Document:

Exhibit
10.79

Option No.________

WAVE2WAVE
COMMUNICATIONS, INC.

Stock Option Grant Notice

Stock Option Grant under the Company’s

2009 Employee, Director and Consultant Equity Incentive Plan

	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 Name and Address of Participant:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 Date of Option Grant:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
 3.

 	
 Type of Grant:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
 4.

 	
 Maximum Number of Shares for which this Option is
 exercisable:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
 5.

 	
 Exercise (purchase) price per share:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
 6.

 	
 Option Expiration Date:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
 7.

 	
 Vesting Start Date:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 Vesting Schedule: This Option shall become
 exercisable (and the Shares issued upon exercise shall be vested) as follows
 provided the Participant is an employee, director or Consultant of the
 Company or of an Affiliate on the applicable vesting date:

 

	
 On the first anniversary of the
 Vesting Start Date

 	
  

 	
 up to
 ____________ Shares

 
	
  

 	
  

 	
  

 
	
 On the second anniversary of the
 Vesting Start Date

 	
  

 	
an
 additional __________ Shares

 	
  

 
	
  

 	
  

 	
  

	
 On the third anniversary of the
 Vesting Start Date

 	
  

 	
 an
 additional __________ Shares

 

          The
foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.

The
Company and the Participant acknowledge receipt of this Stock Option Grant
Notice and agree to the terms of the Stock Option Agreement attached hereto and
incorporated by reference 

herein, the Company’s 2009 Employee, Director and
Consultant Equity Incentive Plan and the terms of this Option Grant as set
forth above.

	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE COMMUNICATIONS, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	

 

 
	
  

 	
 Name:

 	
  

 
	
  

 	

 

 
	
  

 	
 Title:

 	
  

 
	
  

 	

 

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Participant

 

2

WAVE2WAVE
COMMUNICATIONS, INC.

STOCK OPTION AGREEMENT - INCORPORATED
TERMS AND CONDITIONS

          AGREEMENT
made as of the date of grant set forth in the Stock Option Grant Notice by and
between Wave2Wave Communications, Inc. (the “Company”), a Delaware corporation,
and the individual whose name appears on the Stock Option Grant Notice (the
“Participant”).

          WHEREAS,
the Company desires to grant to the Participant an Option to purchase shares of
its common stock, $0.0001 par value per share (the “Shares”), under and for the
purposes set forth in the Company’s 2009 Employee, Director and Consultant
Equity Incentive Plan (the “Plan”);

          WHEREAS,
the Company and the Participant understand and agree that any terms used and
not defined herein have the same meanings as in the Plan; and

          WHEREAS,
the Company and the Participant each intend that the Option granted herein
shall be of the type set forth in the Stock Option Grant Notice.

          NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as follows:

	
  

 	
  

 
	
  

 	
 1. GRANT OF OPTION.

 

                    The
Company hereby grants to the Participant the right and option to purchase all
or any part of an aggregate of the number of Shares set forth in the Stock
Option Grant Notice, on the terms and conditions and subject to all the
limitations set forth herein, under United States securities and tax laws, and
in the Plan, which is incorporated herein by reference. The Participant
acknowledges receipt of a copy of the Plan.

	
  

 	
  

 
	
  

 	
 2. EXERCISE PRICE.

 

                    The
exercise price of the Shares covered by the Option shall be the amount per
Share set forth in the Stock Option Grant Notice, subject to adjustment, as
provided in the Plan, in the event of a stock split, reverse stock split or
other events affecting the holders of Shares after the date hereof (the
“Exercise Price”). Payment shall be made in accordance with Paragraph 9 of the
Plan.

	
  

 	
  

 
	
  

 	
 3. EXERCISABILITY OF OPTION.

 

                    Subject
to the terms and conditions set forth in this Agreement and the Plan, the
Option granted hereby shall become vested and exercisable as set forth in the
Stock Option Grant Notice and is subject to the other terms and conditions of
this Agreement and the Plan.

	
  

 	
  

 
	
  

 	
 4. TERM OF OPTION.

 

                    This
Option shall terminate on the Option Expiration Date as specified in the Stock
Option Grant Notice and, if this Option is designated in the Stock Option Grant
Notice as an ISO and the Participant owns as of the date hereof more than 10%
of the total combined voting power of all classes of capital stock of the
Company or an Affiliate, such date may not be more than five years from the
date of this Agreement, but shall be subject to earlier termination as provided
herein or in the Plan.

                    If
the Participant ceases to be an employee, director or Consultant of the Company
or of an Affiliate for any reason other than the death or Disability of the
Participant, or termination of the Participant for Cause (the “Termination
Date”), the Option to the extent then vested and exercisable pursuant to
Section 3 hereof as of the Termination Date, and not previously terminated in
accordance with this Agreement, may be exercised within three months after the
Termination Date, or on or prior to the Option Expiration Date as specified in
the Stock Option Grant Notice, whichever is earlier, but may not be exercised
thereafter except as set forth below. In such event, the unvested portion of
the Option shall not be exercisable and shall expire and be cancelled on the
Termination Date.

