Document:

Blueprint

 

 

AGREEMENT AND PLAN OF MERGER

 

BY

 

AND

 

AMONG

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.,

 

FUSION MPHC ACQUISITION CORP.,

 

MEGAPATH HOLDING CORPORATION

 

AND

 

SHAREHOLDER REPRESENTATIVE SERVICES LLC, AS STOCKHOLDER
REPRESENTATIVE

 

DATED MAY 4, 2018

 

 

 

 

 

 

	

ARTICLE I

	

THE MERGER

	

1

	

Section 1.1

	

The Merger

	

1

	

Section
1.2

	

Closing

	

2

	

Section
1.3

	

Effective Time

	

2

	

Section
1.4

	

Effects

	

2

	

Section
1.5

	

Conversion of Securities

	

3

	

Section
1.6

	

Certificates of Incorporation; Bylaws

	

4

	

Section
1.7

	

Directors

	

4

	

Section
1.8

	

Officers

	

4

	

ARTICLE II

	

DELIVERY OF MERGER CONSIDERATION

	

4

	

Section
2.1

	

Exchange of Shares

	

4

	

Section
2.2

	

Stock Transfer Books

	

7

	

Section
2.3

	

Treatment of Options

	

7

	

Section
2.4

	

Appraisal Rights

	

7

	

Section
2.5

	

Closing Statement

	

8

	

Section
2.6

	

Transactions to Be Effected at the Closing

	

8

	

Section
2.7

	

Merger Consideration Adjustment

	

8

	

Section
2.8

	

Payments from the Holdback Account

	

10

	

ARTICLE III

	

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

	

10

	

Section
3.1

	

Corporate Organization

	

11

	

Section
3.2

	

Capitalization

	

12

	

Section
3.3

	

Authority; No Violation

	

13

	

Section
3.4

	

Consents and Approvals

	

14

	

Section
3.5

	

Financial Statements

	

14

	

Section
3.6

	

Absence of Company Material Adverse Effect

	

15

	

Section
3.7

	

Legal Proceedings

	

15

	

Section
3.8

	

Taxes and Tax Returns

	

16

	

Section
3.9

	

Employee Benefit Plans; Labor

	

17

	

Section
3.10

	

Compliance with Law

	

20

	

Section
3.11

	

Environmental Matters

	

20

	

Section
3.12

	

Material Contracts

	

21

	

Section
3.13

	

Intellectual Property; Data Privacy

	

22

	

Section
3.14

	

Title to Properties; Assets

	

25

	

Section
3.15

	

Real Property

	

25

	

Section
3.16

	

Regulatory Matters

	

25

	

Section
3.17

	

Interconnection Agreements

	

27

	

Section
3.18

	

Network Facilities

	

27

	

Section
3.19

	

Insurance

	

28

	

Section
3.20

	

Application of Takeover Laws

	

28

	

Section
3.21

	

Affiliate Transactions

	

29

	

Section
3.22

	

Customers and Suppliers

	

29

	

Section
3.23

	

Directors, Officers, Managers

	

29

	

Section
3.24

	

Books and Records

	

29

	

Section
3.25

	

Broker’s Fees

	

30

	

ARTICLE IV

	

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB

	

30

	

Section
4.1

	

Parent Corporate Organization

	

30

	

Section
4.2

	

Merger Sub Corporate Organization

	

30

	

Section
4.3

	

Authority; No Violation

	

30

	

Section
4.4

	

Consents and Approvals

	

31

	

Section
4.5

	

Financing

	

31

	

Section
4.6

	

Legal Proceedings

	

31

	

Section
4.7

	

SEC Reports

	

31

	

Section
4.8

	

Parent Common Stock

	

31

 

 

 

 

	

Section
4.9

	

Investment Intent

	

32

	

Section
4.10

	

Broker’s Fees

	

32

	

ARTICLE V

	

PRE-CLOSING COVENANTS

	

32

	

Section
5.1

	

Conduct of Businesses by the Company Prior to the Effective
Time

	

32

	

Section
5.2

	

Company Forbearances

	

32

	

ARTICLE VI

	

ADDITIONAL AGREEMENTS

	

35

	

Section
6.1

	

Filings; Other Actions; Notification

	

35

	

Section
6.2

	

Written Consent

	

37

	

Section
6.3

	

No Solicitation of Other Bids

	

37

	

Section
6.4

	

Access to Information

	

38

	

Section
6.5

	

Employee Matters

	

39

	

Section
6.6

	

Advice of Changes

	

40

	

Section
6.7

	

Transaction Litigation

	

40

	

Section
6.8

	

Control of the Other Party’s Business

	

40

	

Section
6.9

	

Subsidiary Compliance

	

41

	

Section
6.10

	

Publicity

	

41

	

Section
6.11

	

Takeover Laws

	

41

	

Section
6.12

	

Indemnification of Officers and Directors

	

41

	

Section
6.13

	

Related Party Agreements

	

42

	

Section
6.14

	

Organizational Integration

	

