of the Company. Subject to
adjustment per the Bylaws, the number of Directors as of the date
of this Second Amended and Restated Certificate of Incorporation is
fixed at nine. At each annual meeting of the stockholders of the
Company, the successors to the Directors whose term expires at that
meeting will be elected by plurality vote of all votes cast at such
meeting to hold office for a term expiring at the annual meeting of
stockholders held in the year following the year of their election
and until their successors are elected and qualified. Election of
Directors of the Company need not be by written ballot unless
requested by the presiding officer or by the holders of a majority
of the Voting Stock present in person or represented by proxy at a
meeting of the stockholders at which Directors are to be elected.
If authorized by the Board, such requirement of a written ballot
shall be satisfied by a ballot submitted by electronic
transmission, provided that any such electronic transmission must
either set forth or be submitted with information from which it can
be determined that the electronic transmission was authorized by
the stockholder or proxy holder.

 

Newly Created Directorships and
Vacancies. Subject to the rights, if any, of the holders of
any series of Preferred Stock to elect additional Directors under
circumstances specified in a Preferred Stock Designation, newly
created directorships resulting from any increase in the number of
Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal, or other cause will be
filled solely by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum
of the Board, or by a sole remaining Director. Any Director elected
in accordance with the preceding sentence will hold office for the
remainder of the full term of the Director whose seat is being
filled and until such Director’s successor has been elected
and qualified. No decrease in the number of Directors constituting
the Board may shorten the term of any incumbent
Director.

 

To the
full extent permitted by the Delaware General Corporation Law and
any other applicable law currently or hereafter in effect, no
Director of the Company will be personally liable to the Company or
its stockholders for or with respect to any breach of fiduciary
duty or other act or omission as a Director of the Company. No
repeal or modification of this Article VIII will adversely affect
the protection of any Director of the Company provided hereby in
relation to any breach of fiduciary duty or other act or omission
as a Director of the Company occurring prior to the effectiveness
of such repeal or modification.

 

Right to Indemnification. Each
person who was or is made a party or is threatened to be made a
party to or is otherwise subject to or involved in any claim,
demand, action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), by reason
of the fact that he or she is or was a director or an officer of
the Company or is or was serving at the request of the Company as a
director, officer, employee or agent of another company or of a
partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan (an
“Indemnitee”), whether the
basis of such Proceeding is alleged action in an official capacity
as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be
indemnified by the Company to the fullest extent permitted or
required by the Delaware General Corporation Law and any other
applicable law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that
such amendment permits the Company to provide broader
indemnification rights than such law permitted the Company to
provide prior to such amendment), against all expense, liability
and loss (including attorneys’ fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such Indemnitee in connection
therewith (“Indemnifiable Losses”);
provided, however, that, except as provided in Section 4 of this
Article IX with respect to Proceedings to enforce rights to
indemnification, the Company shall indemnify any such Indemnitee
pursuant to this Section 1 in connection with a Proceeding (or part
thereof) initiated by such Indemnitee only if such Proceeding (or
part thereof) was authorized by the Board.

 

Right to Advancement of
Expenses. The right to indemnification conferred in Section
1 of this Article IX shall include the right to advancement by the
Company of any and all expenses (including, without limitation,
attorneys’ fees and expenses) incurred in defending any such
Proceeding in advance of its final disposition (an
“Advancement of
Expenses”); provided, however, that, if the Delaware
General Corporation Law so requires, an Advancement of Expenses
incurred by an Indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such Indemnitee, including without limitation service
to an employee benefit plan) shall be made pursuant to this Section
2 only upon delivery to the Company of an undertaking (an
“Undertaking”), by or on
behalf of such Indemnitee, to repay, without interest, all amounts
so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (a
“Final
Adjudication”) that such Indemnitee is not entitled to
be indemnified for such expenses under this Section 2. An
Indemnitee’s right to an Advancement of Expenses pursuant to
this Section 2 is not subject to the satisfaction of any standard
of conduct and is not conditioned upon any prior determination that
Indemnitee is entitled to indemnification under Section 1 of
this Article IX with respect to the related Proceeding or the
absence of any prior determination to the contrary.

 

 

A-3

 

 

Contract Rights. The rights to
indemnification and to the Advancement of Expenses conferred in
Sections 1 and 2 of this Article IX shall be contract rights and
such rights shall continue as to an Indemnitee who has ceased to be
a director, officer, employee or agent and shall inure to the
benefit of the Indemnitee’s heirs, executors and
administrators.

 

Right of Indemnitee to Bring
Suit. If a claim under Section 1 or 2 of this Article IX is
not paid in full by the Company within 60 calendar days after a
written claim has been received by the Company, except in the case
of a claim for an Advancement of Expenses, in which case the
applicable period shall be 20 calendar days, the Indemnitee
may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Company to
recover an Advancement of Expenses pursuant to the terms of an
Undertaking, the Indemnitee shall be entitled to the fullest extent
permitted or required by the Delaware General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits
the Company to provide broader reimbursements of prosecution or
defense expenses than such law permitted the Company to provide
prior to such amendment), to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not
in a suit brought by the Indemnitee to enforce a right to an
Advancement of Expenses) it shall be a defense that, and (ii) any
suit brought by the Company to recover an Advancement of Expenses
pursuant to the terms of an Undertaking, the Company shall be
entitled to recover such expenses, without interest, upon a Final
Adjudication that, the Indemnitee has not met any applicable
standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Company (including its
Board of Directors or a committee thereof, its stockholders or
independent legal counsel) to have made a determination prior to
the commencement of such suit that indemnification of the
Indemnitee is proper in the circumstances because the Indemnitee
has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by
the Company (including its Board of Directors or a committee
thereof, its stockholders or independent legal counsel) that the
Indemnitee has not met such applicable standard of conduct, shall
create a presumption that the Indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by an
Indemnitee to enforce a right to indemnification or to an
Advancement of Expenses hereunder, or brought by the Company to
recover an Advancement of Expenses hereunder pursuant to the terms
of an Undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such Advancement of Expenses,
shall be on the Company.

 

Non-Exclusivity of Rights. The
rights to indemnification and to the Advancement of Expenses
conferred in this Article IX shall not be exclusive of any other
right which any person may have or hereafter acquire under any
statute, the Company’s Certificate of Incorporation, By-laws,
agreement, vote of stockholders or disinterested directors or
otherwise. Nothing contained in this Article IX shall limit or
otherwise affect any such other right or the Company’s power
to confer any such other right.

 

Insurance. The Company may
maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Company or another
corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Company
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation
Law.

 

No Duplication of Payments. The
Company shall not be liable under this Article IX to make any
payment to an Indemnitee in respect of any Indemnifiable Losses to
the extent that the Indemnitee has otherwise actually received
payment (net of any expenses incurred in connection therewith and
any repayment by the Indemnitee made with respect thereto) under
any insurance policy or from any other source in respect of such
Indemnifiable Losses.

 

 

 

1 

Prior to closing,
the parties may mutually agree to change the name of the
Company.

 

 

A-4

 

IN
WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this [__ day of
__________,] 2017.

 

 

[FUSION
TELECOMMUNICATIONS INTERNATIONAL, INC.]

By:                                                                       

  Name:

  Title:

 

 

A-5

 

 

Exhibit B

 

STOCKHOLDERS’ AGREEMENT

 

This
STOCKHOLDERS’ AGREEMENT (this “Agreement”) is entered
into as of [●], 2017 among Fusion Telecommunications
International, Inc., a Delaware corporation (the
“Company”),
BCHI Holdings, LLC, a Georgia limited liability company
(“Holding
LLC”), the other Persons set forth on Schedule I hereto (the
“Initial FTI
Stockholders”) and each Person that becomes a party to
this Agreement by delivering to the Company and Holding LLC a duly
executed joinder to this Agreement in the form attached hereto as
Exhibit A hereto or
such other form approved by Holding LLC and the Company (together,
with the Initial FTI Stockholders, the “FTI Stockholders” and
each an “FTI
Stockholder).

 

RECITALS

 

A.           This
Agreement is being entered into in connection with the consummation
of the transactions contemplated by the Merger Agreement, dated as
of August 26, 2017 (as amended or modified from time to time, the
“Merger
Agreement”), by and among the Company, Birch
Communications Holdings, Inc., a Georgia corporation,
and Fusion BCHI
Acquisition LLC, a Delaware limited liability company.

 

B.           After
giving effect to the transactions contemplated by the Merger
Agreement, Holding LLC and the Initial FTI Stockholders own the
equity securities of the Company in the respective amounts
indicated on Schedule
I hereto.

 

C.           Holding
LLC, the FTI Stockholders and the Company wish to set forth certain
agreements regarding the relationships among them and the
governance of the Company.

 

In
consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the Company
and each Stockholder agree as follows:

 

 ARTICLE
I

 

DEFINITIONS

 

    Certain
Defined Terms. As used herein, the following terms shall
have the following meanings:

 

“Affiliate” means (i) with
respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with, such
Person, (ii) with respect to Holding LLC, any member of Holding LLC
or any trust therefor, and (iii) with respect to any natural
person, any spouse or lineal descendant of such person, and in each
case, any trust therefor.

 

 

B-1

 

 

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

 

“beneficial owner” or
“beneficially
own” has the meaning given such term in Rule 13d-3
under the Exchange Act, and a Person’s beneficial ownership
of Common Stock or other Equity Securities of the Company shall be
calculated in accordance with the provisions of such rule. For the
avoidance of doubt, no Person shall be deemed to beneficially own
any security solely as a result of such Person’s execution of
this Agreement.

 

“Board” means the Board of
Directors of the Company.

 

“Business Day” means any
day that is not a Saturday, Sunday or other day on which banks are
required or authorized by law to be closed in New York
City.

 

“Bylaws” means the Bylaws
of the Company, as in effect on the date hereof and as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

 

“Cause” shall mean the
occurrence of any of the following:

 

(A) any action or
omission by the applicable Director that constitutes (1) a criminal
act committed in connection with or related to the activities of
the Company or (2) fraud, willful misconduct or gross negligence in
the performance of such Director’s duties as a director of
the Company or otherwise relating to the activities of the
Company;

 

(B) the conviction of
the applicable Director of any criminal offense unrelated to the
activities of the Company that constitutes a felony or for which a
term of imprisonment of any duration is imposed (other than an
offense under any road traffic legislation, not accompanied by any
other criminal offense that constitutes a felony);

 

(C) a breach by the
applicable Director of a material securities law or regulation or a
material rule of any securities exchange of the Securities and
Exchange Commission; or

 

(D) if such Director
also is a party to a consulting, services, severance or employment
agreement with the Company and such term is defined therein, the
meaning as set forth in such agreement.

 

“Charter” means the
Certificate of Incorporation of the Company, as in effect on the
date hereof and as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Closing” means the
closing of the Transaction as defined in and as contemplated by the
Merger Agreement.

 

“Common Stock” means the
common stock, par value $.01 per share, of the Company, and any
securities issued in respect thereof, or in substitution therefor,
in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange
or other similar reorganization.

 

 

B-2

 

 

“Communications Act” means
the Communications Act of 1934.

 

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

 

“Control” (including the
terms “controlling”,
“controlled
by” and “under common control
with”), with respect to the relationship between or
among two or more Persons, means the possession, directly or
indirectly, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of
voting securities, as trustee or executor, by contract or
otherwise.

 

“Covered Claims” has the
meaning set forth in Section 4.16(a).

 

“Director” means any
member of the Board.

 

“Equity Securities” means
any and all shares of Common Stock or other equity securities of
the Company, securities of the Company convertible into, or
exchangeable or exercisable for (whether presently convertible,
exchangeable or exercisable or not), such shares, and options,
warrants or other rights (whether presently convertible,
exchangeable or exercisable or not) to acquire such shares of
Common Stock or other equity securities of the
Company.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“FCC Regulations” means
the rules, regulations, published decisions, published orders and
policies promulgated by the Federal Communications Commission and
in effect from time to time.

 

“FTI Director” means, as
of any date, each Person who is a director of the Company on such
date and who was designated as a director nominee in accordance
with the provisions of Section 2.1(b)(ii) and elected
to the Board at an annual or special meeting of the stockholders of
the Company.

 

“FTI Stockholders” has the
meaning set forth in the preamble.

 

“FTI Nominating Committee”
means, as of any date on which an action or decision of the FTI
Nominating Committee is required or permitted to be taken pursuant
to this Agreement, the FTI Directors serving on the Board on such
date.

 

“Group” has the meaning
set forth in Section 13(d)(3) of the Exchange Act.

 

 

B-3

 

 

“Holding LLC” has the
meaning set forth in the preamble.

 

“Information” means all
confidential information about the Company or any of its
Subsidiaries that is or has been furnished to any Stockholder or
any of its Representatives by or on behalf of the Company or any of
its Subsidiaries, or any of their respective Representatives
(whether written or oral or in electronic or other form and whether
prepared by the Company or any of its Subsidiaries or their
respective Representatives), together with that portion of all
written or electronically stored documentation prepared by such
Stockholder or its Representatives based on or reflecting, in whole
or in part, such information; provided, however, that the term
“Information” shall not
include any information that (i) is or becomes generally available
to the public through no action or omission by such Stockholder or
its Representatives in violation of this Agreement, (ii) is or
becomes available to such Stockholder on a non-confidential basis
from a source, other than the Company or any of its Subsidiaries,
or any of their respective Representatives, that, to such
Stockholder’s knowledge, after reasonable inquiry, is not
prohibited from disclosing to such Stockholder by a contractual,
legal or fiduciary obligation or (iii) is independently developed
by a Stockholder or its Representatives or Affiliates without use
of any Information.

 

“Initial FTI Stockholders”
has the meaning set forth in the preamble.