                    If
this Option is designated in the Stock Option Grant Notice as an ISO and the
Participant ceases to be an employee of the Company or of an Affiliate but
continues after termination of employment to provide service to the Company or
an Affiliate as a director or Consultant, this Option shall continue to vest in
accordance with Section 3 above as if this Option had not terminated until the
Participant is no longer providing services to the Company. In such case, this
Option shall automatically convert and be deemed a Non-Qualified Option as of
the date that is three months from termination of the Participant’s employment
and this Option shall continue on the same terms and conditions set forth
herein until such Participant is no longer providing service to the Company or
an Affiliate.

                    Notwithstanding
the foregoing, in the event of the Participant’s Disability or death within
three months after the Termination Date, the Participant or the Participant’s
Survivors may exercise the Option within one year after the Termination Date,
but in no event after the Option Expiration Date as specified in the Stock
Option Grant Notice.

                    In
the event the Participant’s service is terminated by the Company or an
Affiliate for Cause, the Participant’s right to exercise any unexercised
portion of this Option even if vested shall cease immediately as of the time
the Participant is notified his or her service is terminated for Cause, and
this Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Participant’s termination, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Participant’s termination, the Participant
engaged in conduct which would constitute Cause, then the Participant shall
immediately cease to have any right to exercise the Option and this Option
shall thereupon terminate.

                    In
the event of the Disability of the Participant, as determined in accordance
with the Plan, the Option shall be exercisable within one year after the
Participant’s termination of

2

service due to Disability or, if earlier, on or prior
to the Option Expiration Date as specified in the Stock Option Grant Notice. In
such event, the Option shall be exercisable:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 to the extent that the Option has become exercisable
 but has not been exercised as of the date of the Participant’s termination of
 service due to Disability; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 in the event rights to exercise the Option accrue
 periodically, to the extent of a pro rata portion through the date of the
 Participant’s termination of service due to Disability of any additional
 vesting rights that would have accrued on the next vesting date had the
 Participant not become Disabled. The proration shall be based upon the number
 of days accrued in the current vesting period prior to the date of the
 Participant’s termination of service due to Disability.

 

                    In
the event of the death of the Participant while an employee, director or
Consultant of the Company or of an Affiliate, the Option shall be exercisable
by the Participant’s Survivors within one year after the date of death of the
Participant or, if earlier, on or prior to the Option Expiration Date as
specified in the Stock Option Grant Notice. In such event, the Option shall be
exercisable:

	
  

 	
  

 	
  

 
	
  

 	
 (x)

 	
 to the extent that the Option has become exercisable
 but has not been exercised as of the date of death; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (y)

 	
 in the event rights to exercise the Option accrue
 periodically, to the extent of a pro rata portion through the date of death
 of any additional vesting rights that would have accrued on the next vesting
 date had the Participant not died. The proration shall be based upon the
 number of days accrued in the current vesting period prior to the
 Participant’s date of death.

 

	
  

 	
  

 
	
  

 	
 5. METHOD OF EXERCISING OPTION.

 

                    Subject
to the terms and conditions of this Agreement, the Option may be exercised by
written notice to the Company or its designee, in substantially the form of Exhibit A
attached hereto. Such notice shall state the number of Shares with respect to
which the Option is being exercised and shall be signed by the person
exercising the Option. Payment of the Exercise Price for such Shares shall be
made in accordance with Paragraph 9 of the Plan. The Company shall deliver such
Shares as soon as practicable after the notice shall be received, provided,
however, that the Company may delay issuance of such Shares until completion of
any action or obtaining of any consent, which the Company deems necessary under
any applicable law (including, without limitation, state securities or “blue
sky” laws). The Shares as to which the Option shall have been so exercised
shall be registered in the Company’s share register in the name of the person
so exercising the Option (or, if the Option shall be exercised by the
Participant and if the Participant shall so request in the notice exercising
the Option, shall be registered in the Company’s share register in the name of
the Participant and another person jointly, with right of survivorship) and
shall be delivered as provided above to or upon the 

3

written order of the person exercising the Option. In
the event the Option shall be exercised, pursuant to Section 4 hereof, by any
person other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the Option. All
Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.

	
  

 	
  

 
	
  

 	
 6. PARTIAL EXERCISE.

 

                    Exercise
of this Option to the extent above stated may be made in part at any time and
from time to time within the above limits, except that no fractional share
shall be issued pursuant to this Option.

	
  

 	
  

 
	
  

 	
 7. NON-ASSIGNABILITY.

 

                    The
Option shall not be transferable by the Participant otherwise than by will or
by the laws of descent and distribution. If this Option is a Non-Qualified
Option then it may also be transferred pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder. Except as provided above in this
paragraph, the Option shall be exercisable, during the Participant’s lifetime,
only by the Participant (or, in the event of legal incapacity or incompetency,
by the Participant’s guardian or representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
the Option or of any rights granted hereunder contrary to the provisions of
this Section 7, or the levy of any attachment or similar process upon the
Option shall be null and void.

	
  

 	
  

 
	
  

 	
 8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

 

                    The
Participant shall have no rights as a stockholder with respect to Shares
subject to this Agreement until registration of the Shares in the Company’s
share register in the name of the Participant. Except as is expressly provided
in the Plan with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or similar rights for which
the record date is prior to the date of such registration.