42

	

Section
6.15

	

Resignations

	

43

	

Section
6.16

	

Rule 144 Reporting

	

43

	

ARTICLE VII

	

CLOSING CONDITIONS

	

43

	

Section
7.1

	

Conditions to Each Party’s Obligation to Effect the
Merger

	

43

	

Section
7.2

	

Conditions to Obligations of Parent and Merger Sub

	

43

	

Section
7.3

	

Conditions to Obligations of the Company

	

45

	

Section
7.4

	

Frustration of Closing Conditions

	

45

	

ARTICLE VIII

	

TERMINATION AND AMENDMENT

	

45

	

Section
8.1

	

Termination

	

45

	

Section
8.2

	

Effect of Termination

	

46

	

ARTICLE IX

	

INDEMNIFICATION

	

46

	

Section
9.1

	

Survival

	

46

	

Section
9.2

	

Indemnification By Stockholders and Optionholders

	

46

	

Section
9.3

	

Indemnification By Parent

	

47

	

Section
9.4

	

Certain Limitations

	

47

	

Section
9.5

	

Indemnification Procedures

	

49

	

Section
9.6

	

Payments; Escrow Fund

	

52

	

Section
9.7

	

Tax Treatment of Indemnification Payments

	

53

	

Section
9.8

	

Effect of Investigation

	

53

	

Section
9.9

	

Exclusive Remedies

	

53

	

ARTICLE X

	

GENERAL PROVISIONS

	

53

	

Section
10.1

	

Notices

	

53

	

Section
10.2

	

Interpretation

	

54

	

Section
10.3

	

Counterparts

	

55

	

Section
10.4

	

Entire Agreement; Third Party Beneficiaries

	

55

	

Section
10.5

	

Amendment

	

55

	

Section
10.6

	

Extension; Waiver

	

56

	

Section
10.7

	

Governing Law

	

56

	

Section
10.8

	

Jurisdiction

	

56

	

Section
10.9

	

Fees and Expenses

	

58

	

Section
10.10

	

Assignment

	

58

	

Section
10.11

	

Specific Performance

	

58

	

Section
10.12

	

Waivers

	

58

 

 

 

 

	

Section
10.13

	

Severability

	

58

	

Section
10.14

	

Stockholder Representative

	

59

	

Section
10.15

	

Tax Matters

	

61

	

Section
10.16

	

Definitions

	

62

	

Section
10.17

	

Liability of Financing Source Parties

	

77

 

 

Exhibits

Exhibit
A 

-            

Form of Merger
Certificate

Exhibit
B    

-            

Amended and
Restated Certificate of Incorporation

Exhibit
C      

-            

Amended and
Restated Bylaws

Exhibit
D       

-            

Letter of
Transmittal

Exhibit
E       

-            

Form of Escrow
Agreement

Exhibit
F      

-            

Example of Working
Capital Calculation

 

Disclosure
Schedules

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER, dated
May 4, 2018 (as may be amended, supplemented or otherwise modified
from time to time in accordance with its terms, this
“Agreement”),
by and among Fusion Telecommunications International, Inc., a
Delaware corporation (“Parent”),
Fusion MPHC Acquisition Corp., a Delaware corporation
(“Merger
Sub”), MegaPath Holding Corporation, a Delaware
corporation (the “Company”)
and Shareholder Representative Services LLC, a Colorado limited
liability company, solely in its capacity as the representative of
the Stockholders and Optionholders (the “Stockholder
Representative”). Parent, Merger Sub and the Company
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 10.16.

 

RECITALS

 

A.           The
Boards of Directors of each of the Company and Merger Sub have (1)
approved and adopted, and declared advisable and in the best
interests of their respective corporations and stockholders, this
Agreement and the transactions contemplated hereby, including the
merger of Merger Sub with and into the Company (the
“Merger”),
with the Company being the survivor in the Merger, as more fully
provided for in this Agreement, directed that this Agreement be
submitted to such corporation’s stockholders for approval and
adoption, and (3) recommended that their stockholders approve and
adopt this Agreement.

 

B.           The
board of directors of Parent has approved and adopted this
Agreement and the transactions contemplated hereby, and Parent, in
its capacity as the sole stockholder of Merger Sub, will approve
and adopt this Agreement promptly following the execution of this
Agreement.

 

C.           It
is anticipated that, following the execution and delivery of this
Agreement, the required stockholders of the Company will execute
and deliver to Parent and Merger Sub a written consent approving
and adopting this Agreement.

 

Parent,
Merger Sub and the Company hereby agree as follows:

 

ARTICLE
I

THE
MERGER

 

Section
1.1 The
Merger. On the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the Delaware General Corporation Law (the
“DGCL”),
Merger Sub will be merged with and into the Company at the
Effective Time. At the Effective Time, the separate corporate
existence of Merger Sub will cease, and the Company will continue
as the surviving corporation (the “Surviving
Corporation”) and will succeed to and assume all the
rights and obligations of Merger Sub in accordance with the
DGCL.