 

“Law” means the law of any
jurisdiction, whether international, multilateral, multinational,
national, federal, state, provincial, local or common law, or an
order, act, statute, ordinance, regulation, rule, extension order
or code promulgated by a governmental authority (including any
department, court, agency or official, or non-governmental
self-regulatory organization, agency or authority and any political
subdivision or instrumentality thereof).

 

“Merger Agreement” has the
meaning provided in the first recital.

 

“Person” means any
individual, corporation, limited liability company, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any
agency or political subdivisions thereof or any Group comprised of
two or more of the foregoing.

 

“Representatives” means
with respect to any Person, any of such Person’s, or its
Affiliates’, directors, officers, employees, general
partners, Affiliates, direct or indirect shareholders, members or
limited partners, attorneys, accountants, financial and other
advisers, and other agents and representatives, including, in the
case of any Stockholder, any designee nominated for election to the
Board or a committee thereof by such Stockholder.

 

“Sale of the Company”
means, in any one or more related transactions, a merger (other
than a merger solely for the purpose of forming a holding company
with no change in indirect ownership or to effect a change in the
Company’s state of incorporation), business combination or
sale of all or substantially all of the Company’s assets, in
each case, as a result of which the Directors immediately prior to
such transaction do not represent a majority of the Board
immediately following the consummation of such transaction (or
series of transactions), or the stockholders of the Company
immediately prior to such transaction do not, immediately following
the consummation of such transaction (or series of transactions),
continue to own equity securities representing more than 50% of the
vote and of the equity of the Company, of the ultimate controlling
Person (in the case of a merger or business combination) or Person
succeeding to ownership of all or substantially all of the
Company’s assets (in the case of a sale of
assets).

 

“Secondary Indemnitors”
has the meaning assigned to such term in Section 4.16.

 

“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

 

“Specified Indemnitee” has
the meaning set forth in Section 4.16.

 

“Stockholder” means each
of Holding LLC and the FTI Stockholders.

 

“Subsidiary” means, with
respect to any Person, (i) any corporation of which a majority of
the securities entitled to vote generally in the election of
directors thereof, at the time as of which any determination is
being made, or a majority of the economic interests in such
Person’s equity, are owned by such Person, either directly or
indirectly, and (ii) any joint venture, general or limited
partnership, limited liability company or other legal entity in
which such Person is the record or beneficial owner, directly or
indirectly, of a majority of the voting or equity interests or of
which such Person is the general partner or managing
member.

 

 

B-4

 

 

 “Transfer”
means, directly or indirectly, to sell, transfer, assign,
hypothecate or similarly dispose of (by merger, operation of law or
otherwise), either voluntarily or involuntarily, or to enter into
any contract, option or other arrangement or understanding with
respect to, the sale, transfer, assignment, hypothecation or
similar disposition of (by merger, operation of law or otherwise),
any shares of Equity Securities beneficially owned by a
Person.

 

“Transferee” means any
Person to whom any Stockholder or any transferee thereof Transfers
Equity Securities in accordance with the terms hereof.

 

“Voting Securities” means
at any time the then-issued and outstanding Common Stock and any
other securities of the Company of any kind or class having power
generally to vote for the election of Directors.

 

 

 

 

    Other
Definitional Provisions. Unless otherwise expressly
provided, for the purposes of this Agreement, the following rules
of interpretation shall apply:

 

(a) When a reference is
made in this Agreement to an article or a section, paragraph,
exhibit or schedule, such reference will be to an article or a
section, paragraph, exhibit or schedule hereof unless otherwise
clearly indicated to the contrary.

 

(b) Whenever the words
“include,” “includes” or
“including” are used in this Agreement, they will be
deemed to be followed by the words “without
limitation.”

 

(c) The words
“hereof,” “herein” and
“herewith” and words of similar import will, unless
otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this
Agreement.

 

(d) The meaning
assigned to each term defined herein will be equally applicable to
both the singular and the plural forms of such term, and words
denoting any gender will include all genders. Where a word or
phrase is defined herein, each of its other grammatical forms will
have a corresponding meaning.

 

(e) A reference to any
period of days will be deemed to be to the relevant number of
calendar days, unless otherwise specified.

 

(f) The word
“dollars” and symbol “$” mean U.S.
dollars.

 

 

B-5

 

 

(g) References herein
to any Person shall include such Person’s heirs, executors,
personal representatives, administrators, successors and
assigns.

 

(h) The word
“or” shall be disjunctive but not
exclusive.

 

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

 

(j) Any statute or rule
defined or referred to herein or in any agreement or instrument
that is referred to herein means such statute or rule as from time
to time amended, modified or supplemented, including by succession
of comparable successor statutes or rules and references to all
attachments thereto and instruments incorporated
therein.

 

 ARTICLE
II 

CORPORATE
GOVERNANCE

 

    Board
of Directors Matters.

 

(a) Board Size and Composition.
Effective as of the Closing, in accordance with Section
[●] of
the Bylaws, the size of the Board has been fixed at nine
Directors.

 

(b) Nomination of Directors.
Subject to Section
2.1(e), each Stockholder agrees with the Company that it
shall: (i) appear in person or by proxy at each annual meeting or
special meeting of the stockholders of the Company at which
Directors are to be elected for the purposes of obtaining a quorum;
(ii) at each such stockholders’ meeting, vote, in person or
by proxy, all of the Voting Securities owned by it on the date of
such meeting in favor of election of the following designees
nominated for election to the Board pursuant to this Section 2.1(b) and in
accordance with the Bylaws and the nomination procedures of the
Company; and (iii) in any action by written consent of the holders
of Voting Securities for the purpose of electing Directors, consent
to election of the following designees nominated for election to
the Board pursuant to this Section 2.1(b) and in
accordance with the Bylaws and the nomination procedures of the
Company:

 

 

B-6

 

 

(i) four (4) Persons
(at least one (1) of whom shall be an independent director within
the meaning of the NASDAQ listing standards) designated as nominees
for election to the Board by Holding LLC;

 

(ii) four
(4) Persons (at least one (1) of whom shall be an independent
director within the meaning of the NASDAQ listing standards)
designated as nominees for election to the Board by the FTI
Nominating Committee; and

 

(iii) one
(1) Person designated as a nominee for election to the Board (who
shall be an independent director within the meaning of the NASDAQ
listing standards) by Holding LLC with the prior written approval
(not to be unreasonably withheld, conditioned or delayed) of the
FTI Nominating Committee.

 

In the
event that either Holding LLC or the FTI Nominating Committee fails
to designate any nominee that it is entitled to designate pursuant
to this Section
2.1(b), then the Company will provide written notice of such
failure to Holding LLC or the FTI Nominating Committee, as
applicable. If such failure is not cured within ten (10) Business
Days following the transmission of such notice by the Company, then
the Board will be entitled to designate a nominee for such
position. The rights of each of Holdings LLC and the FTI Nominating
Committee to designate nominees for election to the Board as set
forth in this Section
2.1(b) are personal to each of Holdings LLC and the FTI
Nominating Committee and may not be exercised by any Transferee,
except that in the event Holding LLC no longer holds any Common
Stock but its Affiliates continue to hold Common Stock Transferred
by Holding LLC to such Affiliates (whether directly or by Transfers
through other Affiliates of Holding LLC), and such rights have not
been terminated pursuant to Section 2.1(e), the rights of
Holdings LLC to designate nominees pursuant to this Section 2.1(b) may be exercised
by the Affiliates of Holding LLC to which such Common Stock was
Transferred.

 

(c) Chairman and Vice Chairman of the
Board. Matthew D. Rosen will be the initial Chairman of the
Board and Holcombe T. Green, Jr. will be the initial Vice Chairman
of the Board.

 

(d) Removal and Replacement;
Vacancies.

 

(i) In the event that a
vacancy is created at any time by the death, disability,
retirement, resignation or removal of any Director nominated for
election to the Board pursuant to Section 2.1(b), the Company, by
action of the remaining Directors, shall, and the Stockholders
agree with the Company to use their reasonable best efforts to
cause the remaining Directors to, fill the vacancy created thereby
with a replacement nominee designated by the entity (i.e., either
Holding LLC or the FTI Nominating Committee) that had designated
such Director for nomination pursuant to Section 2.1(b) as promptly as
practicable. If such vacant position had been held by a Person
nominated under Section
2.1(b)(iii), then the nomination of the replacement nominee
shall be subject to the prior written approval of the FTI
Nominating Committee, in accordance with Section
2.1(b)(iii).

 

(ii) In
the event that a vacancy is created at any time by the death,
disability, retirement, resignation or removal of any Director
nominated for election to the Board pursuant to Section 2.1(b) and the
remaining Directors have not caused the vacancy created thereby to
be filled pursuant to Section 2.1(d)(i) by a new
designee of the appropriate Person promptly after both Holding LLC
and the FTI Nominating Committee have been notified of such
vacancy, then in such case the Company shall take all such actions
as and when requested by whichever of Holding LLC or the FTI
Nominating Committee is entitled, pursuant to Section 2.1(b) to designate a
Person to fill such vacancy (the “Designating
Stockholder”), and each other Stockholder hereby
agrees with the Company to vote, or act by written consent with
respect to, all Voting Securities beneficially owned by it on the
date of the relevant vote or action to act to fill the vacancy with
a Person designated as a replacement by the Designating Stockholder
in accordance with Section
2.1(b). Upon the written request of any Person having rights
under Section
2.1(b), each other Stockholder agrees with the Company to
vote, or act by written consent with respect to, all Voting
Securities beneficially owned by it on the date of the relevant
action to, remove any Director nominated by such Person for
election to the Board pursuant to Section 2.1(b) and to elect any
replacement Director designated for nomination by such Person
pursuant to this Section
2.1(d).

 

(iii) Subject
to Section 2.1(e),
unless otherwise requested in writing by the Person entitled to
nominate such Person for election to the Board under Section 2.1(b), no other
Stockholder shall take any action to cause the removal of any
Directors nominated by such Person for election to the Board
pursuant to Section
2.1(b); provided, that any Director may be removed by the
Board for Cause and, in such case, the resulting vacancy will be
filled with a Person designated as a replacement by the Designating
Stockholder in accordance with Section 2.1(b) .

 

 

B-7

 

 

(iv) Any
vacancy on the Board that results from the termination of rights of
nomination pursuant to Section 2.1(e) may be filled by
action of a majority of the Board, in accordance with the Bylaws
and applicable nomination procedures of the Company.

 

(e) Termination of Rights of
Nomination.

 

(i) Upon such time as
Holding LLC and its Affiliates cease to beneficially own,
collectively, at least 20% of the number of shares of Common Stock
they collectively beneficially own immediately following the
Closing, Holding LLC
shall cease to have the right to designate any nominee for election
to the Board pursuant to Section 2.1(b).

 

(ii) Unless
otherwise mutually agreed by Holding LLC and the FTI Nominating
Committee, upon such time as the aggregate number of issued and
outstanding shares of Common Stock beneficially owned by Marvin
Rosen and Matt Rosen is less than that number of shares of Common
Stock equal to 1.5% of the then issued and outstanding shares of
Common Stock, the FTI Nominating Committee shall cease to have the
right to designate any nominee for election to the Board pursuant
to Section
2.1(b).

 

    Company
Cooperation. The Company shall take such action as may be
required under applicable Law, the Charter and the Bylaws (subject
to such vote of the Board as may be required) (a) to cause the
Board to consist of the number of Directors specified in
Section 2.1(a) and
(b) to cause one of the Directors to be appointed and serve as the
Chairman of the Board and another of the Directors to be appointed
and serve as the Vice Chairman of the Board in accordance with
Section 2.1(c). The
Company agrees to include in the slate of nominees to be voted upon
by stockholders of the Company the Persons designated for
nomination to the Board in accordance with Section 2.1(b). The Company
agrees that no modification or amendment of the Charter or the
Bylaws that is inconsistent with the provisions of this Agreement
shall be effective without the approval of Holding LLC and the FTI
Nominating Committee.

 

  FTI
Nominating Committee. The FTI Nominating Committee will only
take such actions under this Agreement as authorized in writing
(email being sufficient), including the nomination of individuals
for election to the Board by the FTI Nominating Committee pursuant
to Section
2.1(b)(ii), by a majority of the FTI Nominating
Committee.

 

    FTI
Stockholders. Notwithstanding anything to the contrary
herein, at such time as any Person shall cease to serve as an FTI
Director for any reason, such Person shall no longer be an FTI
Stockholder within the meaning of this Agreement and the rights and
obligations of such Person under this Agreement shall terminate at
such time. At such time as any Person shall be elected as an FTI
Director such Person shall become an FTI Stockholder within the
meaning of this Agreement but only upon execution and delivery, to
the Company and Holding LLC, of a duly executed joinder to this
Agreement in the form attached hereto as Exhibit A hereto or such other
form approved by Holding LLC and the Company.

 

    Affiliate
Transactions. Except for such transactions as are
contemplated by agreements to which the Company is a party on the
date hereof or to be entered into on the date hereof, any
transaction between the Company or any Subsidiary of the Company,
on the one hand, and a Stockholder or any Affiliate of such
Stockholder, on the other, shall require the approval of a majority
of the disinterested members of the Board.

 

 

B-8

 

 

 ARTICLE
III 

REPRESENTATIONS
AND WARRANTIES

 

    Representations
and Warranties of the Company. The Company represents and
warrants to each Stockholder as follows:

 

(a) the Company has all
requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except to the extent that the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting the enforcement of creditors’ rights
generally and general equitable principles, regardless of whether
such enforceability is considered in a proceeding at law or in
equity; and

 

(b) the execution and
delivery of this Agreement by the Company, the performance of its
obligations hereunder, and the consummation of the transactions
contemplated hereby will not violate, conflict with or result in a
breach, or constitute a default (with or without notice or lapse of
time or both) under any provision of the Charter or
Bylaws.