	
  

 	
  

 
	
  

 	
 9. ADJUSTMENTS.

 

                    The
Plan contains provisions covering the treatment of Options in a number of
contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made applicable
hereunder and are incorporated herein by reference.

	
  

 	
  

 
	
  

 	
 10. TAXES.

 

                    The
Participant acknowledges and agrees that (i) any income or other taxes due from
the Participant with respect to this Option or the Shares issuable upon
exercise of this 

4

Option shall be the Participant’s responsibility; (ii)
the Participant was free to use professional advisors of his or her choice in
connection with this Agreement, has received advice from his or her
professional advisors in connection with this Agreement, understands its
meaning and import, and is entering into this Agreement freely and without
coercion or duress; (iii) the Participant has not received and is not relying
upon any advice, representations or assurances made by or on behalf of the Company
or any Affiliate or any employee of or counsel to the Company or any Affiliate
regarding any tax or other effects or implications of the Option, the Shares or
other matters contemplated by this Agreement and (iv) neither the Company its
Affiliates, nor any of its officers or directors, shall be held liable for any
applicable costs, taxes, or penalties associated with the Option if, in fact,
the Internal Revenue Service were to determine that the Option constitutes
deferred compensation under Section 409A of the Code.

                    If
this Option is designated in the Stock Option Grant Notice as an ISO and there
is a Disqualifying Disposition (as defined in Section 15below) or if the Option is
converted into a Non-Qualified Option and such Non-Qualified Option is
exercised, the Participant agrees that the Company may withhold from the
Participant’s remuneration, if any, the minimum statutory amount of federal,
state and local withholding taxes attributable to such amount that is
considered compensation includable in such person’s gross income. At the
Company’s discretion, the amount required to be withheld may be withheld in
cash from such remuneration, or in kind from the Shares otherwise deliverable
to the Participant on exercise of the Option. The Participant further agrees
that, if the Company does not withhold an amount from the Participant’s
remuneration sufficient to satisfy the Company’s income tax withholding
obligation, the Participant will reimburse the Company on demand, in cash, for
the amount under-withheld.

	
  

 	
  

 
	
  

 	
 11. PURCHASE FOR INVESTMENT.

 

                    Unless
the offering and sale of the Shares to be issued upon the particular exercise
of the Option shall have been effectively registered under the Securities Act
of 1933, as now in force or hereafter amended (the “1933 Act”), the Company
shall be under no obligation to issue the Shares covered by such exercise
unless and until the following conditions have been fulfilled:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 The person(s) who exercise the Option shall warrant
 to the Company, at the time of such exercise, that such person(s) are
 acquiring such Shares for their own respective accounts, for investment, and
 not with a view to, or for sale in connection with, the distribution of any
 such Shares, in which event the person(s) acquiring such Shares shall be
 bound by the provisions of the following legend which shall be endorsed upon
 any certificate(s) evidencing the Shares issued pursuant to such exercise:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “The shares represented by this certificate have
 been taken for investment and they may not be sold or otherwise transferred
 by any person, including a pledgee, unless (1) either (a) a Registration
 Statement with respect to such shares shall be effective under the Securities
 Act of 1933, as amended, or (b) the Company shall have received an opinion of
 counsel satisfactory to it that an exemption from registration under such Act
 is

 

5

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 then available, and (2) there shall have been
 compliance with all applicable state securities laws;” and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 If the Company so requires, the Company shall
 have received an opinion of its counsel that the Shares may be issued upon
 such particular exercise in compliance with the 1933 Act without registration
 thereunder. Without limiting the generality of the foregoing, the Company may
 delay issuance of the Shares until completion of any action or obtaining of
 any consent, which the Company deems necessary under any applicable law
 (including without limitation state securities or “blue sky” laws).

 

	
  

 	
  

 
	
  

 	
 12. RESTRICTIONS ON TRANSFER OF SHARES.

 

          12.1
The Participant agrees that in the event the Company proposes to offer for sale
to the public any of its equity securities and such Participant is requested by
the Company and any underwriter engaged by the Company in connection with such
offering to sign an agreement restricting the sale or other transfer of Shares,
then it will promptly sign such agreement and will not transfer, whether in
privately negotiated transactions or to the public in open market transactions
or otherwise, any Shares or other securities of the Company held by him or her
during such period as is determined by the Company and the underwriters, not to
exceed 180 days following the closing of the offering, plus such additional
period of time as may be required to comply with Marketplace Rule 2711 of the
National Association of Securities Dealers, Inc. or similar rules thereto (such
period, the “Lock-Up Period”). Such agreement shall be in writing and in form
and substance reasonably satisfactory to the Company and such underwriter and
pursuant to customary and prevailing terms and conditions. Notwithstanding
whether the Participant has signed such an agreement, the Company may impose
stop-transfer instructions with respect to the Shares or other securities of
the Company subject to the foregoing restrictions until the end of the Lock-Up
Period.

          12.2
The Participant acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Participant any material information regarding the business of
the Company or affecting the value of the Shares before, at the time of, or
following a termination of the service of the Participant by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.