 

 

-1-

 

 

Section
1.2 Closing.
Subject to the terms and conditions of this Agreement, the closing
(the “Closing”)
of the Merger shall take place (i) on the final day of the calendar
month in which the satisfaction or, to the extent permitted by Law,
waiver of the conditions set forth in Article VII
occurs (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), or (ii) such other time and place as Parent and the
Company may mutually agree, provided that if the Closing occurs on
any day other than the last day of a calendar month, then the
Working Capital as of 11:59 p.m. on the last day of the calendar
month preceding the Closing shall be deemed to be the Closing
Working Capital. The date on which the Closing occurs is
hereinafter referred to as the “Closing
Date.”

 

Section
1.3 Effective
Time. On the Closing
Date, Parent and the Company will cause to be filed with the
Secretary of State of Delaware a certificate of merger,
substantially in the form attached hereto as Exhibit A to
effect the Merger (collectively, the “Certificate of
Merger”) executed in accordance with the relevant
provisions of the DGCL and will make all other filings or
recordings required under the DGCL to effect the Merger. The Merger
will become effective at such time as the Certificate of Merger is
duly filed with such Secretary of State of Delaware, or at such
later time as Parent and the Company shall agree and specify in the
Certificate of Merger (the time the Merger becomes effective being
the “Effective
Time”).

 

Section
1.4 Effects.
The Merger will have the effects provided in this Agreement and in
the applicable provisions of the DGCL.

 

 

-2-

 

 

Section
1.5 Conversion of
Securities.

 

(a) At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of the Company
Capital Stock, each share of Company Capital Stock (each, a
“Share”)
issued and outstanding immediately prior to the Effective Time
(other than Dissenting Shares and any Shares to be cancelled
pursuant to Section
1.5(b)) will be converted automatically into the right to
receive, in accordance with the terms of this Agreement, (i) the
Initial Per Share Merger Consideration, without interest, to be
paid as contemplated by Section 2.1, (ii) the
Additional Per Share Merger Consideration, without interest,
payable in the manner set forth in Section 2.7, (iii) a pro-rata
portion of any funds remaining in the Escrow Fund after the
satisfaction of obligations payable therefrom in accordance with
this Agreement and the Escrow Agreement, at the respective times
and subject to the contingencies specified herein and therein, and
(iv) a pro-rata portion of any funds remaining in the Holdback
Account after the satisfaction of obligations payable therefrom in
accordance with this Agreement, calculated and payable in the
manner set forth in Section 2.8. Parent, in its
sole discretion, may elect to pay up to an aggregate of $10.0
million of the Initial Merger Consideration in shares of Parent
Common Stock; provided, however, that the Initial
Merger Consideration paid to any Stockholder surrendering Shares
shall not be paid in shares of Parent Common Stock with a value
(based on the formula below) that constitutes more than such
Stockholder’s Individual Share Percentage of such aggregate
elected dollar amount; and provided, further, that the Initial
Merger Consideration paid to any Stockholder surrendering Shares
that does not represent in the Letter of Transmittal that such
Stockholder is an Accredited Investor shall be paid only in cash.
If Parent elects to pay up to $10.0 million of the Initial Merger
Consideration in shares of Parent Common Stock, the number of
shares of Parent Common Stock shall be calculated based on the
greater of (i) $3.85 per share; or (ii) the weighted average
closing price of the Parent Common Stock during the ten (10)
trading day period occurring three (3) Business Days prior to the
date of the public announcement regarding the execution of this
Agreement, in each case as adjusted to give appropriate effect to
any stock split or reverse stock split effectuated by Parent.
Except for Dissenting Shares and any Shares to be cancelled
pursuant to Section
1.5(b), as a result of the Merger, each holder of a
certificate or certificates that immediately prior to the Effective
Time represented outstanding Shares (“Certificates”)
and each holder of Shares outstanding immediately prior to the
Effective Time that are not represented by Certificates
(“Book-Entry
Shares”) will thereafter cease to have any rights with
respect to such Shares except the right to receive the applicable
Merger Consideration, to be paid, without interest, in
consideration therefor upon surrender of such Certificate or
Book-Entry Shares in accordance with Section 2.1(b) (or in the case
of a lost, stolen or destroyed Certificate, Section 2.1(f)).

 

(b) At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub or the Company, each share of Company Capital
Stock held in the treasury of the Company or owned of record by any
Company 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.

 

(c) Each issued and
outstanding share of common stock of Merger Sub will be converted
into and become one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.

 

 

-3-

 

 

Section
1.6 Certificates of
Incorporation; Bylaws.

 

(a) At the Effective
Time, the Company’s certificate of incorporation will, by
virtue of the Merger, be amended and restated in its entirety in
the form attached hereto as Exhibit B,
and as so amended and restated will be the certificate of
incorporation of the Surviving Corporation until thereafter amended
as provided therein or by applicable Law.