 

    Representations
and Warranties of the Stockholders. Each Stockholder,
severally and not jointly, represents and warrants, solely with
respect to itself, to each other Stockholder and to the Company as
follows:

 

(c) such Stockholder
has all requisite power and authority to enter into this Agreement
and to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder
enforceable against such Stockholder in accordance with its terms,
except to the extent that the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting the enforcement of creditors’ rights
generally and general equitable principles, regardless of whether
such enforceability is considered in a proceeding at law or in
equity; and

 

(d) the execution and
delivery of this Agreement by such Stockholder, the performance of
its obligations hereunder, and the consummation of the transactions
contemplated hereby will not violate, conflict with or result in a
breach, or constitute a default (with or without notice or lapse of
time or both) under any provision of its charter, bylaws or other
similar organizational documents.

 

 

B-9

 

 

 ARTICLE
IV

MISCELLANEOUS

 

    Not
A “Group”. The Stockholders and the Company
acknowledge that the arrangements contemplated by this Agreement
are not intended to constitute the formation of a Group. Each
Stockholder agrees that, for purposes of determining beneficial
ownership of such Stockholder, it shall disclaim any beneficial
ownership by virtue of this Agreement of the Company’s
securities owned by the other Stockholders, and the Company agrees
to recognize such disclaimer in its Exchange Act and Securities Act
reports.

 

    Termination.
This Agreement shall terminate upon the earliest of (a) a Sale of
the Company or (b) the date on which the rights of Holding LLC or
the FTI Nominating Committee pursuant to Section 2.1(b) to nominate
individuals for election to the Board have terminated in accordance
with the terms of Section
2.1(e); provided, however, that, notwithstanding
anything in this Section
4.2 to the contrary, the rights and obligations of any
particular Stockholder (other than an FTI Stockholder) under this
Agreement shall terminate on the date on which such Stockholder no
longer beneficially owns any Equity Securities; provided, further, that, notwithstanding
anything in this Section
4.2 to the contrary, the termination of the rights and
obligations of any Person who ceases to serve as an FTI Director
for any reason shall be governed by Section 2.4.

 

    Confidentiality.
Each Stockholder agrees with the Company to, and agrees with the
Company to use commercially reasonable efforts to cause its
Representatives to, keep confidential and not divulge any
Information; provided, however, that nothing herein
shall prevent any Stockholder from disclosing such Information (a)
upon the order of any court or administrative agency, (b) upon the
request or demand of any regulatory agency or authority having
jurisdiction over such Stockholder or Representative, (c) to the
extent required by Law or legal process or required or requested
pursuant to subpoena, interrogatories or other discovery requests,
(d) to the extent necessary in connection with the exercise of any
remedy hereunder, (e) to other Stockholders, or (f) to such
Stockholder’s Representatives that in the reasonable judgment
of such Stockholder need to know such Information; provided, further, that, in the case of
clause (a), (b) or (c), such Stockholder shall notify the Company
of the proposed disclosure as far in advance of such disclosure as
reasonably practicable and, if requested by the Company, use
commercially reasonable efforts (but at the sole expense of the
Company) to ensure that any Information so disclosed is accorded
confidential treatment, when and to the extent
available.

 

    Amendments
and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this
Agreement shall be effective without the approval of the Company,
Holding LLC and the FTI Nominating Committee; provided, however, that (a) this
Agreement may not be amended, modified or waived in any manner
adversely affecting the rights or obligations of any Stockholder
without the prior written consent of such Stockholder, (b) no
amendment, modification or waiver to Section 2.1 (directly or by
amendment of the definitions used therein) shall adversely affect
the rights of Holding LLC or the FTI Nominating Committee to
designate nominee(s) for election to the Board in accordance with
this Agreement without the consent of Holding LLC or the FTI
Nominating Committee, as the case may be, (c) amendment,
modification or waiver of this Section 4.4 shall require the
prior written consent of each Stockholder, and (d) any Stockholder
may terminate or waive (in writing) the benefit of any provision of
this Agreement with respect to itself for any purpose.

 

    Successors,
Assigns and Transferees. Except as expressly set forth
herein, this Agreement shall bind and inure to the benefit of, and
be enforceable by, the parties hereto and their respective
successors and permitted assigns.

 

 

B-10

 

 

    Notices.
All notices and other communications to be given to any party
hereunder shall be sufficiently given for all purposes hereunder if
in writing and delivered by hand, courier or overnight delivery
service, or when received in the form of an email or other
electronic transmission (receipt confirmation requested), and shall
be directed to the address set forth below (or at such other
address or email address as such party shall designate by like
notice):

 

if to
the Company, to:

 

Fusion
Telecommunications International, Inc.

420
Lexington Avenue, Suite 1718

New
York, New York 10170

Attention: James P.
Prenetta, Jr. Executive Vice President and General
Counsel

Email:
jprenetta@fusionconnect.com

 

if to
any Stockholder, to the address of such Stockholder as shown in
Schedule I
hereto.

 

    Further
Assurances. At any time or from time to time after the date
hereof, the parties agree to cooperate with each other, and at the
request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the
other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby
and to otherwise carry out the intent of the parties
hereunder.

 

    Entire
Agreement; Third Party Beneficiaries. Except as otherwise
expressly set forth herein, this Agreement embodies the complete
agreement and understanding among the parties hereto with respect
to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the
parties, written or oral, that they may have related to the subject
matter hereof in any way. This Agreement is not intended to confer
in or on behalf of any Person not a party to this Agreement any
rights, benefits, causes of action or remedies with respect to the
subject matter or any provision thereof.

 

    Delays
or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this
Agreement, shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any
kind or character on the part of any party hereto of any breach,
default or noncompliance under this Agreement or any waiver on such
party’s part of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either
under this Agreement, by Law, or otherwise afforded to any party,
shall be cumulative and not alternative.

 

    Governing
Law. This Agreement will be governed by and construed in
accordance with the Laws of the State of Delaware applicable to
contracts made and to be performed within the State of Delaware,
without giving effect to conflicts of law rules that would require
or permit the application of the Laws of another
jurisdiction.

 

 

B-11

 

 

    Specific
Performance; Jurisdiction.

 

(a) The parties agree
that irreparable damage would occur for which money damages would
not suffice in the event that any of the provisions of this
Agreement were not performed in accordance with their specific
terms or were otherwise breached and that the parties would not
have any adequate remedy at law. It is accordingly agreed that any
non-breaching party shall be entitled to seek an injunction,
temporary restraining order or other equitable relief exclusively
in the Delaware Court of Chancery enjoining any such breach and
enforcing specifically the terms and provisions hereof, or in the
event (but only in the event) that such court does not have subject
matter jurisdiction over such action or proceeding, in the United
States District Court for the District of Delaware or another court
sitting in the state of Delaware. Each party agrees not to raise
any objections to the availability of the equitable remedy of
specific performance to prevent or restrain breaches or threatened
breaches of, or to enforce compliance with, the covenants and
obligations of such party under this Agreement. The provisions of
this Section
4.11(a) are in addition to any other remedy to which any
party is entitled at law, in equity or otherwise.

 

(b) Each of the parties
hereto irrevocably agrees that any legal action or proceeding in
connection with or with respect to this Agreement and the rights
and obligations arising hereunder, or for recognition and
enforcement of any judgment in respect of this Agreement and the
rights and obligations arising hereunder brought by the other party
hereto or its successors or assigns shall be brought and determined
exclusively in the Delaware Court of Chancery, or in the event (but
only in the event) that such court does not have subject matter
jurisdiction over such action or proceeding, in the United States
District Court for the District of Delaware or another court
sitting in the state of Delaware. The parties hereto further agree
that any dispute between the parties regarding the approval by the
FTI Nominating Committee of any Person designated by Holding LLC
pursuant to Section
2.1(b)(iii) will be submitted to the Delaware Court of
Chancery with a request to rule on an expedited basis. Each of the
parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect of its property,
generally and unconditionally, to the personal jurisdiction of the
aforesaid courts and agrees that it will not bring any action in
connection with or relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than
the aforesaid courts. Each of the parties hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding in
connection with or with respect to this Agreement, (i) any claim
that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve
in accordance with this Section 4.11, (ii) any claim
that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts
(whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment
or otherwise) and (iii) to the fullest extent permitted by the
applicable Law, any claim that (A) the suit, action or proceeding
in such court is brought in an inconvenient forum, (B) the venue of
such suit, action or proceeding is improper or (C) this Agreement,
or the subject matter hereof, may not be enforced in or by such
courts.

 

(c) Each of the parties
hereto irrevocably consents to the service of any summons and
complaint and any other process in any other action in connection
with or relating to this Agreement, on behalf of itself or its
property, by the personal delivery of copies of such process to
such party or by sending or delivering a copy of the process to the
party to be served at the address and in the manner provided for
the giving of notices in Section 4.6. Nothing in this
Section 4.11 shall
affect the right of any party hereto to serve legal process in any
other manner permitted by Law.

 

    Waiver
of Jury Trial. Each party hereby waives, to the fullest
extent permitted by applicable Law, any right it may have to a
trial by jury in respect of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated
hereby. Each party (i) certifies and acknowledges that no
representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing
waiver, and (ii) acknowledges that it understands and has
considered the implications of this waiver and makes this waiver
voluntarily, and that it and the other parties have been induced to
enter into the Agreement by, among other things, the mutual waivers
and certifications in this Section 4.12.

 

    Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such a
determination, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties
as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent
possible.

 

 

B-12

 

 

    Titles
and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and will not
affect the meaning or interpretation of this
Agreement.

 

    Counterparts;
Electronic Signatures. This Agreement may be executed in
counterparts, each of which shall constitute one and the same
instrument. Signatures provided by electronic transmission in
“pdf” or equivalent format will be deemed to be
original signatures.

 

    Certain
Indemnification Matters. The Company hereby acknowledges
that an Indemnitee (as defined in the Charter) who is an officer,
director, partner, member, manager, employee, managing director or
Affiliate of, or a Director nominee pursuant to Section 2.1 of, a Stockholder
(each such Indemnitee, a “Specified Indemnitee”)
may have certain rights to indemnification, advancement of expenses
and/or insurance pursuant to charter documents, constitutive
agreements or other agreements with such Stockholder or Affiliates
of such Stockholder or other Person (other than the Company and its
Affiliates) of which such Specified Indemnitee is an officer,
director, partner, member, manager, employee, managing director or
Affiliate (collectively, the “Secondary Indemnitors”).
In furtherance of the foregoing, the Company hereby covenants and
agrees as follows:

 

(d) The Company shall
be the indemnitor of first resort for any claims or proceedings
(collectively, “Covered Claims”) for
which any Specified Indemnitee is entitled, under the Charter or
otherwise, to indemnification by the Company (i.e., the Company’s obligations
to each such Specified Indemnitee with respect to any Covered Claim
are primary and any obligations of any Secondary Indemnitor to
advance expenses or to provide indemnification for the same
expenses or liabilities incurred by any such Specified Indemnitee
with respect Covered Claims are secondary).

 

(e) Subject to Sections
1 and 2 of Article
IX of the Charter, the
Company shall pay the expenses (including attorneys’ fees and
expenses) incurred by any Specified Indemnitee in defending any
Covered Claim in advance of such Covered Claim’s final
disposition, without regard to any rights any such Specified
Indemnitee may have against any Secondary Indemnitor.

 

(f) The Company hereby
irrevocably waives, relinquishes and releases each Secondary
Indemnitor from any and all claims against such Secondary
Indemnitor for contribution, subrogation or any other recovery of
any kind in respect of any Covered Claim.

 

The
Company further agrees that no advancement or payment by any
Secondary Indemnitor on behalf of any such Specified Indemnitee
with respect to any Covered Claim for which any such Specified
Indemnitee has sought indemnification from the Company shall affect
the foregoing and any such Secondary Indemnitor shall have a right
of contribution and/or subrogation to the extent of such
advancement or payment to all of the rights of recovery of such
Specified Indemnitee against the Company. Any amendment, repeal or
modification of this Section 4.16 shall not
adversely affect any right or protection of a Specified Indemnitee
or Secondary Indemnitor existing prior to such repeal or
modification.

 

    Rights
and Obligations of Transferees. No Stockholder shall
Transfer any Equity Securities except in compliance with the
Securities Act, the Charter (as defined in the Merger Agreement),
any applicable state or foreign securities Laws and this Agreement,
or if such Transfer would violate the Communications Act or FCC
Regulations and such Stockholder has been so advised by the
Company. Without limiting the generality of the foregoing, no such
Transfer shall be made or recognized in the books and records of
the Company if such Transfer would result in a violation of the
Communications Act or FCC Regulations. Any Transfers in violation
of this Agreement shall be null and void.

 

[Remainder
of page intentionally left blank]

 

 

B-13

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Stockholders’ Agreement to be executed effective as of the
date set forth in the first paragraph hereof.

 

FUSION
TELECOMMUNICATIONS INTERNATIONAL, INC.