	
  

 	
  

 
	
  

 	
 13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.

 

                    The
Participant acknowledges that: (i) the Company is not by the Plan or this
Option obligated to continue the Participant as an employee, director or
Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in
nature and may be suspended or terminated by the Company at any time; (iii) the
grant of the Option is a one-time benefit which does not create any contractual
or other right to receive future grants of options, or benefits in lieu of
options; (iv) all determinations with respect to any such future grants,
including, but not 

6

limited to, the times when options shall be granted,
the number of shares subject to each option, the option price, and the time or
times when each option shall be exercisable, will be at the sole discretion of
the Company; (v) the Participant’s participation in the Plan is voluntary; (vi)
the value of the Option is an extraordinary item of compensation which is
outside the scope of the Participant’s employment or consulting contract, if
any; and (vii) the Option is not part of normal or expected compensation for
purposes of calculating any severance, resignation, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments.

	
  

 	
  

 
	
  

 	
 14. IF OPTION IS INTENDED TO BE AN ISO. 

 

                    If
this Option is designated in the Stock Option Grant Notice as an ISO so that
the Participant (or the Participant’s Survivors) may qualify for the favorable
tax treatment provided to holders of Options that meet the standards of Section
422 of the Code then any provision of this Agreement or the Plan which
conflicts with the Code so that this Option would not be deemed an ISO is null
and void and any ambiguities shall be resolved so that the Option qualifies as
an ISO. Nonetheless, if the Option is determined not to be an ISO, the
Participant understands that neither the Company nor any Affiliate is
responsible to compensate him or her or otherwise make up for the treatment of
the Option as a Non-Qualified Option and not as an ISO. The Participant should
consult with the Participant’s own tax advisors regarding the tax effects of
the Option and the requirements necessary to obtain favorable tax treatment
under Section 422 of the Code, including, but not limited to, holding period
requirements.

                    Notwithstanding
the foregoing, to the extent that the Option is designated
in the Stock Option Grant Notice as an ISO and is not deemed to be an ISO pursuant to Section
422(d) of the Code because the aggregate Fair Market Value (determined as of
the Date of Option Grant) of any of the Shares with respect to which this ISO
is granted becomes exercisable for the first time during any calendar year in
excess of $100,000, the portion of the Option representing such excess value
shall be treated as a Non-Qualified Option and the Participant shall be deemed
to have taxable income measured by the difference between the then Fair Market
Value of the Shares received upon exercise and the price paid for such Shares
pursuant to this Agreement. 

	
  

 	
  

 
	
  

 	
 15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
 OF AN ISO.

 

                    If
this Option is designated in the Stock Option Grant Notice as an ISO then the
Participant agrees to notify the Company in writing immediately after the
Participant makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the ISO. A Disqualifying Disposition is defined in
Section 424(c) of the Code and includes any disposition (including any sale) of
such Shares before the later of (a) two years after the date the Participant
was granted the ISO or (b) one year after the date the Participant acquired
Shares by exercising the ISO, except as otherwise provided in Section 424(c) of
the Code. If the Participant has died before the Shares are sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

7

	
  

 	
  

 
	
  

 	
 16. NOTICES.

 

                    Any
notices required or permitted by the terms of this Agreement or the Plan shall
be given by recognized courier service, facsimile, registered or certified
mail, return receipt requested, addressed as follows:

If to the Company: 

	
  

 	
  

 
	
  

 	
 Wave2Wave Communications, Inc.

 
	
  

 	
 433 Hackensack Avenue

 
	
  

 	
 Hackensack, NJ 07601

 
	
  

 	
 Attention: Eric Mann, Chief Financial Officer

 

If to the Participant at the address set forth on the
Stock Option Grant Notice 

or to such other address or addresses of which notice
in the same manner has previously been given. Any such notice shall be deemed
to have been given upon the earlier of receipt, one business day following
delivery to a recognized courier service or three business days following
mailing by registered or certified mail.

	
  

 	
  

 
	
  

 	
 17. GOVERNING LAW.

 

                    This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to the conflict of law principles
thereof. For the purpose of litigating any dispute that arises under this
Agreement, the parties hereby consent to exclusive jurisdiction in the State of
New Jersey and agree that such litigation shall be conducted in the state
courts of New Jersey or the federal courts of the United States for the
District of New Jersey.

	
  

 	
  

 
	
  

 	
 18. BENEFIT OF AGREEMENT.

 

                    Subject
to the provisions of the Plan and the other provisions hereof, this Agreement
shall be for the benefit of and shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto.

	
  

 	
  

 
	
  

 	
 19. ENTIRE AGREEMENT.

 

                    This
Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be
subject to and governed by the Plan.

8

	
  

 	
  

 
	
  

 	
 20. MODIFICATIONS AND AMENDMENTS.

 

                    The
terms and provisions of this Agreement may be modified or amended as provided
in the Plan.