 

(b) At the Effective
Time, the Company Bylaws will, by virtue of the Merger, be amended
and restated in their entirety in the form attached hereto as
Exhibit
C, and as so amended and restated will be the bylaws of the
Surviving Corporation, until thereafter amended as provided therein
or by applicable Law.

 

Section
1.7 Directors.
The parties will take all necessary action such that, from and
after the Effective Time, the directors of Merger Sub immediately
prior to the Effective Time will be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified,
as the case may be.

 

Section
1.8 Officers.
The parties will take all necessary action such that, from and
after the Effective Time, the officers of Merger Sub immediately
prior to the Effective Time will be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and
qualified, as the case may be.

 

ARTICLE
II

DELIVERY OF MERGER
CONSIDERATION

 

Section
2.1 Exchange of
Shares.

 

(a) Exchange
Procedures.

 

(i) Prior to the
Closing Date, the Company shall distribute to each Person who is
expected to be, at the Effective Time, a holder of record of Shares
entitled to receive the Merger Consideration pursuant to
Section 1.5(a): (A)
a letter of transmittal, in substantially the form attached hereto
as Exhibit D
(the “Letter of
Transmittal”) and containing such provisions as Parent
may reasonably specify (including a provision confirming that
delivery will be effected, and risk of loss and title will pass,
only upon proper delivery of the Certificates to Parent or, in the
case of Book-Entry Shares, upon adherence to the procedures set
forth in the Letter of Transmittal; each Stockholder’s
agreement to accept their indemnification obligations set forth in
Article IX, the
choice of law provisions in Section 10.7 and the exclusive
forum provisions in Section 10.8; each
Stockholder’s representation as to whether or not such
Stockholder is an Accredited Investor; customary investment
representations with respect to any receipt of Parent Common Stock;
and an acknowledgement that any certificates received representing
Parent Common Stock will bear legends customary for unregistered
shares), and (B) instructions for use in effecting the surrender of
such holder’s Certificates or Book-Entry Shares in exchange
for payment of the their portion of the Merger Consideration
issuable and payable in respect thereof pursuant to such Letter of
Transmittal.

 

 

-4-

 

 

(ii) Each
holder of Shares who has, prior to the Effective Time, properly
completed, executed and delivered to the Company (who shall have
thereafter delivered a copy of such documents to Parent at or prior
to the Closing) a Letter of Transmittal and any and all
Certificate(s) evidencing such holder’s Shares (or an
Affidavit of Loss in lieu thereof) shall be entitled to receive
from Parent at the Closing, and Parent shall pay or cause to be
paid to each such Stockholder at the Closing, (i) an amount in cash
and shares of Parent Common Stock (to the extent permitted by this
Agreement and if such holder is an Accredited Investor) equal to
the product (rounded to the nearest cent) of (A) the number of
Shares represented by such holder’s properly surrendered
Certificates plus the number, if any, of such holders Book-Entry
Shares and (B) the Initial Per Share Merger
Consideration.

 

(iii) With
respect to each holder of Shares who has not properly completed,
executed and delivered a Letter of Transmittal to the Company, or
who has failed to deliver the Certificate(s) evidencing such Shares
(or an Affidavit of Loss in lieu thereof) to the Company, in each
case prior to the Effective Time, Parent shall (x) deliver or cause
to be delivered at the Closing to an account of the Payments
Administrator specified by the Stockholder Representative not less
than two (2) Business Days prior to the Closing Date (the
“Stockholder Payment
Account”) an amount in cash equal to (I) the product
(rounded to the nearest cent) of (A) the number of Shares held by
all such holders (other than Dissenting Shares) and (B) the Initial
Per Share Merger Consideration, less (II) the aggregate cash value
(based on the formula in Section 1.5(a)) of the shares
of Parent Common Stock to be included in the Initial Merger
Consideration that are to be issued to such holders assuming that
all such holders are Accredited Investors, and (y) cause its
transfer agent to issue at the Closing all such shares of Parent
Common Stock and hold such shares deliverable to each such holder
pending such holder’s delivery of the items set forth in the
following sentence. Such cash shall be held in the Stockholder
Payment Account and such shares shall be held by Parent’s
transfer agent (in each case, subject to applicable abandoned
property, escheat and similar Laws) for distribution to each such
holder when and as such holder delivers a properly completed and
executed Letter of Transmittal and the Certificate(s) evidencing
such holder’s Shares (or an Affidavit of Loss in lieu
thereof) to the Payments Administrator (who shall promptly
thereafter deliver such documents to Parent), at which time the
Payments Administrator shall distribute or cause to be distributed
to such holder from the funds held in the Stockholder Payment
Account the same cash amount (payable in the same manner) as such
holder would have received from Parent under Section 2.1(a)(ii) if such
Letter of Transmittal and Certificate(s) (or Affidavit of Loss in
lieu thereof) had been delivered to the Company prior to the
Effective Time and Parent shall cause its transfer agent to deliver
to such holder such shares issued in such holder’s name and
held by such transfer agent. Notwithstanding the foregoing, if any
such holder is not an Accredited Investor (based on such
holder’s Letter of Transmittal), then the shares of Parent
Common Stock issued in such holder’s name and held by
Parent’s transfer agent shall be cancelled and, in lieu of
delivery of such shares to such holder, Parent shall deliver to
such holder a cash amount equal to the value of such cancelled
shares, as determined in accordance with the formula set forth in
Section 1.5(a) of
this Agreement.