 

 

By: 

Name:

Title:

 

 

B-14

 

BCHI
HOLDINGS, LLC

 

 

By: 

Name:

Title:

 

 

 

B-15

 

FTI STOCKHOLDERS:

 

 

By:                                                                                     

 

 

By: 

 

 

By: 

 

 

By: 

 

 

B-16

 

Schedule I--Stockholder Information

 

 

	

Stockholder

	

Equity Securities

	

Notice Information

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

 

B-17

 

EXHIBIT A

 

FORM
OF JOINDER TO

 

STOCKHOLDERS’ AGREEMENT

 

This
JOINDER to the Stockholders’ Agreement, dated as of
__________, 2017 (the “Stockholders’
Agreement”), of Fusion Telecommunications
International, Inc., a Delaware corporation (the
“Company”),
BCHI Holdings, LLC, a Georgia limited liability company
(“Holding
LLC”) and the other Persons set forth on Schedule I of the
Stockholders’ Agreement (the “Initial FTI
Stockholders”) is executed on behalf of the
undersigned (“FTI
Stockholder”), effective as of the date set forth on
the signature page below, with reference to the following
facts:

 

A.           Capitalized
terms used herein but not otherwise defined shall have the meanings
set forth in the Stockholders’ Agreement.

 

B.           FTI
Stockholder is, as of the date set forth below, an FTI
Director.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned
hereby agrees as follows:

 

1.           Agreement
to be Bound. FTI Stockholder hereby agrees that upon
execution of this Joinder, FTI Stockholder shall become a party to
the Stockholders’ Agreement as an “FTI
Stockholder” and shall be fully bound by, and subject to, all
of the covenants, terms and conditions of the Stockholders’
Agreement applicable to FTI Stockholder.

 

2.           Equity
Securities. As of the date of this Agreement, the FTI
Stockholder owns [INSERT AMOUNT AND TYPE OF COMPANY EQUITY
SECURITIES OWNED BY STOCKHOLDER.]

 

3.           Counterparts.
This Joinder may be executed in separate counterparts each of which
shall be an original and all of which taken together shall
constitute one and the same agreement.

 

4.           Notices.
For purposes of Section
4.6 of the Stockholders’ Agreement, all notices,
demands or other communications to FTI Stockholder shall be
directed to FTI Stockholder’s address set forth below FTI
Stockholder’s signature below.

 

 

 

[Signature Page Follows]

 

 

B-18

 

 

IN WITNESS WHEREOF, Stockholder has
executed this Joinder effective as of the date set forth
below.

 

FTI
STOCKHOLDER:

 

 

 

By:                                                                       

 

Name:                                                                       

 

Title:                                                                       

 

 

ADDRESS:

 

 

 

 

 

 

 

 

 

 

 

Date:                                                                       

 

 

 

  B-19

 

 

 EXHIBIT
C

 

REGISTRATION RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and
entered into effective as of [●], 2017, by and among Fusion
Telecommunications International, Inc., a Delaware corporation (the
“Company”), BCHI Holdings,
LLC, a Georgia limited liability company (the “Initial Stockholder”),
and each Person (as defined below) that becomes a party to this
Agreement by delivering to the Company a duly executed joinder to
this Agreement in the form attached hereto as Exhibit A or such other form
approved by the Company having the same effect thereof pursuant to
Section 6.1 (together with Initial Stockholder, each, a
“Stockholder,” and,
collectively, the “Stockholders”).

 

RECITALS

 

A.           The
Company is party to a Merger Agreement, dated as of August 26,
2017, by and among Birch Communications Holdings, Inc., Fusion BCHI
Acquisition LLC and the Company (the “Merger
Agreement”).

 

B.           Pursuant
to the terms of the Merger Agreement, the Initial Stockholder will
acquire shares (the “Closing Shares”) of the
Company’s common stock, $0.01 par value per share (the
“Company Common
Stock”).

 

C.           In
connection with the transactions contemplated by the Merger
Agreement, the Company has agreed to provide the registration
rights provided in this Agreement.

 

D.           The
Company and the Stockholders are entering into this Agreement to
set forth the terms and conditions applicable to such registration
rights.

 

NOW,
THEREFORE, in consideration of the mutual agreements contained
herein, the Company and the Initial Stockholder agree as
follows:

 

ARTICLE V

 

Definitions

 

Capitalized terms
not otherwise defined herein have the meaning set forth in the
Merger Agreement. As used in this Agreement, the following terms
have the following meanings:

 

“Affiliate” of any
particular Person means any other Person controlling, controlled by
or under common control with such particular Person, where
“control” means the possession, directly or indirectly,
of the power to direct the management and policies of a Person
whether through the ownership of voting securities or
otherwise.

 

 

C-1

 

 

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

 

“Business Day” means any
day other than a weekend or public holiday.

 

“Closing Shares” has the
meaning set forth in the recitals.

 

“Closing Shares Registration
Statement” means the Company’s Registration
Statement on Form S-1 or S-3 (or a successor form) that covers the
resale, to be made on a delayed or continuous basis, of Closing
Shares representing no greater than 25% of the total number of all
Closing Shares that constitute Registrable Securities (and may
include other Registrable Securities held by the other
Stockholders, as set forth herein), under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such Registration Statement,
including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

 

“Closing Shares Shelf
Expiration” has the meaning set forth in Section 2.1.

 

“Company” has the meaning
set forth in the preamble and shall include the Company’s
successors.

 

“Company Common Stock” has
the meaning set forth in the recitals.

 

“Controlling Person” has
the meaning set forth in Section 5.1.

 

“Demand Registration” has
the meaning set forth in Section 2.2.

 

“Demand Registration
Request” has
the meaning set forth in Section 2.2.

 

“Demand Registration
Statement” means a Registration Statement filed by the
Company with the SEC pursuant to Section 2.2 hereof, and all
amendments and supplements to such Registration Statement,
including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

 

 

C-2

 

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as amended from time to
time.

 

“Immediate Family” means,
with respect to any individual, such individual’s spouse,
parents, parents-in-law, descendants, brothers, sisters,
brothers-in-law, sisters-in-law and children-in-law.

 

“Initiating Stockholder”
has the meaning set forth in Section 2.2.

 

“Merger Agreement” has the
meaning set forth in the recitals.

 

“NASDAQ” means The NASDAQ
Stock Market, LLC.

 

“Partner
Distribution” has the meaning set forth in
Section
2.2.

 

“Permitted
Interruption” has the meaning set forth in
Section
2.6(c).

 

“Permitted Transferee”
means, (a) with respect to any Stockholder that is an individual,
(i) members of the Immediate Family of such Stockholder or (ii) any
trust or partnership established solely for the benefit of the
Immediate Family Member of such Stockholder, or (b) with respect to
any Stockholder that is not an individual, an Affiliate (other than
any “portfolio company” described below) of such
Stockholder; provided, however, that in no event shall
any “portfolio company” (as such term is customarily
used among institutional investors) of any Stockholder or any
entity controlled by any portfolio company of any Stockholder
constitute a “Permitted Transferee” of such
Stockholder.

 

“Person” means an
individual, limited liability company, association, joint stock
company, partnership, corporation, trust, estate or unincorporated
organization.

 

“Piggyback Registration”
has the meaning set forth in Section 2.3.

 

“Piggyback Stockholders”
has the meaning set forth in Section 2.3.

 

“Registrable Securities”
means all shares of Company Common Stock held by the Stockholders
at any time, including the Closing Shares, and any shares of
Company Common Stock issued or issuable to any Stockholder with
respect thereto by way of stock dividend or distribution, stock
split, or in connection with any combination of shares,
recapitalization, merger, share exchange, conversion, consolidation
or similar transaction (including pursuant to Article I of the
Merger Agreement), whether now owned or acquired by Stockholders or
acquired at a later time; provided, however, that any such shares
of Company Common Stock shall cease to be Registrable Securities
(i) when they have been sold pursuant to a Registration Statement,
(ii) when they have been sold pursuant to Rule 144 of the
Securities Act, (iii) with respect to any Stockholder, at such time
as the entire amount of such Stockholder’s Registrable
Securities may be sold in a single sale, in the opinion of counsel
satisfactory to the Company and such holder, each in their
reasonable judgment, without any limitation as to volume pursuant
to Rule 144 of the Securities Act, (iv) when they have been
transferred to any Person other than a Permitted Transferee to whom
registration rights are assigned in accordance with Section 6.1 hereof, or (v) when
they have ceased to be outstanding.

 

 

C-3

 

 

“Registration Expenses”
has the meaning set forth in Section 3.7.

 

“Registration Statement”
means the Closing Shares Registration Statement, a Demand
Registration Statement and any other registration statement
prepared and filed with the SEC pursuant to Article II hereof, and all
amendments and supplements to such Registration Statement,
including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

 

“Required Stockholders”
means the holders of at least a majority of the Registrable
Securities held by the Stockholders.

 

“SEC” means the Securities
and Exchange Commission.

 

“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as amended from time to time.

 

“Shelf Takedown” has the
meaning set forth in Section 2.1.

“Stockholder(s)” has the
meaning set forth in the preamble, and such term shall include any
transferee to whom registration rights granted pursuant to this
Agreement are validly assigned pursuant to Section 6.1
hereof.

 

“underwritten offering”
means a registered underwritten offering in which securities of the
Company are sold to one or more underwriters for reoffering to the
public.

 

“WKSI” means a
“well-known seasoned issuer” as defined in Rule 405
promulgated by the SEC.

 

 

C-4

 

 

ARTICLE VI

 

CLOSING
SHARES REGISTRATION STATEMENT; Demand and Piggyback
Rights

 

Section
6.1 Closing Shares Registration
Statement. The Company shall prepare the Closing Shares
Registration Statement and file it with the SEC, and shall use
reasonable best efforts to cause the Closing Shares Registration
Statement to be declared effective by the SEC no later than 120
days from the date hereof. The Company shall use reasonable best
efforts to cause the Closing Shares Registration Statement to
remain effective (subject to Section 2.6(c)) until the
earlier to occur of (i) the date on which all Registrable
Securities included within the Closing Shares Registration
Statement have been sold (other than to a Permitted Transferee to
whom registration rights are effectively assigned in accordance
with Section 6.1
hereof) or (ii) the fifth (5th) anniversary of the
date that the Closing Shares Registration Statement is declared
effective by the SEC (the end of such period, the
“Closing Shares
Shelf Expiration”). The Stockholders who hold
Registrable Securities each shall be entitled, at any time and from
time to time when the Closing Shares Registration Statement is
effective, to sell such Registrable Securities pursuant to such
Closing Shares Registration Statement (a “Shelf Takedown”). The
resale of shares of Registrable Securities pursuant to the Closing
Shares Registration Statement may from time to time from and after
the date the Closing Shares Registration Statement is declared
effective by the SEC and until the Closing Shelf Expiration, upon
the written request of any Stockholder that holds, together with
its Affiliates, at least a simple majority of the Registrable
Securities issued pursuant to the transactions contemplated by the
Merger Agreement to such Stockholder and its Affiliates and
included under the Closing Shares Registration Statement, be an
underwritten offering; provided, however, that the Company shall
not be required to effect an underwritten Shelf Takedown unless the
gross proceeds from the sale of Registrable Securities in such
offering are reasonably expected to be at least $10,000,000
(without regard to any underwriting discount or commission); and
provided,
further, that the
Company shall not be required to effect more than one (1)
underwritten Shelf Takedown in any 90-day period or more than three
(3) underwritten Shelf Takedowns in any 365-day period. In the
event that any Stockholder requests an underwritten Shelf Takedown
pursuant to this Section
2.1 (the “Requesting Stockholder”),
then the other Stockholders, if any, in each of such
Stockholder’s discretion, shall have the right to participate
in such underwritten Shelf Takedown of Registrable Securities
registered under the Closing Shares Registration Statement, subject
to this Section
2.1, and (ii) the Company shall promptly notify each of the
Stockholders (other than the Requesting Stockholder) of such
underwritten Shelf Takedown, and such Stockholders shall have five
(5) Business Days after receipt of such notice to request, by
written notice to the Company and the Requesting
Stockholder, that
Registrable Securities held by such Stockholder and registered
pursuant to the Closing Shares Registration Statement be sold
pursuant to such proposed underwritten Shelf Takedown. The Company
and the Stockholders shall use their reasonable best efforts to
cooperate in taking any customary actions necessary or appropriate,
including making necessary filings with the SEC, to permit any such
Stockholder to participate in such proposed underwritten Shelf
Takedown in such circumstances. If the Closing Shares Registration
Statement ceases to be effective for any reason at any time prior
to the Closing Shares Shelf Expiration, the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall
within 45 days of such cessation of effectiveness amend the Closing
Shares Registration Statement in a manner to obtain the withdrawal
of the order suspending the effectiveness thereof. In any
underwritten Shelf Takedown, the majority of the Stockholders
requesting such underwritten Shelf Takedown shall have the right to
select the plan of distribution, to select one counsel for the
selling Stockholders and to designate the lead managing underwriter
in connection with any underwritten Shelf Takedown pursuant to such
registration and each other managing underwriter for any such
underwritten Shelf Takedown; provided, that in each case,
each such underwriter is reasonably satisfactory to the Company,
which approval shall not be unreasonably withheld or delayed. If
the managing underwriters advise the Requesting Stockholder and the
Company that, in their opinion, the number of shares of Common
Stock requested to be included in such underwritten Shelf Takedown
exceeds the amount that can be sold in such underwritten Shelf
Takedown without adversely affecting the distribution (including
the timing and/or price at which the Registrable Securities can be
sold) of the shares of Company Common Stock being offered, such
underwritten offering will include only the number of shares of
Company Common Stock that the underwriters advise can be sold in
such underwritten offering without having an adverse effect on the
distribution (including the timing and/or price at which the
Registrable Securities can be sold) of the shares of Company Common
Stock being offered. The Company will include in such underwritten
Shelf Takedown pursuant to the Closing Shares Registration
Statement, to the extent of the number of shares of Company Common
Stock which the Requesting Stockholder and the Company are so
advised can be sold in such underwritten Shelf Takedown, the
Registrable Securities of the Stockholders, pro rata, on the basis of the number of
shares of Company Common Stock requested to be included by such
Stockholders.