	
  

 	
  

 
	
  

 	
 21. WAIVERS AND CONSENTS.

 

                    Except
as provided in the Plan, the terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this Agreement,
whether or not similar. Each such waiver or consent shall be effective only in
the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

	
  

 	
  

 
	
  

 	
 22. DATA PRIVACY.

 

                    By
entering into this Agreement, the Participant: (a) authorizes the Company and
each Affiliate, and any agent of the Company or any Affiliate administering the
Plan or providing Plan recordkeeping services, to disclose to the Company or
any of its Affiliates such information and data as the Company or any such
Affiliate shall request in order to facilitate the grant of options and the
administration of the Plan; (b) waives any data privacy rights he or she may
have with respect to such information; and (c) authorizes the Company and each
Affiliate to store and transmit such information in electronic form.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

9

Exhibit
A

NOTICE OF EXERCISE
OF STOCK OPTION

[Form for
Employees for Shares registered in the United States] 

To:     Wave2Wave
Communications, Inc.

IMPORTANT NOTICE: This form of Notice of Exercise may
only be used at such time as the Company has filed a Registration Statement
with the Securities and Exchange Commission under which the issuance of the
Shares for which this exercise is being made is registered and such
Registration Statement remains effective.

Ladies and Gentlemen:

          I
hereby exercise my Stock Option to purchase _________ shares (the “Shares”) of
the common stock, $0.0001 par value, of Wave2Wave Communications, Inc. (the
“Company”), at the exercise price of $________ per share, pursuant to and
subject to the terms of that Stock Option Grant Notice dated _______________,
200_.

          I
understand the nature of the investment I am making and the financial risks
thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.

          I
am paying the option exercise price for the Shares as follows:

	
  

 
	

 

 

          Please
issue the Shares (check one):

          o to me; or 

          o to me
and ____________________________, as joint tenants with right of survivorship,

	
  

 	
  

 
	
  

 	
 at the following address:

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	

 

 
	
  

 	

 

 

Exhibit A-1

          My
mailing address for shareholder communications, if different from the address
listed above, is:

	
  

 	
  

 
	
  

 	

 

 
	
  

 	

 

 
	
  

 	

 

 

	
  

 	
  

 
	
  

 	
 Very truly yours,

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Participant
 (signature)

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Print Name

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Date

 
	
  

 	
  

 
	
  

 	

 

 
	
  

 	
 Social Security
 Number

 

Exhibit A-2form8k_exh101-121010.htm

SUPERVISORY AGREEMENT

This Supervisory Agreement (Agreement) is made this 10th day of December, 2010, by and through the Board of Directors (Board) of Atlantic Coast Bank, Waycross, Georgia, OTS Docket No. 17022 (Association) and the Office of Thrift Supervision (OTS), acting by and through its Regional Director for the Southeast Region (Regional Director);

WHEREAS, the OTS, pursuant to 12 U.S.C. § 1818, has the statutory authority to enter into and enforce supervisory agreements to ensure the establishment and maintenance of appropriate safeguards in the operation of the entities it regulates; and

WHEREAS, the Association is subject to examination, regulation and supervision by the OTS; and

WHEREAS, based on its July 12, 2010 examination of the Association (2010 Examination), the OTS finds that the Association has engaged in unsafe or unsound practices and/or violations of law or regulation; and

WHEREAS, in furtherance of their common goal to ensure that the Association addresses the unsafe or unsound practices and/or violations of law or regulation identified by the OTS in the 2010 Examination, the Association and the OTS have mutually agreed to enter into this Agreement; and

           WHEREAS, on December 9, 2010, the Association’s Board, at a duly constituted meeting, adopted a resolution (Board Resolution) that authorizes the Association to enter into this Agreement and directs compliance by the Association and its directors, officers, employees, and other institution-affiliated parties with each and every provision of this Agreement.

NOW THEREFORE, in consideration of the above premises, it is agreed as follows:

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Capital

1.           By March 31, 2011, the Association shall submit a written Contingency Plan in the event that the Association is notified by the OTS that it has inadequate capital levels for the Association’s risk profile and the volume, type and quality of assets held by the Association.  The Contingency Plan shall detail the actions to be taken, with specific time frames, to resolve the Association by a specific date, after written notification is received from the Regional Director to implement the Contingency Plan.

2.           Upon receipt of written notification from the Regional Director, the Association shall implement and adhere to the Contingency Plan immediately.  The Association shall provide the Regional Director with written status reports detailing the Association’s progress in implementing the Contingency Plan by no later than the fifteenth (15th) of each month following implementation of the Contingency Plan.

Business Plan.

3.           Within sixty (60) days, the Association shall submit an updated comprehensive business plan for calendar years 2011 and 2012  (Business Plan) that addresses all corrective actions in the 2010 Examination relating to the Association’s business operations to the Regional Director for review and non-objection.  At a minimum, the updated Business Plan shall conform to applicable laws, regulations and regulatory guidance and include:

(a)           plans to improve the Association’s core earnings and achieve profitability on a consistent basis throughout the term of the Business Plan; and

(b)           consideration of the requirements of this Agreement.

Thereafter, the Association shall submit an updated one year Business Plan at least ninety (90) days prior to the end of each calendar year.

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4.           Upon receipt of written notification of non-objection from the Regional Director, the Association shall implement and adhere to the Business Plan.  A copy of the Business Plan and the Board meeting minutes reflecting the Board’s adoption thereof shall be provided to the Regional Director within twenty (20) days after the Board meeting.