 

 

-5-

 

 

(iv) Following
the Closing, (A) any holder to which Section 2.1(a)(iii) applies
shall be entitled to look only to the funds in the Stockholder
Payment Account and, if such holder is not an Accredited Investor,
only to Parent for any cash payable in lieu of shares of Parent
Common Stock (in each case, subject to applicable abandoned
property, escheat or similar Laws) and only as general creditors
thereof with respect to the cash amount that such holder is
entitled to receive pursuant to Section 2.1(a)(iii) upon
delivery to the Payments Administrator of a properly completed and
executed Letter of Transmittal and the Certificate(s) evidencing
such holder’s Shares (or an Affidavit of Loss in lieu
thereof), without any interest thereon, and (B) none of Parent, the
Surviving Corporation or the Stockholder Representative shall be
liable to any Stockholder for any amounts and shares of Parent
Common Stock delivered to a public official pursuant to any
applicable abandoned property, escheat or similar
Laws.

 

(b) Escrow Fund. In accordance with
the Escrow Agreement, Parent shall deposit into the Escrow Fund the
Escrow Amount (such amount, including any interest or other amounts
earned thereon and less any disbursements therefrom in accordance
with the Escrow Agreement, the “Escrow
Fund”), to be held for the purpose of securing the
indemnification and other obligations of the Stockholders set forth
in this Agreement.

 

(c) No Further Rights in Company Capital
Stock. All Merger Consideration issued or paid upon
surrender of Certificates or transfer of Book-Entry Shares 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 or Book-Entry Shares.

 

(d) Adjustments. If at any time
during the period between the date of this Agreement and the
Effective Time, any change in the outstanding shares of Company
Capital Stock occurs as a result of any reclassification,
recapitalization, stock split (including a reverse stock split) or
combination, exchange or readjustment of shares, or any stock
dividend or stock distribution with a record date during such
period, the Initial Per Share Merger Consideration will be
equitably adjusted to reflect such change.

 

(e) Withholding Rights. Each of the
Surviving Corporation, Parent and Merger Sub will be entitled to
deduct and withhold from any consideration 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 Treasury Regulations, any provision of applicable state,
local or foreign Tax Law or any other Law. To the extent that
amounts are so withheld, such withheld amounts will be treated for
purposes of this Agreement as having been paid to the Person in
respect of which such deduction and withholding was
made.

 

(f) Lost Certificates. In the event
that any Certificate has been lost, stolen or destroyed, the holder
of such Certificate may, in lieu of delivering such Certificate
with the Letter of Transmittal delivered in accordance with
Section 2.1(a)(ii)
or Section
2.1(a)(iii), complete, execute and deliver to the Payments
Administrator, an affidavit of loss and indemnity in a form
reasonably satisfactory to Parent (an “Affidavit of
Loss”).

 

 

-6-

 

 

(g) Termination of Stockholder Payment
Account. Any funds remaining in the Stockholder Payment
Account on the date that is six (6) months after the Closing Date
will be delivered to Parent, and any holders of Shares who have not
theretofore complied with this Section 2.1 will thereafter
look only to Parent for the Merger Consideration to which they are
entitled pursuant to Section 1.5.

 

Section
2.2 Stock
Transfer Books. At the Effective
Time, the stock transfer books of the Company will be closed and
there will be no further registration of transfers of Shares
thereafter on the records of the Company. On or after the Effective
Time, any Certificates or Book-Entry Shares presented to Parent for
any reason will be cancelled and exchanged for the applicable
portion of the Merger Consideration with respect to the Shares
formerly represented by such Certificates or Book-Entry Shares to
which the holders thereof are entitled pursuant to Section 1.5(a).

 

Section
2.3 Treatment
of Options. Prior to the
Closing, the Company will take all actions necessary in accordance
with the Company Stock Option Plan so that all Options outstanding
immediately prior to the Effective Time will become fully vested
and exercisable (whether or not currently exercisable) and,
immediately prior to the Effective Time, each Option will be
cancelled without any future liability to the Company or any other
Person after the Effective Time in exchange for the right to
receive from the Company the payment described in the following
sentence (such amount payable pursuant to clause (a) in the
following sentence with respect to each Optionholder, such
holder’s “Option
Consideration”), subject to applicable withholding.
Each holder of an Option that is cancelled pursuant to the
preceding sentence shall, in respect of such Option and subject to
the terms and conditions of this Agreement, be entitled to (a) a
cash payment in an amount equal to the product of (i) the excess,
if any, of the Initial Per Share Merger Consideration over the
applicable Exercise Price of such Option, and (ii) the number of
shares of Company Common Stock underlying such Option, and (b) any
amounts payable to such Optionholder pursuant to Section 2.7 and Section 2.8 (in the case of
this clause (b), if, as and when payable in accordance with
Section 2.7 and
Section 2.8).
Parent will cause the Company to pay to each Optionholder such
Optionholder’s Option Consideration via payroll less
applicable withholding Taxes on the Closing Date.