 

 

C-5

 

 

Section
6.2 Demand Registration Rights. As
of and after the Closing Shares Shelf Expiration, each Stockholder
shall have the right to require the Company to file one or more
registration statements under the Securities Act covering all or
any part of its and its Affiliates’ Registrable Securities (a
“Demand
Registration”) by delivering a written request (the
“Demand Registration
Request”) therefor to the Company specifying the
number of Registrable Securities to be included in such
registration and the intended method of distribution thereof (each
such Stockholder so requesting a Demand Registration, an
“Initiating
Stockholder”). Any Demand Registration Request may
request that the Company register Registrable Securities on an
appropriate form, including a long-form registration statement on
Form S-1 (or any similar long-form registration statement), a shelf
registration statement, and, if the Company is a WKSI, an automatic
shelf registration statement; provided, however, that the Company shall
only be obligated to register such Registrable Securities if the
sale of the Registrable Securities requested to be registered by
such Stockholder is reasonably expected to result in aggregate
gross cash proceeds of at least $20,000,000 (without regard to any
underwriting discount or commission); and provided, further, that unless otherwise
approved by the Board, the Company shall not be obligated to file a
Registration Statement relating to any registration request under
this Section 2.2
within a period of 180 days after the effective date of any other
Registration Statement. The Company shall, as promptly as
reasonably practicable (subject to Section 2.6(c)), use its
reasonable best efforts to file with the SEC (no later than forty
five (45) days from the Company’s receipt of the applicable
Demand Request) and cause to be declared effective such
registration under the Securities Act of the Registrable Securities
which the Company has been so requested to register, for
distribution in accordance with such intended method of
distribution, including a distribution to, and resale by, the
members or partners of the Initial Stockholder (a
“Partner
Distribution”), and (y) if requested by the
Stockholders, obtain acceleration of the effective date of the
registration statement relating to such registration. The Company
shall use reasonable best efforts to cause any Registration
Statement filed pursuant to this Section 2.2 (subject to
Section 2.6(c)
hereof) to remain effective until the earlier of (i) the date on
which all Registrable Securities included within such Registration
Statement have been sold (other than to a Permitted Transferee to
whom registration rights are effectively assigned in accordance
with Section 6.1
hereof) and (ii) the expiration of 180 days (or, if such
registration is a shelf-registration statement that permits sales
of Registrable Securities on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act, one (1) year) from the date
such Registration Statement first becomes effective (exclusive of
any period during which the holders of Registrable Securities are
prohibited or impaired from disposition of Registrable Securities
by reason of the occurrence of a Permitted Interruption), at which
time the Company shall have the right to deregister any of such
securities that remain unsold. The Company shall, at
the request of any Stockholder (including to effect a Partner
Distribution), file any prospectus supplement or post-effective
amendments, or include in the initial Registration Statement any
disclosure or language, or include in any prospectus supplement or
post-effective amendment any disclosure or language, and otherwise
take any action, reasonably deemed necessary or advisable by such
Stockholder (including to effect a Partner Distribution).
Notwithstanding anything contained herein to the contrary, the
Company shall not be required to effect more than five (5) Demand
Registrations pursuant to this Section 2.2.

 

Section
6.3 Piggyback Registration Rights.
If the Company at any time proposes to register any securities
(whether pursuant to the exercise of Demand Registration rights by
a Stockholder of the Company or at the initiative of the Company)
under the Securities Act (other than the Closing Shares
Registration Statement solely as provided in Section 2.1) in connection with
a public offering of such securities for cash, whether for its own
account or for the account of other securityholders, and the form
of registration statement to be used may be used for the
registration of Registrable Securities held by the Stockholders,
the Company shall give prompt written notice of its intention to do
to each Stockholder at least fifteen (15) Business Days prior to
filing any registration statement, and the Stockholders
(“Piggyback
Stockholders”), may, by written notice to the Company,
request that any or all Registrable Securities not otherwise
registered pursuant to a Registration Statement (other than the
Closing Shares Registration Statement solely as provided in
Section 2.1) be
included in such proposed registration of securities by the Company
under the Securities Act (a “Piggyback Registration”).
Upon the written request of any such Piggyback Stockholder, made
within ten (10) Business Days following the receipt of any such
written notice (which request shall specify the maximum number of
Registrable Securities intended to be disposed of by such Piggyback
Stockholder and the intended method of distribution thereof), the
Company shall, subject to this Section 2.3, use its reasonable
best efforts to cause all such Registrable Securities, the
Piggyback Stockholders of which have so requested the registration
thereof, to be registered under the Securities Act with the
securities which the Company at the time proposes to register to
permit the sale or other disposition by the Piggyback Stockholders
(in accordance with the intended method of distribution thereof) of
the Registrable Securities to be so registered, including, if
necessary, by filing with the SEC a post-effective amendment or a
supplement to the registration statement filed by the Company or
the prospectus related thereto. There is no limitation on the
number of such Piggyback Registrations pursuant to the preceding
sentence which the Company is obligated to effect. No registration
of Registrable Securities effected under this Section 2.3 shall relieve the
Company of its obligations to effect Demand Registrations under
Section 2.2
hereof.

 

 

C-6

 

 

Section
6.4 Additional Demand
Registrations. If the Company effects the registration of
less than all of the Registrable Securities requested to be
included by the Initiating Stockholder in a Demand Registration
under Section 2.2,
then the Stockholders shall be entitled to request an additional
Demand Registration with respect to such Registrable Securities
that were not so registered. If the Company withdraws or suspends
any Demand Registration pursuant to Section 2.6(c) before the
expiration of such Demand Registration pursuant to Section 2.2, and before all of
the Registrable Securities covered by such Demand Registration have
been sold pursuant thereto, the Initiating Stockholder shall be
entitled to request an additional Demand Registration with respect
to such Registrable Securities that were not so sold. Any such
additional Demand Registration shall be requested and effected in
the manner and subject to the procedures that applied with respect
to the Demand Registration that was the subject of the cutback in
Section
3.4.

 

Section
6.5 Effective Registration
Statement. A Demand
Registration pursuant to Section 2.2 shall not be deemed
to have been effected unless (i) a Registration Statement with
respect thereto has become effective and, after it has become
effective, such Demand Registration is not interfered with by any
stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason, and (ii) the
sale of Registrable Securities contemplated thereby (if
underwritten) has been consummated.

 

Section
6.6 Limitations on Demand and Piggyback
Rights.

 

(a) With respect to any
registrations requested pursuant to Section 2.2 or Section 2.3, the Company may
include in such registration any other equity securities of the
Company. Notwithstanding anything in this Agreement to the
contrary, the Stockholders will not have piggyback or other
registration rights with respect to registered primary offerings by
the Company (i) covered by a Form S-8 Registration Statement (or a
successor form) applicable to employee benefit-related offers and
sales, (ii) where the securities are not being sold for cash, (iii)
covered by a registration statement on Form S-4 (or successor form)
or (iv) relating to a corporate reorganization pursuant to Rule 145
promulgated by the SEC.

 

(b) Any demand for the
filing of a Registration Statement will be subject to the
constraints of any customary and reasonable lockup arrangements
entered into by the Company in connection with a then pending
underwritten offering, and such demand must be deferred until such
lockup arrangements no longer apply. If a demand has been made
under this Article
II, no further demands may be made so long as the related
offering is still being pursued in good faith.

 

 

C-7

 

 

(c) The Company may
postpone the filing of any Registration Statement or suspend the
effectiveness of any Registration Statement (including, without
limitation, the Closing Shares Registration Statement), any
amendment or post-effective amendment thereto or prospectus
supplement for a reasonable “blackout period” not in
excess of 60 days if the board of directors of the Company
determines in good faith that such registration, offering,
amendment or supplement (i) would materially interfere with a bona
fide business, financing or acquisition (including any merger,
reorganization, consolidation, tender offer or similar transaction)
transaction of the Company because it would be reasonably likely to
require premature disclosure of material, nonpublic information,
the premature disclosure of which the board of directors reasonably
determines in the exercise of its good faith judgment (and not for
the avoidance of its obligations under this Agreement) would not be
in the best interests of the Company, or (ii) could not be effected
by the Company in compliance with the applicable financial
statement requirements under the Securities Act or Exchange Act
(such event described in this Section 2.6(c) during which the
Company is not required to make such filing, amendment or
supplement is herein referred to as a “Permitted Interruption”);
provided,
however, that the
Company shall not postpone the filing of a demanded Registration
Statement or suspend the effectiveness of any Registration
Statement pursuant to this Section 2.6 more than once in
any 90-day period. If a Permitted Interruption affects a
Registration Statement during the period such Registration
Statement remains effective, the Company agrees to notify each of
the Stockholders so affected by a Permitted Interruption in writing
as promptly as practicable upon each of the commencement and the
termination of each Permitted Interruption. The Company shall not
be required in such notice of a Permitted Interruption to disclose
the cause for such Permitted Interruption, and each Stockholder
agrees, subject to applicable law, that it will not disclose
receipt of such notice of Permitted Interruption to any Person.
Each Stockholder agrees that, upon receipt of any such notice from
the Company, such Stockholder will forthwith discontinue
disposition of Registrable Securities pursuant to the applicable
Registration Statement until the earlier of (i) such
Stockholder’s receipt of the Company’s notice as to the
termination of the Permitted Interruption and (ii) 90 days after
receipt of the original notice of a Permitted Interruption. In the
event of a Permitted Interruption, the duration of the applicable
period in which a Registration Statement is to remain effective
shall be extended by the number of days of such period. The Company
shall reimburse each holder of Registrable Securities for all
reasonable and documented out-of pocket costs and expenses incurred
by such Stockholder in connection with the postponement or
withdrawal of such a filing.

 

ARTICLE VII

 

Notices,
Cutbacks and Other Matters

 

Section
7.1 Notifications Regarding Registration
Statements.  In
order for one or more Initiating Stockholders to exercise their
right to demand that a Registration Statement be filed, they must
so notify the Company in writing indicating the number of shares
sought to be registered. The Company will keep the Stockholders
contemporaneously apprised of all pertinent aspects of its pursuit
of any registration, whether pursuant to a Demand Registration or
otherwise, with respect to which a Piggyback Registration
opportunity is available. Pending any required public disclosure
and subject to applicable legal requirements, the parties will
maintain the confidentiality of these discussions.

 

 

C-8

 

 

Section
7.2 Notifications Regarding Registration
Piggyback Rights. Subject to Section 2.3, in the event that
any sale of shares pursuant to a Registration Statement is
underwritten, the Company shall promptly notify each Piggyback
Stockholder of such development and the Piggyback Stockholders
shall have fifteen (15) days after receipt of such notice to
request the registration by the Company under the Securities Act of
Registrable Securities not otherwise registered pursuant to a
Registration Statement (other than the Closing Shares Registration
Statement) in connection with such proposed registration of
securities.

 

Section
7.3 Plan of Distribution;
Underwriters. In connection with any Demand Registration,
the majority of the Initiating Stockholders participating in such
Demand Registration shall have the right to select the plan of
distribution, to select one counsel for the selling Stockholders
and to designate the lead managing underwriter in connection with
any underwritten offering pursuant to such registration and each
other managing underwriter for any such underwritten offering;
provided, that in
each case, each such underwriter is reasonably satisfactory to the
Company, which approval shall not be unreasonably withheld or
delayed.

 

Section
7.4 Cutbacks. If the managing
underwriters advise the Company and the selling Stockholders that,
in their opinion, the number of shares requested to be included in
an underwritten offering (other than any resale of Registrable
Securities pursuant to the Closing Shares Registration Statement
that is an underwritten offering, which shall be subject to
Section 2.1)
exceeds the amount that can be sold in such offering without
adversely affecting the distribution (including the timing and/or
price at which the Registrable Securities can be sold) of the
shares being offered, such offering will include only the number of
shares that the underwriters advise can be sold in such offering
without having an adverse effect on the distribution (including the
timing and/or price at which the Registrable Securities can be
sold) of the shares being offered. The Company will include in such
Registration Statement (other than any resale of Registrable
Securities pursuant to the Closing Shares Registration Statement
that is an underwritten offering, which shall be subject to
Section 2.1), to
the extent of the number which the Company is so advised can be
sold in such offering, first, all securities proposed
by the Company, if any, to be sold for its own account;
second, Registrable
Securities requested by the Stockholders to be included in such
Registration Statement, pro
rata, on the basis of the number of shares of Company Common
Stock requested to be included in such Registration
Statement.

 

Section
7.5 Withdrawals. Even if shares
held by a Stockholder have been part of a registered underwritten
offering, such Stockholder may, no later than the time at which the
public offering price and underwriters’ discount are
determined with the managing underwriter, decline to sell all or
any portion of the shares being offered for its account. In the
event of such a withdrawal, the Company and any Stockholder having
the right to participate in such offering may, in their discretion,
include additional shares in such offering in replacement of any
shares so withdrawn without requiring any further notice or
piggyback registration rights with respect to the Stockholder that
has withdrawn its shares.

 

 

C-9

 

 

Section
7.6 Lockups. In connection with any
underwritten offering of Registrable Securities, (a) the Company
(and each of its executive officers
and directors) and (b) each Stockholder which is selling
shares of Company Common Stock pursuant to its rights hereunder
will agree to be bound by the underwriting agreement’s lockup
restrictions (which must apply, and continue to apply, in like
manner to each of the Company (and
each of its executive officers and directors) and
Stockholders participating in the underwritten offering) that are
agreed to (i) by the Company (if a majority of the shares being
sold in such underwritten offering are being sold for its account)
or (ii) by Stockholders holding a majority of shares being sold by
all Stockholders in such underwritten offering (if a majority of
the shares being sold in such underwritten offering are being sold
by Stockholders), as applicable.