5.           Any material modifications1 to the Business Plan must receive the prior written non-objection of the Regional Director.  The Association shall submit proposed material modifications to the Regional Director at least thirty (30) days prior to implementation.

6.           Within forty-five (45) days after the end of each quarter, beginning with the quarter ending March 31, 2011, the Board shall review quarterly variance reports on the Association’s compliance with the Business Plan (Variance Reports).  The Variance Reports shall:

(a)           identify variances, expressed in dollars and percentages, in the Association’s actual performance during the preceding quarter as compared to the projections set forth in the Business Plan;

(b)           contain an analysis and explanation of identified variances; and

(c)           discuss the specific measures taken or to be taken to address identified  variances.

7.           A copy of the Variance Reports and Board meeting minutes shall be provided to the Regional Director within ten (10) days after the Board meeting.

Concentration Program.

8.           Within ninety (90) days, the Association shall revise its written program for identifying, monitoring, and controlling risks associated with concentrations of credit and other assets (Concentration Program) to address all corrective actions set forth in the 2010 Examination relating to concentrations of credit and activities.  The Concentration Program shall comply with all applicable laws, regulations and regulatory guidance and shall:

  

1 A modification shall be considered material under this Section of the Agreement if the Association plans to: (a) engage in any activity that is inconsistent with the Business Plan; or (b) exceed the level of any activity contemplated in the Business Plan or fail to meet target amounts established in the Business Plan by more than ten percent (10%), unless the activity involves assets risk-weighted fifty percent (50%) or less, in which case a variance of more than twenty-five percent (25%) shall be deemed to be a material modification.

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(a)            establish comprehensive concentration limits expressed as a percentage of Tier 1 (Core) Capital plus allowance for loan and lease losses (ALLL), and document the appropriateness of such limits based on the Association’s risk profile, capital levels and business plan;

(b)           establish concentration limits as discussed in CEO Letter 280 for (i) mortgage banking activities conducted with third parties, including aggregate limits for pipeline, warehouse, and credit enhancing risk exposure;(ii) nonmortgage commercial loans; and (iii) mobile home lending, including sub-limits applicable to chattel and mortgage collateral;

(c)           establish stratification categories and enhanced risk analysis, monitoring, and management for each stratification category;

(d)           contain specific review procedures and reporting requirements, including quarterly written reports to the Board, designed to identify, monitor, and control the risks associated with concentrations; and

(e)           contain a written action plan, including specific time frames, for bringing the Association into compliance with its concentration limits.

Financial Recordkeeping and Reporting.

9.           Effective immediately, the Association shall ensure that its books, records, financial reports and statements are timely and accurately prepared and filed in compliance with applicable laws, regulations, and regulatory guidance including, but not limited to, 12 C.F.R. Part 562 and the Thrift Financial Report (TFR) instructions.

10.           Within thirty (30) days, the Association shall conduct a comprehensive review of the system loan coding beginning with the nonresidential mortgages reported on line SC 260 of the Association’s TFR to ensure that this line item and other related line items are properly reported and ensure that all errors are corrected.

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11.           Within sixty (60) days, the Association shall establish and implement additional systems, controls and procedures to ensure proper coding and reporting of loans on the TFR, including a quarterly comparison between internal reports and regulatory reports.  Any identified irregularities between regulatory and internal reports shall be reconciled within thirty (30) days after identification.

12.           Effective immediately, the Association shall ensure that troubled debt restructurings (TDRs) are accurately reported on the TFR and that allowance for loan and lease loss (ALLL) on TDRs is calculated in accordance with applicable regulatory guidance including, but not limited to, Accounting Standards Codification (ASC) No. 310-10, Accounting by Creditors for Impairment of a Loan; OTS Thrift Bulletin 85, Regulatory and Accounting Issues Related to Modifications and TDRs of 1-4 Residential Mortgage Loans; and Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan.

13.           Within thirty (30) days, the Association shall classify any noninvestment grade security in accordance with CEO Memorandum No. 200 and Section 540 of the OTS Examination Handbook.

Loan Modifications.

14.            Within sixty (60) days, the Association shall develop and adhere to a written TDR and Loan Modification Policy (Loan Modification Policy).  At a minimum, the Loan Modification Policy shall:

(a) identify acceptable modification terms (e.g., a lower or no interest rate, a reduction in principal, a short sale of the underlying collateral property, a lengthier term to maturity, a transfer of assets from the borrower, the substitution or addition of a new borrower, or some combination of these terms) and guidelines and restrictions on such modifications;

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(b) specify loan underwriting and documentation requirements, including analysis of the borrower’s creditworthiness and repayment capacity under the modified loan terms;

(c) identify Association personnel authorized to approve loan modifications and the procedures to be incorporated to monitor all approved modified loans for compliance with the Modification Policy;

(d) ensure that all modified loans (i) comply with applicable laws and regulations, generally accepted accounting principles (GAAP) and regulatory guidance including, but not limited to, OTS Thrift Bulletin No. 85 (August 28, 2009), (ii) be properly reported on the Thrift Financial Report (TFR), and (iii) be accurately and timely classified in accordance with the Association’s asset classification policies;

(e) require that the Association’s loan modification and TDR practices and program be reviewed by the Association’s Internal Audit function;

(f) require a written monthly report to the Board, beginning with the March 2011 Board meeting, detailing the total number and dollar amount of loan modifications, the number and dollar amount of loans modified since the preceding monthly report, and the types of modifications made.