 

Section
2.4 Appraisal
Rights. Notwithstanding
anything in this Agreement to the contrary, any Shares that are
issued and outstanding immediately prior to the Effective Time and
are held by a Stockholder who is entitled to exercise, and properly
complied with the provisions of Section 262 of the DGCL to demand
appraisal rights with respect to such Shares (each, a
“Dissenting
Stockholder”) and not effectively withdrawn or lost
its right to appraisal (collectively, the “Dissenting
Shares”), such Dissenting Shares will not be converted
into or exchangeable for or represent the right to receive the
applicable Merger Consideration (except as provided in this
Section 2.4) and
will entitle such Dissenting Stockholder only to payment of the
fair value of such Dissenting Shares as may be determined to be due
to the holder of such Dissenting Shares in accordance with the
DGCL, unless and until such Dissenting Stockholder effectively
waives such appraisal rights or is otherwise no longer entitled to
payment for such Dissenting Shares in accordance with Section 262
of the DGCL. If any such Dissenting Stockholder effectively waives
such appraisal rights or is otherwise no longer entitled to payment
for the Dissenting Shares held by such Dissenting Stockholder in
accordance with the Section 262 of DGCL, then as of the later of
the Effective Time or the occurrence of such event, the Dissenting
Shares held by such Dissenting Stockholder will be cancelled and
converted into and represent the right to receive, without any
interest thereon, the applicable Merger Consideration in accordance
with Article I and
this Article II,
less applicable withholding taxes, if any, required to be withheld.
The Company will not, except with the prior written consent of
Parent, voluntarily make (or cause or permit to be made on its
behalf) any payment with respect to, or settle or make a binding
offer to settle, or otherwise negotiate with, any Dissenting
Stockholder regarding its exercise of appraisal rights prior to the
Effective Time. The Company will give Parent notice of any such
demands prior to the Effective Time.

 

 

-7-

 

 

Section
2.5 Closing
Statement. At least three
(3) Business Days prior to the Closing Date, the Company will
deliver to Parent a statement setting forth a good faith estimate
of (a) Closing Working Capital prepared in accordance with GAAP
(the “Working Capital
Estimate”) and the resulting Estimated Working Capital
Overage or Estimated Working Capital Underage, if any, (b) Closing
Cash prepared in accordance with GAAP (the “Closing Cash
Estimate”), (c) the Transaction Expenses Payoff
Amount, (d) the amount of Closing Indebtedness and the Indebtedness
Payoff Amount, (e) the number of Shares issued and outstanding as
of immediately prior to the Effective Time, (f) the Share
Percentage and the Individual Share Percentage for each
Stockholder, (g) with respect to each Option, the holder of such
Option, the number of shares of Company Common Stock underlying
such Option and the Exercise Price of such Option, in each case
immediately prior to the Effective Time, and (h) the Option
Percentage and the Individual Option Percentage for each
Optionholder.

 

Section
2.6 Transactions
to Be Effected at the Closing. At the Closing,
the following transactions shall be effected by the
Parties:

 

(a) Parent will pay the
Initial Merger Consideration to the Payments Administrator and the
holders of Shares in accordance with Section 2.1(a);

 

(b) Parent will
transfer the Escrow Amount to the Escrow Fund;

 

(c) Parent will
transfer the Holdback Amount to an account of the Escrow Agent (the
“Holdback
Account”);

 

(d) Parent will pay the
Indebtedness Payoff Amount to such parties and in such amounts as
designated in writing (such designation to be made at least two (2)
Business Days prior to the Closing Date) in the Payoff
Letters;

 

(e) Parent will pay the
Transaction Expenses Payoff Amount, other than such amount related
to Transaction Bonuses, to such parties and in such amounts as
designated by the Company in writing (such designation to be made
at least two (2) Business Days prior to the Closing Date);
and

 

(f) Parent will pay the
Transaction Expenses Payoff Amount related to Transaction Bonuses
to the Company and cause the Company to pay to each recipient of a
Transaction Bonus via the Company’s payroll system on the
Closing Date an amount equal to such Transaction Bonus less
applicable withholding Taxes.

 

Section
2.7 Merger
Consideration Adjustment.