 

Section
7.7 Expenses. All costs and
expenses incurred in connection with any Registration Statement or
registered offering that includes shares held by Stockholders,
whether or not a Registration Statement becomes effective or the
offering is consummated, including all registration and filing
fees, printing expenses, reasonable fees and disbursements of
counsel (including the fees and disbursements of one outside
counsel for the Stockholders (selected by the holders of the
majority of the Registrable Securities to be included in such
Registration Statement) and of the independent certified public
accountants), and the expense of qualifying such shares under state
blue sky laws (all such expenses, the “Registration Expenses”),
will be borne by the Company. However, any underwriters’,
brokers’ and dealers’ discounts and commissions, or
similar fees of securities industry professionals, and applicable
transfer taxes, if any, in each case relating to shares sold for
the account of a Stockholder will be borne by such Stockholder.
Notwithstanding anything herein to the contrary, the Company shall
not be required to pay fees and disbursements of any outside
counsel retained by any Stockholder or by any underwriter in
connection with any Registration Statement or registered offering,
except as expressly set forth above in this Section 3.7.

 

ARTICLE VIII

 

FACILITATING
REGISTRATIONS AND OFFERINGS

 

Section
8.1 General. If the Company becomes
obligated under this Agreement to facilitate a registration and
offering of shares on behalf of Stockholders, the Company will do
so with the same degree of care and dispatch as would reasonably be
expected in the case of a registration and offering by the Company
of shares for its own account. Without limiting this general
obligation, the Company will fulfill its specific obligations as
described in this Article
IV.

 

Section
8.2 Registration Statements. In
connection with each Registration Statement (including the Closing
Shares Registration Statement and any other Registration Statement
that is demanded by Stockholders or as to which piggyback rights
otherwise apply), the Company will:

 

 

C-10

 

 

(a) (i) prepare and
file with the SEC a Registration Statement (or an amendment or
supplement to the Closing Shares Registration Statement) covering
the applicable shares, (ii) file amendments thereto as warranted,
(iii) seek the effectiveness thereof, and (iv) file with the SEC
prospectuses and prospectus supplements as may be required, all in
consultation with the Stockholders and as reasonably necessary in
order to permit the offer and sale of such shares in accordance
with the applicable plan of distribution;

 

(b)  within a
reasonable time prior to the filing of any Registration Statement,
any prospectus, any amendment to a Registration Statement,
amendment or supplement to a prospectus or any free writing
prospectus, provide copies of such documents to the selling
Stockholders and to the underwriter or underwriters of an
underwritten offering, if applicable, and to their respective
counsel; fairly consider such reasonable changes in any such
documents prior to or after the filing thereof as the counsel to
the Stockholders or the underwriter or the underwriters may
request; and make such of the representatives of the Company as
shall be reasonably requested by the selling Stockholders or any
underwriter available for discussion of such
documents;

 

(i) within a reasonable
time prior to the filing of any document which is to be
incorporated by reference into a Registration Statement or a
prospectus, provide copies of such document to counsel for the
Stockholders and underwriters; fairly consider such reasonable
changes in such document prior to or after the filing thereof as
counsel for such Stockholders or such underwriter shall request;
and make such of the representatives of the Company as shall be
reasonably requested by such counsel available for discussion of
such document;

 

(c) cause each
Registration Statement and the related prospectus and any amendment
or supplement thereto, as of the effective date of such
Registration Statement, amendment or supplement and during the
distribution of the registered shares (x) to comply in all material
respects with the requirements of the Securities Act and the rules
and regulations of the SEC and (y) not to contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;

 

(d) notify each
Stockholder promptly, and, if requested by such Stockholder,
confirm such advice in writing, (i) when a Registration Statement
has become effective and when any post-effective amendments and
supplements thereto become effective if such Registration Statement
or post-effective amendment is not automatically effective upon
filing pursuant to Rule 462 promulgated by the Securities Act, (ii)
of the issuance by the SEC or any state securities authority of any
stop order, injunction or other order or requirement suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iii) if, between the effective date
of a Registration Statement and the closing of any sale of
securities covered thereby pursuant to any agreement to which the
Company is a party, the representations and warranties of the
Company contained in such agreement cease to be true and correct in
all material respects or if the Company receives any notification
with respect to the suspension of the qualification of the shares
for sale in any jurisdiction or the initiation of any proceeding
for such purpose, and (iv) of the happening of any event during the
period a Registration Statement is effective as a result of which
such Registration Statement or the related prospectus contains any
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading;

 

(e) promptly furnish to
counsel for each underwriter, if any, and for the respective
Stockholders copies of any correspondence with the SEC or any state
securities authority relating to the Registration Statement or
prospectus;

 

 

C-11

 

 

(f) otherwise comply
with all applicable rules and regulations of the SEC, including
making available to its security holders an earnings statement
covering at least 12 months which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar provision then in force); and

 

(g) use all reasonable
efforts to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible
time.

 

Section
8.3 Due Diligence. In connection
with each registration and offering of shares to be sold by
Stockholders, the Company will, in accordance with customary
practice, make available for inspection by representatives of the
Stockholders and underwriters and any counsel or accountant
retained by such Stockholder or underwriters all relevant financial
and other records, pertinent corporate documents and properties of
the Company and cause appropriate officers, managers and employees
of the Company to supply all information reasonably requested by
any such representative, underwriter, counsel or accountant in
connection with their due diligence exercise.

 

Section
8.4 Information from Stockholders.
Each Stockholder that holds shares covered by any Registration
Statement will furnish to the Company such information regarding
itself as is required to be included in the Registration Statement,
the ownership of shares by such Stockholder and the proposed
distribution by such Stockholder of such shares, and make such
customary representations to the Company, as the Company may from
time to time reasonably request in writing. Each Stockholder
authorizes the Company to include such information in the
applicable Registration Statement or other documents prepared or
filed in connection therewith. Each Stockholder further agrees to
promptly notify the Company of any inaccuracies or changes in the
information provided to the Company that it becomes aware of that
may occur subsequent to the date hereof at any time while a
Registration Statement including shares owned by such Stockholder
remains effective. Each Stockholder agrees to distribute
Registrable Securities included in the Registration Statement only
in the manner described in the applicable Registration
Statement.

 

Section
8.5 Additional Agreements of
Stockholders.

 

(a) Each Stockholder
agrees to, following such time that such Stockholder becomes aware,
as expeditiously as possible, notify the Company of the occurrence
of any event that makes any statement made in any Registration
Statement or any related prospectus regarding such Stockholder
untrue in any material respect or that requires the making of any
changes in either a Registration Statement or prospectus regarding
such Stockholder.

 

 

C-12

 

 

(b) Each Stockholder
agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.2(d)(ii) or
Section 4.2(d)(iv)
hereof, such Stockholder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement until
such Stockholder’s receipt of the copies of any necessary
supplements or amendments to such Registration Statement or
applicable prospectus, and, if so directed by the Company, such
Stockholder will deliver to the Company all copies in its
possession, other than permanent file copies then in such
Stockholder’s possession, of the Registration Statement or
applicable prospectus covering such Registrable Securities at the
time of receipt of such notice. Each Stockholder agrees that in the
event it receives any notice from the Company under Section 4.2(d)(ii) or
Section 4.2(d)(iv),
it will not disclose such fact to any person.

 

Section
8.6 Non-Closing Shares Registration
Statements. In connection with any non-shelf registered
offering or shelf registration that is demanded by Stockholders in
accordance with Section
2.2 or as to which piggyback rights apply pursuant to
Section 2.3, the
Company will:

 

(a) cooperate with the
Stockholders selling shares and the sole underwriter or managing
underwriter of an underwritten offering shares, if any, to
facilitate the timely preparation and delivery of certificates
representing the shares to be sold and not bearing any restrictive
legends; and enable such shares to be in such denominations
(consistent with the provisions of the governing documents thereof)
and registered in such names as the selling Stockholders or the
sole underwriter or managing underwriter of an underwritten
offering of shares, if any, may reasonably request at least five
(5) Business Days prior to any sale of such shares;

 

(b) furnish to each
Stockholder and to each underwriter, if any, participating in the
relevant offering, without charge, as many copies of the applicable
prospectus, including each preliminary prospectus, and any
amendment or supplement thereto and such other documents as such
Stockholder or underwriter may reasonably request in order to
facilitate the public sale or other disposition of the shares; the
Company hereby consents to the use of the prospectus, including
each preliminary prospectus, by each such Stockholder and
underwriter in connection with the offering and sale of the shares
covered by the prospectus or the preliminary
prospectus;

 

(c) (i) use all
reasonable efforts to register or qualify the shares being offered
and sold, no later than the time the applicable registration
statement becomes effective, under all applicable state securities
or “blue sky” laws of such jurisdictions as each
underwriter, if any, or any Stockholder holding shares covered by a
registration statement, shall reasonably request; (ii) use all
reasonable efforts to keep each such registration or qualification
effective during the period such registration statement is required
to be kept effective; and (iii) do any and all other acts and
things which may be reasonably necessary or advisable to enable
each such underwriter, if any, and Stockholder to consummate the
disposition in each such jurisdiction of such shares owned by such
Stockholder; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified
or to consent to be subject to general service of process (other
than service of process in connection with such registration or
qualification or any sale of shares in connection therewith) in any
such jurisdiction;

 

(d) use all reasonable
efforts to cause all shares being sold to be qualified for
inclusion in or listed on NASDAQ or any other U.S. securities
exchange on which shares issued by the Company are then so
qualified or listed if so requested by the Stockholders, or if so
requested by the underwriter or underwriters of an underwritten
offering of shares, if any;

 

 

C-13

 

 

(e) cooperate and
assist in any filings required to be made with Financial Industry
Regulatory Authority and in the performance of any due diligence
investigation by any underwriter in an underwritten
offering;

 

(f) use all reasonable
efforts to facilitate the distribution and sale of any shares being
offered, including by making road show presentations, holding
meetings with and making calls to potential investors and taking
such other actions as shall be requested by the lead managing
underwriter of an underwritten offering; and

 

(g) enter into
customary agreements (including, in the case of an underwritten
offering, underwriting agreements in customary form, and including
provisions with respect to indemnification and contribution in
customary form and consistent with the provisions relating to
indemnification and contribution contained herein) and take all
other customary and appropriate actions in order to expedite or
facilitate the disposition of such shares and in connection
therewith:

 

(i) make such
representations and warranties to the selling Stockholders and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar underwritten
offerings;

 

(ii) obtain
opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the lead managing underwriter, if any)
addressed to each selling Stockholder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
sales of securities or underwritten offerings and such other
matters as may be reasonably requested by such Stockholders and
underwriters;

 

(iii) obtain
“cold comfort” letters and updates thereof from the
Company’s independent certified public accountants addressed
to the selling Stockholders, if permissible, and the underwriters,
if any, which letters shall be customary in form and shall cover
matters of the type customarily covered in “cold
comfort” letters to underwriters in connection with primary
underwritten offerings;

 

(iv) to
the extent requested and customary for the relevant transaction,
enter into a securities sales agreement with the Stockholders
providing for, among other things, the appointment of such
representative as agent for the selling Stockholders for the
purpose of soliciting purchases of shares, which agreement shall be
customary in form, substance and scope and shall contain customary
representations, warranties and covenants

 

 

C-14

 

 

The
above shall be done at such times as customarily occur in similar
non-shelf registered offerings or shelf registrations, as
applicable.

 

ARTICLE IX

 

INDEMNIFICATION

 

Section
9.1 Indemnification by the Company.
In the event of any registration under the Securities Act by any
Registration Statement, pursuant to rights granted in this
Agreement, of shares held by Stockholders, the Company will hold
harmless Stockholders, each director, officer, employee and
Affiliate of the Stockholders and each other person, if any, who
controls any Stockholder within the meaning of the Securities Act
(each, a “Controlling Person”),
against any losses, claims, damages, or liabilities (including
legal fees and costs of court), joint or several, to which
Stockholders or such Controlling Person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or any actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact (a) contained, on its effective
date, in any Registration Statement under which such securities
were registered under the Securities Act or any amendment or
supplement to any of the foregoing, or which arise out of or are
based upon the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (b) contained in any
preliminary prospectus, if used prior to the effective date of such
Registration Statement, or in the final prospectus (as amended or
supplemented if the Company shall have filed with the SEC any
amendment or supplement to the final prospectus), or which arise
out of or are based upon the omission or alleged omission (if so
used) to state a material fact required to be stated in such
prospectus or necessary to make the statements in such prospectus
not misleading; and will reimburse Stockholders and each such
Controlling Person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, or liability; provided, however, that the Company shall
not be liable to any Stockholder or Controlling Persons in any such
case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such
Registration Statement or such amendment or supplement, solely in
reliance upon and in conformity with information furnished to the
Company through a written instrument duly executed by such
Stockholder specifically for use in the preparation thereof. In
connection with any underwritten public offering effected under a
Registration Statement, the Company will agree to indemnify the
underwriters on terms and conditions customary for such an
offering. This indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an
indemnified party, and shall survive the transfer (in accordance
with the terms hereof) of such Registrable Securities by the seller
thereof.