15.           A copy of the Loan Modification Policy shall be provided to the Regional Director within ten (10) days after adoption by the Board.

Bank Owned Life Insurance.

16.           Effective immediately, the Association shall not purchase additional bank-owned life insurance (BOLI) or increase its investment in existing BOLI policies until the Association’s BOLI exposure is within the regulatory concentration guidelines of 25 percent of total capital set forth in OTS Regulatory Bulletin (RB) 32-26.

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17.           At the first regular Board meeting following the end of each calendar quarter, beginning with the quarter ending December 31, 2010, the Association shall prepare and submit to the Board for review a written report detailing the amount of BOLI as a percentage of total capital, (Quarterly BOLI Report).  The Board’s review of the Quarterly BOLI Report and any corrective actions taken shall be fully documented in the Board meeting minutes.

Brokered Deposits.

18.           Effective immediately, the Association shall comply with the requirements of 12 C.F.R. § 337.6(b).

19.           Effective immediately, the Association is prohibited from increasing the dollar amount of brokered deposits2, excluding interest credited, at the Association without receiving the prior written non-objection of the Regional Director.  The Association’s level of brokered deposits at June 30, 2011 shall not exceed $52.5 million, excluding interest credited.  The Association’s written request for non-objection shall be submitted to the Regional Director at least forty-five (45) days prior to the anticipated date of acceptance of additional brokered deposits.

20.           Within forty-five (45) days after the close of each quarter, beginning with the quarter ending December 31, 2010, the Board shall review quarterly reports detailing the level of brokered deposits for each month within the quarter (Brokered Deposit Report).  The Board’s review of the Brokered Deposit Report, including any corrective actions, shall be detailed in the Board meeting minutes.

  

2 The term “brokered deposit” is defined at 12 C.F.R. § 337.6(a)(2).

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Directorate and Management Changes. 

21.           Effective immediately, the Association shall comply with the prior notification requirements for changes in directors and Senior Executive Officers3 set forth in 12 C.F.R. Part 563, Subpart H.

Dividends and Other Capital Distributions.

22.           Effective immediately, the Association shall not declare or pay dividends or make any other capital distributions, as that term is defined in 12 C.F.R. § 563.141, without receiving the prior written approval of the Regional Director in accordance with applicable regulations and regulatory guidance.  The Association’s written request for approval shall be submitted to the Regional Director at least thirty (30) days prior to the anticipated date of the proposed declaration, dividend payment or distribution of capital.

Employment Contracts and Compensation Arrangements.

23.           Effective immediately, the Association shall not enter into, renew, extend or revise any contractual arrangement relating to compensation or benefits for any Senior Executive Officer or director of the Association, unless it first provides the Regional Director with not less than thirty (30) days prior written notice of the proposed transaction.  The notice to the Regional Director shall include a copy of the proposed employment contract or compensation arrangement or a detailed, written description of the compensation arrangement to be offered to such officer or director, including all benefits and perquisites.  The Board shall ensure that any contract, agreement or arrangement submitted to the Regional Director fully complies with the requirements of 12 C.F.R. Part 359, 12 C.F.R. §§ 563.39 and 563.161(b), and 12 C.F.R. Part 570 – Appendix A, and the Interagency Guidance on Sound Incentive Compensation Policies contained in OTS Chief Executive Officer Memorandum No. 354.

  

3 The term “Senior Executive Officer” is defined at 12 C.F.R. § 563.555.

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Third Party Contracts.

24.           Effective immediately, the Association shall not enter into any arrangement or contract with a third party service provider that is significant to the overall operation or financial condition of the Association4 or outside the Association’s normal course of business unless, with respect to each such contract, the Association has: (a) provided the Regional Director with a minimum of thirty (30) days prior written notice of such arrangement or contract and a written determination that the arrangement or contract complies with the standards and guidelines set forth in Thrift Bulletin 82a (TB 82a); and (b) received written notice of non-objection from the Regional Director.

Golden Parachute and Indemnification Payments.

25.           Effective immediately, the Association shall not make any golden parachute payment5 or prohibited indemnification payment6 unless, with respect to each such payment, the Association has complied with the requirements of 12 C.F.R. Part 359 and, as to indemnification payments, 12 C.F.R. § 545.121.

  

4 A contract will be considered significant to the overall operation or financial condition of the Association where the annual contract amount equals or exceeds two percent (2%) of the Association’s total capital, where there is a foreign service provider, or where it involves information technology that is critical to the Association’s daily operations without regard to the contract amount.

 

5 The term “golden parachute payment” is defined at 12 C.F.R. § 359.1(f).

  

6 The term “prohibited indemnification payment” is defined at 12 C.F.R. § 359.1(l).

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Growth.

26.           Effective immediately, the Association shall not increase its total assets during any quarter in excess of an amount equal to net interest credited on deposit liabilities during the prior quarter without the prior written notice of non-objection of the Regional Director.