 

(a) Within 60 days
after the Closing Date, Parent will deliver to the Stockholder
Representative a statement (the “Statement”)
of (i) the Closing Working Capital and the resulting Working
Capital Overage or Working Capital Underage, if any, (ii) the
Closing Cash and the resulting Closing Cash Overage or Closing Cash
Underage, if any, (iii) any Transaction Expenses not included in
the Transaction Expenses Payoff Amount (the “Additional
Transaction Expenses”), and (iv) any Closing
Indebtedness of the Company and Company Subsidiaries not included
in the calculation of the Initial Merger Consideration (the
“Additional
Indebtedness”)

 

 

-8-

 

 

(b) The Statement will
become final and binding upon all of the Parties at 5:00 p.m. in
New York, New York on the 60th day following the date on which the
Statement was delivered by Parent to the Stockholder
Representative, unless the Stockholder Representative delivers
written notice of its disagreement with the Statement (a
“Notice of
Disagreement”) to Parent prior to such time. During
such 60-day period, Parent shall cause the Surviving Corporation
and its Subsidiaries to provide the Stockholder Representative and
the Stockholder Representative’s advisors with reasonable
access (including on-site access and electronic access to the
extent available) during regular business hours and upon reasonable
notice to all relevant books and records and employees (including
key accounting and finance personnel) of the Surviving Corporation
and its Subsidiaries to the extent reasonably necessary to review
the matters and information used to prepare and to support the
Statement, all in a manner not unreasonably interfering with the
business of the Surviving Corporation and its Subsidiaries. All
fees, costs and expenses of the Stockholder Representative relating
to the review of the Statement shall be borne by the holders of
Shares and Options out of the Holdback Account and all fees, costs
and expenses of Parent or the Surviving Corporation relating
thereto shall be borne by Parent. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so
asserted. If a Notice of Disagreement is received by Parent in a
timely manner, then the Statement (as revised in accordance with
this Section
2.7(b)) will become final and binding upon Parent and the
Stockholder Representative on the earlier of (i) the date
Stockholder Representative and Parent resolve in writing any
differences they have with respect to the matters specified in the
Notice of Disagreement and (ii) the date any disputed matters are
finally resolved in writing by an independent accounting firm (the
“Accounting
Firm”). During the 14-day period following the
delivery of a Notice of Disagreement, the Stockholder
Representative and Parent will seek in good faith to resolve in
writing any differences that they may have with respect to the
matters specified in the Notice of Disagreement. If at the end of
such 14-day period the Stockholder Representative and Parent have
not resolved in writing the matters specified in the Notice of
Disagreement, then, no later than ten (10) days following such
14-day period, the Stockholder Representative and Parent will
submit to the Accounting Firm for resolution, in accordance with
the standards set forth in this Section 2.7, only matters that
remain in dispute. The Accounting Firm will be UHY, LLP or, if such
firm is unable or unwilling to act, such other nationally
recognized independent public accounting firm as shall be agreed
upon by the Stockholder Representative and Parent in writing. The
Stockholder Representative and Parent will use commercially
reasonable efforts to cause the Accounting Firm to render a written
decision resolving the matters submitted to the Accounting Firm
within 30 days of the receipt of such submission. The Accounting
Firm may not assign a value greater than the greatest value for
such item claimed by either Party or smaller than the smallest
value for such item claimed by either Party. Judgment may be
entered upon the determination of the Accounting Firm in any court
having jurisdiction over the party against which such determination
is to be enforced. The fees, costs and expenses of the Accounting
Firm incurred pursuant to this Section 2.7(b) (the
“Accounting
Fees”) shall be borne pro rata as between the Stockholder
Representative (solely on behalf of the Stockholders and
Optionholders), on the one hand, and Parent, on the other hand, in
proportion to the final allocation made by the Accounting Firm of
the disputed items weighted in relation to the claims made by the
Stockholder Representative and Parent, such that the prevailing
party pays the lesser proportion of such fees, costs and expenses.
For example, if the Parent claims that the appropriate adjustments
are, in the aggregate, $1,000 greater than the amount determined by
the Stockholder Representative and if the Accounting Firm
ultimately resolves the dispute by awarding to the Parent an
aggregate of $300 of the $1,000 contested, then the fees, costs and
expenses of the Accounting Firm will be allocated 30% (i.e., 300
÷ 1,000) to the Stockholder Representative and 70% (i.e., 700
÷ 1,000) to Parent. For the avoidance of doubt, the fees,
costs and expenses of any Party incurred in connection with this
Section 2.7 (other
than the Accounting Fees, which shall be allocated in accordance
with this Section
2.7(b)) shall be paid by the Party incurring such fees,
costs and expenses; provided, that the Stockholder
Representative’s fees, costs and expenses shall be paid by
the Stockholders and Optionholders.

 

 

-9-

 

 

(c) If the Stockholder
Adjustment Amount exceeds the Parent Adjustment Amount (the amount
of such excess, the “Excess
Amount”), (i) within five (5) Business Days after a
final determination Parent will make payment by wire transfer of
immediately available funds to the Stockholder Representative, or
upon written instruction of the Stockholder Representative, to the
Payments Administrator, for distribution to each holder of Shares,
contingent upon such holder’s delivery of a Letter of
Transmittal and Certificates evidencing such holder’s Shares
(or an Affidavit of Loss in lieu thereof) and in accordance with
such holder’s Individual Share Percentage, subject to
applicable withholding, an amount equal to the Share Percentage of
any such Excess Amount, and (ii) Parent will cause the Company to
pay to the Optionholders via payroll in accordance with their
respective Individual Option Percentage, and subject to applicable
withholding, an amount equal to the Option Percentage, the
applicable portion of any such Excess Amount.