 

Section
9.2 Indemnification by
Stockholders. Each Stockholder will, severally and not
jointly, indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 5.1) the Company, each
director, officer, employee and Affiliate of the Company and any
Person who controls the Company within the meaning of the
Securities Act with respect to any statement or omission from such
Registration Statement, or any amendment or supplement to it, if
such statement or omission was made solely in reliance upon and in
conformity with information furnished to the Company through a
written instrument duly executed by such Stockholder specifically
regarding such Stockholder for use in the preparation of such
Registration Statement or amendment or supplement; provided, however, that such Stockholder
shall not be liable in any such case to the extent that prior to
the filing of any such Registration Statement amendment or
supplement, such Stockholder has furnished in writing to the
Company information expressly for use in such Registration
Statement or prospectus or any amendment or supplement which
corrected or made not misleading information previously furnished
to the Company. This indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the
Company, its directors, officers or controlling Persons, and shall
survive the transfer of such Registrable Securities by the seller
thereof. Notwithstanding the foregoing, the liability of any such
Stockholder shall not exceed an amount equal to the net proceeds
realized by such Stockholder from the sale of Registrable
Securities pursuant to such Registration Statement.

 

 

C-15

 

 

Section
9.3 Indemnification Procedures.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the
preceding Sections of this Article V, the indemnified
party will, if a resulting claim is to be made or may be made
against and indemnifying party, give written notice to the
indemnifying party of the commencement of the action. The failure
of any indemnified party to give notice shall not relieve the
indemnifying party of its obligations in this Article V, except to the extent
that the indemnifying party is actually prejudiced by the failure
to give notice. If any such action is brought against an
indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense of the action with counsel
reasonably satisfactory to the indemnified party, and after notice
from the indemnifying party to such indemnified party of its
election to assume defense of the action, the indemnifying party
will not be liable to such indemnified party for any legal or other
expenses incurred by the latter in connection with the
action’s defense. An indemnified party shall have the right
to employ separate counsel in any action or proceeding and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at such indemnified party’s expense
unless (a) the employment of such counsel has been specifically
authorized in writing by the indemnifying party, which
authorization shall not be unreasonably withheld, (b) the
indemnifying party has not assumed the defense and employed counsel
reasonably satisfactory to the indemnified party within 60 days
after notice of any such action or proceeding, or (c) the named
parties to any such action or proceeding (including any impleaded
parties) include the indemnified party and the indemnifying party
and the indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to the
indemnified party that are different from or additional to those
available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action
or proceeding on behalf of the indemnified party), it being
understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to all local counsel which is necessary, in
the good faith opinion of both counsel for the indemnifying party
and counsel for the indemnified party in order to adequately
represent the indemnified parties) for the indemnified party and
that all such fees and expenses shall be reimbursed as they are
incurred upon written request and presentation of invoices. Whether
or not a defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any
settlement made without its consent. No indemnifying party will
consent to entry of any judgment or enter into any settlement which
(i) does not include as an unconditional term the giving by the
claimant or plaintiff, to the indemnified party, of a release from
all liability in respect of such claim or litigation or (ii)
involves the imposition of equitable remedies or the imposition of
any non-financial obligations on the indemnified
party.

 

Section
9.4 Contribution. If the
indemnification required by this Article V from the indemnifying
party is unavailable to or insufficient to hold harmless an
indemnified party in respect of any indemnifiable losses, claims,
damages, liabilities, or expenses, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages, liabilities, or
expenses in such proportion as is appropriate to reflect (a) the
relative benefit of the indemnifying and indemnified parties and
(b) if the allocation in clause (a) is not permitted by applicable
law, in such proportion as is appropriate to reflect the relative
benefit referred to in clause (a) and also the relative fault of
the indemnified and indemnifying parties, in connection with the
actions which resulted in such losses, claims, damages,
liabilities, or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and
the indemnified party shall be determined by reference to, among
other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
parties, and the parties’ relative intent, knowledge, access
to information, and opportunity to correct or prevent such action.
The amount paid or payable by a party as a result of the losses,
claims, damage, liabilities, and expenses referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding. The Company and Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 5.4 were determined by
pro rata allocation or by
any other method of allocation which does not take account of the
equitable considerations referred to in the prior provisions of
this Section 5.4.
Notwithstanding the provisions of this Section 5.4, no indemnifying or
contributing party shall be required to contribute any amount in
excess of the amount by which the total price at which the
securities were offered to the public by such party exceeds the
amount of any damages which such party has otherwise been required
to pay by reason of an untrue statement or omission. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such a
fraudulent misrepresentation.

 

 

C-16

 

 

ARTICLE X

 

other
agreements

 

Section
10.1 Transfer of
Rights.

 

(a) This Agreement is
personal to the parties hereto and not assignable or transferable;
provided,
however, that
notwithstanding the foregoing, a Stockholder may assign and
transfer its rights and obligations under this Agreement to a
Permitted Transferee in connection with a transfer or sale of
Registrable Securities to such Person, which assignment or transfer
shall only be effective upon receipt by the Company of a duly
executed commitment by such Permitted Transferee to be bound by the
terms of this Agreement, in the form attached hereto as
Exhibit A, in which
case this Agreement shall be assigned to, and may be enforced by,
such Permitted Transferee, and such Permitted Transferee shall
thereupon have all of the rights and obligations of its transferor
hereunder.

 

(b) In the event the
Company engages in a merger or consolidation in which the
Registrable Securities are converted into securities of another
company, and which securities are not tradable without registration
under the Securities Act, appropriate arrangements will be made so
that the registration rights provided under this Agreement continue
to be provided to Stockholders by the issuer of such securities. To
the extent such new issuer, or any other company acquired by the
Company in a merger or consolidation, was bound by registration
rights obligations that would conflict with the provisions of this
Agreement, the Company will, unless the Required Stockholders
otherwise agree, use its best efforts to modify any such
“inherited” registration rights obligations so as not
to interfere in any material respects with the rights provided
under this Agreement.

 

Section
10.2 Limited Liability.
Notwithstanding any other provision of this Agreement, neither the
members, general partners, limited partners or managing directors,
or any directors or officers of any members, general or limited
partner, advisory director, nor any future members, general
partners, limited partners, advisory directors, or managing
directors, if any, of any Stockholder shall have any personal
liability for performance of any obligation of such Stockholder
under this Agreement in excess of the respective capital
contributions of such members, general partners, limited partners,
advisory directors or managing directors to such
Stockholder.

 

Section
10.3 Rule 144. If the Company is
subject to the requirements of Section 13, 14 or 15(d) of the
Exchange Act, the Company covenants that it will file any reports
required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is subject to the requirements of
Section 13, 14 or 15(d) of the Exchange Act but is not
required to file such reports, it will, upon the request of any
Stockholder, make such information available) and it will take such
further action as any Stockholder may reasonably request, so as to
enable such Stockholder to sell Registrable Securities without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Stockholder, the Company will deliver to such
Stockholder a written statement as to whether it has complied with
such requirements.

 

 

C-17

 

 

Section
10.4 In-Kind Distributions. If any
Stockholder seeks to effectuate an in-kind distribution of all or
part of its Registrable Securities to its direct or indirect
equityholders, the Company will work with such Stockholder and the
Company’s transfer agent to facilitate such in-kind
distribution in the manner reasonably requested by such
Stockholder.

 

Section
10.5 No Inconsistent Agreements. The
Company has not entered into, and on or after the date of this
Agreement will not enter into, any agreement that conflicts with
the provisions hereof.

 

ARTICLE XI

 

MISCELLANEOUS

 

Section
11.1 Notices. All notices, demands
and other communications hereunder shall be in writing and shall be
deemed to have been duly given (i) on the date so given, if
delivered personally, (ii) on the date sent, if delivered by
facsimile with telephone confirmation of receipt, (iii) on the
second Business Day following the date deposited in the mail if
mailed via an internationally recognized overnight courier and (iv)
on the fourth (4th) Business Day
following the date deposited in the mail if mailed via registered
or certified mail, return receipt requested, postage prepaid, in
each case, to the other party at the following
addresses:

 

if to
any Stockholder, to the address listed on Annex A, with copies (which
shall not constitute notice) to the respective persons listed on
Annex
A.

 

if to
the Company, to:

 

Fusion
Telecommunications International, Inc.

420
Lexington Avenue, Suite 1718

New
York, New York 10170

Attention: James P.
Prenetta, Jr., Executive Vice President and General
Counsel

Email:
jprenetta@fusionconnect.com

 

 

C-18

 

 

Section
11.2 Section Headings. The article
and section headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement. References in this Agreement to a designated
“Article” or “Section” refer to an Article
or Section of this Agreement unless otherwise specifically
indicated.

 

Section
11.3 Use of Terms. Whenever required
by the context, any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural
and vice versa. Whenever the words “include”,
“included” or “including” are used in this
Agreement, they are deemed to be followed by the words
“without limitation”. Reference to any agreement,
document or instrument means such agreement, document or instrument
as amended or otherwise modified from time to time in accordance
with the terms thereof. When used in this Agreement, words such as
“herein”, “hereinafter”,
“hereof”, “hereto”, and
“hereunder” shall refer to this Agreement as a whole,
unless the context clearly requires otherwise. The use of the words
“or,” “either” and “any” shall
not be exclusive. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.

 

Section
11.4 Governing Law. This Agreement
will be governed and construed in accordance with the internal Laws
of the State of Delaware, without regard to any applicable conflict
of laws principles (whether of the State of Delaware or any other
jurisdiction).

 

Section
11.5 Consent to Jurisdiction and Service of
Process. Each of the parties to this Agreement hereby
irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction and venue of the Chancery
Court of the State of Delaware and, in the absence of such
jurisdiction, the United States District Court for the District of
Delaware, and, in the absence of such federal jurisdiction, the
parties consent to be subject to the exclusive jurisdiction of any
Delaware state court sitting in New Castle County (together, the
“Chosen Courts”), in any action or proceeding arising
out of or relating to this Agreement or the Transactions or for
recognition or enforcement of any judgment relating thereto, and
each of the Parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in the
Chosen Courts, (ii) agrees that any claim in respect of any such
action or proceeding may be heard and determined in the Chosen
Courts, and any appellate court hearing actions or proceedings
therefrom, (iii) 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 such action or proceeding in the
Chosen Courts, and (iv) waives, to the fullest extent it may
legally and effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding in the Chosen
Courts. Each of the parties to this Agreement agrees that a final
judgment in any such action or proceeding will be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

 

Section
11.6 WAIVER OF JURY TRIAL. EACH
PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.6.

 

 

C-19

 

 

Section
11.7 Amendments; Termination. This
Agreement may be amended or modified only by an instrument in
writing executed by the Company and the Required Stockholders. Any
such amendment and modification will apply to all Stockholders
equally, without distinguishing between them. This Agreement will
terminate as to any Stockholder when it no longer holds any
Registrable Securities. This Agreement will no longer be applicable
to Registrable Securities that are registered in a public offering
on NASDAQ or any other U.S. securities exchange on which
Registrable Securities issued by the Company are then so qualified
or listed.

 

Section
11.8 Entire Agreement. This
Agreement constitutes the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby and
thereby. The registration rights granted under this Agreement
supersede any registration, qualification or similar rights with
respect to any of the shares of Company Common Stock granted under
any other agreement to the parties hereto.

 

Section
11.9 Severability. The invalidity or
unenforceability of any specific provision of this Agreement shall
not invalidate or render unenforceable any of its other provisions.
Any provision of this Agreement held invalid or unenforceable shall
be deemed reformed, if practicable, to the extent necessary to
render it valid and enforceable and to the extent permitted by law
and consistent with the intent of the parties to this
Agreement.

 

Section
11.10 Counterparts. This Agreement
may be executed in multiple counterparts, including by means of
facsimile, each of which shall be deemed an original, but all of
which together shall constitute the same instrument.

 

[Remainder
of page intentionally blank]

 

 

C-20

 

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

 

FUSION
TELECOMMUNICATIONS INTERNATIONAL, INC.

 

 

 

By:                                                                       

       Name:

       Title:

 

 

C-21

 

 

BCHI
HOLDINGS, LLC

 

 

 

By:                                                                       

       Name:

       Title:

 

       Notices:

 

 

C-22

 

EXHIBIT A

 

FORM OF JOINDER TO

 

REGISTRATION
RIGHTS AGREEMENT

 

This
JOINDER to the Registration Rights Agreement, dated as of
__________, 2017 (the “Registration Rights
Agreement”), of Fusion Telecommunications
International, Inc., a Delaware corporation (the
“Company”),
is executed on behalf of the undersigned (“Stockholder”), effective
as of the date set forth on the signature page below, with
reference to the following facts:

 

A.           Capitalized
terms used herein but not otherwise defined shall have the meanings
set forth in the Registration Rights Agreement.

 

B.           Stockholder
has acquired Registrable Securities from a Stockholder (in this
instance, as defined in the Registration Rights Agreement) (the
“Original
Stockholder”), is the Permitted Transferee of the
Original Stockholder and, in connection with such transfer, the
registration rights of such Original Stockholder are being assigned
to Stockholder in accordance with the terms of Section 6.1 of the Registration
Rights Agreement, and the Registration Rights Agreement requires
Stockholder to become a party thereto if Stockholder desires to
avail itself of the registration rights therein, and Stockholder
agrees to do so in accordance with the terms thereof.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned
hereby agrees as follows:

 

1.           Agreement
to be Bound. Stockholder hereby agrees that upon execution
of this Joinder, Stockholder shall become a party to the
Registration Rights Agreement as a “Stockholder” and
shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Registration Rights Agreement
applicable to Stockholder and the Registrable Securities held by
Stockholder as though an original party thereto.

 

2.           Counterparts.
This Joinder may be executed in separate counterparts each of which
shall be an original and all of which taken together shall
constitute one and the same agreement.

 

3.           Notices.
For purposes of Section
7.1 of the Registration Rights Agreement, all notices,
demands or other communications to Stockholder shall be directed to
Stockholder’s address set forth below Stockholder’s
signature below.

 

[Signature Page Follows]

 

 

C-23

 

 

 

IN WITNESS WHEREOF, Stockholder has
executed this Joinder effective as of the date set forth
below.