Transactions with Affiliates.

27.           Effective immediately, the Association shall not engage in any new transaction with an affiliate unless, with respect to each such transaction, the Association has complied with the notice requirements set forth in 12 C.F.R. § 563.41(c)(4), which shall include the information set forth in 12 C.F.R. § 563.41(c)(3).  The Board shall ensure that any transaction with an affiliate for which notice is submitted pursuant to this Paragraph, complies with the requirements of 12 C.F.R. § 563.41 and Regulation W, 12 C.F.R. Part 223.

Effective Date.

28.           This Agreement is effective on the Effective Date as shown on the first page.

Duration.

29.           This Agreement shall remain in effect until terminated, modified or suspended, by written notice of such action by the OTS, acting by and through its authorized representatives.

Time Calculations.

30.           Calculation of time limitations for compliance with the terms of this Agreement run from the Effective Date and shall be based on calendar days, unless otherwise noted.

Submissions and Notices.

31.           All submissions to the OTS that are required by or contemplated by the Agreement shall be submitted within the specified timeframes.

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32.           Except as otherwise provided herein, all submissions, requests, communications, consents or other documents relating to this Agreement shall be in writing and sent by first class U.S. mail (or by reputable overnight carrier, electronic facsimile transmission or hand delivery by messenger) addressed as follows:

(a)           To the OTS:

Regional Director

                                Office of Thrift Supervision

        1475 Peachtree St., NE

Atlanta, Georgia 30309

(b)           To the Association

Atlantic Coast Bank

Board of Directors

c/o Jay S. Sidhu, Executive Chairman

12724 Gran Bay Parkway

Suite 150

Jacksonville, Florida  32258

No Violations Authorized.

33.           Nothing in this Agreement shall be construed as allowing the Association, its Board, officers or employees to violate any law, rule, or regulation.

OTS Authority Not Affected.

34.           Nothing in this Agreement shall inhibit, estop, bar or otherwise prevent the OTS from taking any other action affecting the Association if at any time the OTS deems it appropriate to do so to fulfill the responsibilities placed upon the OTS by law.

Other Governmental Actions Not Affected.

35.           The Association acknowledges and agrees that its execution of the Agreement is solely for the purpose of resolving the matters addressed herein, consistent with Paragraph 34 above, and does not otherwise release, discharge, compromise, settle, dismiss, resolve, or in any way affect any actions, charges against, or liability of the Association that arise pursuant to this action or otherwise, and that may be or have been brought by any governmental entity other than the OTS.

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Miscellaneous.

36.           The laws of the United States of America shall govern the construction and validity of this Agreement.

37.           If any provision of this Agreement is ruled to be invalid, illegal, or unenforceable by the decision of any Court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby, unless the Regional Director in his or her sole discretion determines otherwise.

38.           All references to the OTS in this Agreement shall also mean any of the OTS’s predecessors, successors, and assigns.

39.           The section and paragraph headings in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

40.           The terms of this Agreement represent the final agreement of the parties with respect to the subject matters thereof, and constitute the sole agreement of the parties with respect to such subject matters.

Enforceability of Agreement.

41.           This Agreement is a “written agreement” entered into with an agency within the meaning and for the purposes of 12 U.S.C. § 1818.

Signature of Directors/Board Resolution.

42.           Each Director signing this Agreement attests that he or she voted in favor of a Board Resolution authorizing the consent of the Association to the issuance and execution of the Agreement.  This Agreement may be executed in counterparts by the directors after approval of execution of the Agreement at a duly called board meeting.  A copy of the Board Resolution authorizing execution of this Agreement shall be delivered to the OTS, along with the executed original(s) of this Agreement.

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WHEREFORE, the OTS, acting by and through its Regional Director, and the Board of

the Association, hereby execute this Agreement.

 

	  	
ATLANTIC COAST BANK

	  	
OFFICE OF THRIFT SUPERVISION

	  	
Waycross, Georgia

	  	  
	  	  	  	  
	  	  	  	  
	
By:

	
/s/ Jay S. Sidhu

	
By:

	
/s/ James G. Price

	  	
Jay S. Sidhu

	  	
James G. Price

	  	
Executive Chairman

	  	
Regional Director, Southeast Region

	  	
Director Signatures

	  
	  	  	  
	  	  	  
	
/s/ Forrest W. Sweat, Jr.

	  	
/s/ Robert J. Larison, Jr.

	
Forrest W. Sweat, Jr., Director

	  	
Robert J. Larison, Jr., Director

	  	  	  
	  	  	  
	
/s/ Thomas Beeckler

	  	
/s/ Frederick D. Franklin, Jr.

	
Thomas F. Beeckler, Director

	  	
Frederick D. Franklin, Jr., Director

	  	  	  
	  	  	  
	
/s/ W. Eric Palmer

	  	
/s/ Robert J. Smith

	
W. Eric Palmer, Director

	  	
Robert J. Smith, Director

	  	  	  
	  	  	  
	
/s/ H. Dennis Woods

	  	
/s/ Chares E. Martin, Jr.

	
H. Dennis Woods, Director

	  	
Charles E. Martin, Jr., Director

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