 

STOCKHOLDER:

 

 

 

By:                                                                       

 

Name:                                                                       

 

Title:                                                                       

 

 

ADDRESS:

 

 

 

 

 

 

 

 

 

 

 

Date:                                                                       

 

 

 

C-24

 

 

Exhibit D

Consumer/SMB Business Carve-out

 

Prior
to the Closing, BCHI and the BCHI Subsidiaries will distribute to
the shareholders of BCHI the equity of an entity containing certain
assets associated with their consumer and single line business
services business as more fully described below, and will enter
into agreements and arrangements, containing, among others, terms
set forth below, each of which distributions, agreements and
arrangements will be preapproved by the Company. As used herein, on
and after the Effective Time, BCHI means the Surviving Company and
its Subsidiaries.

 

1.

Distribution. Immediately prior
to the Effective Time, BCHI will distribute to its shareholders all
the equity interests in Spinco (as defined below) (the
“Distribution”). The time
of the Distribution is herein referred to as the
“Distribution
Time”.

 

2.

Assets. Prior to the
Distribution Time, BCHI and the BCHI Subsidiaries will transfer to
a newly created Subsidiary of BCHI or to Tempo Telecom, LLC or
another current subsidiary of BCHI approved by the Company (such
company being hereinafter referred to as “Spinco”) (i) all customer
contracts and accounts relating thereto with respect to the then
existing consumer business of BCHI and the BCHI Subsidiaries and
all customer contracts and accounts relating thereto with respect
to their single-line business services business (collectively, the
“Consumer/SMB
Business Customers”), (ii) any assets that are used
solely to support the Consumer/SMB Business Customers, (iii) any
other assets that are reasonably agreed by the Parties as necessary
to support the services provided to the Consumer/SMB Business
Customers, and (iv) the patents set forth on Annex 1 to this Exhibit D and any associated
marks in the United States and Canada, which patents will be
licensed to the Surviving Company under a perpetual, royalty free,
worldwide license. The services currently provided by BCHI and the
BCHI Subsidiaries to the Consumer/SMB Business Customers include
landline local voice services, associated long distance voice
services, associated ancillary services such as adjunct-to-basic
services that are intended to facilitate completion of calls
through utilization of basic telephone service facilities
including, but not limited to, call waiting, speed dialing, caller
ID, call blocking, call forwarding, and voicemail, and associated
carrier access services; the Tempo consumer wireless voice and data
services; and Canadian consumer landline local voice services and
related features (including, but not limited to, call waiting,
speed dialing, caller ID, call blocking, call forwarding, and
voicemail) associated long distance voice services (including, but
not limited to long distance calling plans, post-paid and prepaid
calling cards), and associated ancillary services (such as
adjunct-to-basic services that are intended to facilitate
completion of calls through utilization of basic telephone service
facilities including, but not limited to 9-1-1 emergency service,
local operator service, 4-1-1 directory assistance, 3-1-1
non-Emergency municipal government services, 6-1-1 repairs, and
7-1-1 message relay service) (collectively, the “Consumer/SMB
Business”).

 

3.

Liabilities. The Parties agree
that Spinco will, as of the Distribution Time, have accounts
receivable and accounts payable that have a net aggregate value of
$0. The Parties will cooperate in good faith to determine which
accounts receivable and accounts payable related to the
Consumer/SMB Business will be transferred to Spinco prior to the
Distribution Time to achieve such net $0 aggregate value. No
liabilities, other than those associated with the accounts payable,
will be assumed by Spinco other than accounts payable as determined
by this Section
3.

 

4.

Employees. The Parties will
cooperate in good faith to determine the employees of BCHI and its
Subsidiaries to be offered employment by Spinco in connection with
the Distribution.

 

 

D-1

 

 

5.

Wholesale Agreement. The
Company and BCHI will mutually develop the terms of a wholesale
agreement under the terms of which Spinco will purchase specific
services from the Surviving Company, these services will include
services currently purchased by BCHI and the BCHI Subsidiaries from
various third-party carriers and services available directly from
the Company and its Subsidiaries; the agreement will be structured
in a manner designed to enable the parties to maximize the benefit
of any existing volume discounts provided by third party
carriers.

 

6.

Transition Services
Agreement.

 

(a) The Company and
BCHI will negotiate the terms of a transition services agreement,
under which Surviving Company and its Subsidiaries will provide
Spinco and its Subsidiaries with various agreed upon support
services that are reasonably required by Spinco to support the
Consumer/SMB Business Customers, for a period of up to three (3)
years following the Distribution Time. The cost of such services
will be mutually agreed upon by the Company and BCHI.

 

(b)  If, prior to
the Distribution Time, Spinco is unable to obtain all required
regulatory approvals, licenses and permits necessary for it to
legally operate the Consumer/SMB Business, Spinco and the Surviving
Company will enter into a management agreement, the terms of which
will be agreed by BCHI and the Company in advance of the
Distribution Time.

 

(c) If the transactions
contemplated by this Exhibit D cannot be consummated
on the terms set forth herein due to the failure to obtain any
required regulatory approvals or consents with respect to any
material contracts or arrangements, BCHI and the Company will work
in good faith to restructure these transactions in a manner that
provides the parties with substantially the same economic and
commercial position as if such transactions had occurred as set
forth in this Exhibit
D.

 

7.

Valuation; Adjustments to
Distribution.

 

(b) The value of the
Consumer/SMB Business as of the Distribution Time will be
calculated as follows (the “Distribution Value”): (i)
EBITDA of the Consumer/SMB Business for the last full calendar
month prior to the Distribution Time; multiplied by (ii) 12; multiplied by (iii) $3.48. For purposes
of the foregoing, EBITDA of the Consumer/SMB Business will be
calculated in accordance with the methodology used in creating the
information included on Annex 2 to this Exhibit D. BCHI will calculate
the Distribution Value in good faith and provide the calculation to
the Company for its reasonable verification. If the Company and
BCHI are unable to reach agreement concerning the value of the
Consumer/SMB Business, the parties will submit the matter to an
independent accounting firm for their determination.

 

(c) If the Distribution
Value is less than $25 million, then, immediately prior to the
Distribution Time, BCHI will deliver to Spinco a promissory note
payable to Spinco in an amount equal to the excess of $25 million
over the Distribution Value. This promissory note will be payable
on the one-year anniversary of the Closing Date and may be settled
by Surviving Company, at its election, either in cash or in shares
of Company Common Stock, such shares to be calculated in accordance
with the formula set forth in clause (c) below.

 

(d) If the Distribution
Value is greater than $25 million (the “Excess Value”), then the
BCHI shareholders will either (i) make a cash payment, at the
Distribution Time, to BCHI in an amount equal to the Excess Value,
or (ii) cause Spinco to issue a promissory note payable to BCHI in
an amount equal to the Excess Value, payable on the one-year
anniversary of the Closing Date, which at the election of Spinco
can be paid in cash, or paid by the transfer of a number of shares
of the common stock of the Company equal to (rounded up or down to
the nearest whole share) (1) the Excess Value, divided by (2) the
greater of (A) $2.00, or (B) the weighted average daily closing
price of the Company Common Stock, as reported by NASDAQ (or any
successor to such exchange), for the ten (10) consecutive trading
days ending immediately prior to the third Business Day preceding
the date of such transfer.

 

 

****************************************************************

 

 

D-2

 

Annex 1

 

Patents
of the Consumer/SMB Business

 

	

Patent Title

	

Application No.

	

Registration No.

	

Country

	

CALL
SCREENING SYSTEM AND METHOD

	

2597377

	

2,597,377

	

Canada

	

CALL
SCREENING SYSTEM AND METHOD

	

12/673,377

	

8,577,002

	

United
States

 

 

D-3

 

Annex 2

 

EBITDA
of the Consumer/SMB Business

 

 

D-4Exhibit 4.2

 

FORM OF CERTIFICATE FOR SHARES OF $1.95
 SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES

 

	
Number            
    	
 
    	
               Shares
    
	
 
    	
 
    	
CUSIP 74965L 200
    

 

SEE REVERSE FOR CERTAIN DEFINITIONS AND RESTRICTIONS

 

RLJ LODGING TRUST

 

a Real Estate Investment Trust Formed Under the Laws of the State of Maryland

 

	
THIS CERTIFIES THAT
    
	
 
    
	
is the record holder of
    

 

FULLY PAID AND NONASSESSABLE $1.95 SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES, PAR VALUE $0.01 PER SHARE, OF

 

RLJ LODGING TRUST

 

(the “Corporation”), transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent and registered by the Registrar.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Secretary
    	
 
    	
President
    

 

Countersigned and Registered:

 

	
Wells Fargo Shareowners Services,

a division of Wells Fargo Bank N.A.
   Transfer Agent and Registrar
    	
 
    

 

 

RLJ LODGING TRUST

 

The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN COM
    	
-as tenants in common 
    	
 
    	
UNIF GIFT MIN ACT-
    	
                         Custodian   
    
	
TEN ENT
    	
-as tenants by the entireties 
    	
 
    	
 
    	
(Cust)
    	
(Minor)
    
	
JT TEN
    	
-as joint tenants with right of   survivorship and not as tenants in common
    	
 
    	
 
    	
under Uniform Gifts to Minors Act of
    
	
 
    	
 
    	
 
    	
 
    	
(State)
    
	
 
    	
Additional abbreviations may also be used   though not in the above list.
    	
 
    

 

For Value Received,                      hereby sell, assign and transfer unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER
 IDENTIFYING NUMBER OF ASSIGNEE

 

 

(Please Print or Typewrite Name and Address Including Zip Code, of Assignee)

 

Shares of the $1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share, of the Corporation represented by the within Certificate, and do hereby irrevocably constitute and appoint                                                                                                                                                       attorney to transfer the said shares on the books of the within-named Corporation with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
X
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
X
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
NOTICE: THE SIGNATURE(S) TO THIS   ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF   THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY   CHANGE WHATEVER. 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature(s) Guaranteed
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    	
 
    	
 
    
	
THE SIGNATURE(S) MUST BE GUARANTEED   BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN   ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE   GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15 
    	
 
    	
 
    	
 
    
						

 

 

The Trust will furnish to any Shareholder on request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends or distributions, qualifications, and terms and conditions of redemption of the shares of each class which the Trust is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of a preferred or special class which the Trust is authorized to issue in series, to the extent they have been set, and of the authority of the Board of Trustees to set the relative rights and preferences of subsequent series of a preferred or special class o shares. Such request may be made to the secretary of the Trust or to its transfer agent.

 

The Shares represented by this certificate are subject to restrictions on Beneficial Ownership, Constructive Ownership and Transfer.  Subject to certain further restrictions and except as expressly provided in the Trust’s Declaration of Trust, (i) no Person may Beneficially Own or Constructively Own Common Shares of the Trust in excess of 9.8% (in value or number of Shares, whichever is more restrictive) of the outstanding Common Shares of the Trust; (ii) no Person may Beneficially Own or Constructively Own Preferred Shares of the Trust in excess of 9.8% (in value or number of Shares, whichever is more restrictive) of the total outstanding Preferred Shares of the Trust of such class or series; (iii) no Person may Beneficially Own or Constructively Own Shares of the Trust that would result in the Trust being “closely held” under Section 856(h) of the Code or otherwise cause the Trust to fail to qualify as a REIT; (iv) no Person may Beneficially Own or Constructively Own Shares of the Trust that would result in (a) the Trust owning (directly or indirectly) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Trust (either directly or indirectly through one or more partnerships or limited liability companies) from such tenant for the taxable year of the Trust during which such determination is being made would reasonably be expected to equal or exceed the lesser of (I) one percent (1%) of the Trust’s gross income (as determined for purposes of Section 856(c) of the Code), or (II) an amount that would cause the Trust to fail to satisfy any of the gross income requirements of Section 856(c) of the Code or (b) any manager or operator of a “qualified lodging facility,” within the meaning of Section 856(d)(9)(D) of the Code, leased by the Trust (or any subsidiary of the Trust) to one of its taxable REIT subsidiaries with respect to the Trust failing to qualify as an “eligible independent contractor,” within the meaning of Section 856(d)(9)(A) of the Code, in either case if the income derived by the Trust from such tenant or such taxable REIT subsidiary, taking into account any other income of the Trust that would not qualify under the gross income requirements of Section 856(c) of the Code, would cause the Trust to fail to satisfy any of such gross income requirements; and (v) no Person may Transfer Shares of the Trust if such Transfer would result in Shares of the Trust being owned by fewer than 100 Persons (as determined under the principles of Section 856(a)(5) of the Code). Any Person who Beneficially Owns or Constructively Owns, Transfers or attempts to Beneficially Own or Constructively Own Shares of the Trust which causes or will cause a Person to Beneficially Own or Constructively Own Shares of the Trust in excess or in violation of the above limitations must immediately notify the Trust.  If certain of the restrictions on Transfer or ownership above are violated, the Shares of the Trust represented hereby will be automatically Transferred to a Charitable Trustee of a Charitable Trust for the benefit of one or more Charitable Beneficiaries. In addition, the Trust may take other actions, including redeeming Shares upon the terms and conditions specified by the Board of Trustees in its sole and absolute discretion if the Board of Trustees determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio.  A Person who attempts to Beneficially Own or Constructively Own Shares in violation of the ownership limitations described above shall have no claim, cause of action or any recourse whatsoever against a transferor of such Shares.  All capitalized terms in this legend have the meanings defined in the Declaration of Trust of the Trust, as the same may be amended from time to time, a copy of which, including the restrictions on Transfer and ownership, will be furnished to each holder of Shares of the Trust on request and without charge. Requests for such a copy may be directed to the Secretary of the Trust at its Principal Office.

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