 

(d) If the Parent
Adjustment Amount exceeds the Stockholder Adjustment Amount (the
amount of such excess, the “Deficiency
Amount”), within five (5) Business Days after a final
determination in accordance with Section 2.7(b), the Stockholder
Representative shall cause the Escrow Agent to make payment to
Parent by wire transfer of immediately available funds from the
Escrow Fund, the total amount of the Deficiency
Amount.

 

Section
2.8 Payments
from the Holdback Account. The Holdback
Account will be used for the purposes of paying directly, or
reimbursing the Stockholder Representative for, any third party
expenses pursuant to this Agreement and any agreements ancillary
hereto. The Stockholder Representative shall retain control over
the funds in the Holdback Account and shall, promptly following
completion of the Stockholder Representative’s duties, direct
the Escrow Agent to pay all or a portion of any funds that remain
in the Holdback Account to the Payments Administrator for further
distribution to (i) the Stockholders, contingent with respect to
each such holder upon such holder’s delivery of a Letter of
Transmittal and Certificates evidencing such holder’s Shares
(or an Affidavit of Loss in lieu thereof), in accordance with such
holders’ respective Individual Share Percentages, and subject
to applicable withholding, an aggregate amount equal to the Share
Percentage of any such funds, and (ii) the Company, for further
payment to the Optionholders via payroll in accordance with their
respective Individual Option Percentages, and subject to applicable
withholding, an aggregate amount equal to the Option Percentage of
any such funds.

 

ARTIVLE
III

REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

 

Except
as disclosed in the disclosure letter delivered by the Company to
Parent 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”), the Company represents and warrants to
Parent as follows:

 

 

-10-

 

 

Section
3.1 Corporate
Organization.

 

(a) The Company is a
corporation duly formed, 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 for such jurisdictions where the failure to be so licensed
or qualified would not reasonably be expected to have a Material
Adverse Effect.

 

(b) Copies of the
certificate 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 Parent. The
Company is not in default under or in violation of any provision of
the Company Charter or the Company Bylaws.

 

(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/formed and validly existing under
the Laws of its jurisdiction of organization, (ii) is duly
qualified to do business and, where such concept is recognized, in
good standing in all jurisdictions in which the conduct of its
business requires it to be so qualified, except for such
jurisdictions where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material
Adverse Effect, and (iii) has all the corporate or limited
liability company power and authority to carry on its business as
now conducted. As used in this Agreement, the word
“Subsidiary”
when used with respect to any Person means another Person, 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, more
than 40% of the Equity Interests of which is owned directly or
indirectly by such first Person; the terms “Company
Subsidiary” and “Parent
Subsidiary” mean any direct or indirect Subsidiary of
the Company or Parent, respectively, and, in the case of Parent,
will include (A) Merger Sub prior to the Effective Time and (B) the
Surviving Corporation as of and after the Effective
Time.

 

(d) Copies of the
certificate of incorporation, or similar organizational document,
as applicable, of each Company Subsidiary, as amended and restated,
and the bylaws or operating agreement, or other 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 provided to Parent. No Company Subsidiary is in
default under or in violation of any such governing
document.

 

 

-11-

 

 

Section
3.2 Capitalization.

 

(a) The authorized
capital stock of the Company consists of (i) 23,030,000 shares of
common stock, $0.001 par value per share (“Company Common
Stock”), of which 2,082,961 shares are issued and
outstanding, and (ii) 20,035,000 shares of Series B preferred
stock, $0.001 par value per share (“Company Preferred
Stock”), of which 19,999,874 shares are issued and
outstanding (collectively, the “Company Capital
Stock”). 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) The Company does
not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase, issuance or registration of any
shares of Company Capital Stock or any other equity securities of
the Company or any securities representing the right to purchase or
otherwise receive any shares of Company Capital Stock, except for
Options issued pursuant to the Company Stock Option Plan. 2,988,549
shares of Company Common Stock were originally reserved for
issuance under the Company Stock Option Plan. No Company Stock
Option has an Exercise Price in excess of $0.01. The Company does
not have any “phantom equity” plans, agreements or
awards.

 

(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) 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 and state securities
Laws), 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. There are no outstanding obligations to which the
Company or any Company Subsidiary is a party restricting the
transfer of, or limiting the exercise of voting rights with respect
to, any Equity Interest in any Company Subsidiary.

 

 

-12-

 

 

Section
3.3 Authority; No
Violation.

 

(a) The Company has all
necessary corporate power and authority to enter into this
Agreement and to consummate the Merger. The execution, delivery and
performance of this Agreement by the Company have been duly and
validly adopted by the Company Board and, except for (i) the
Written Consent and (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, no other
corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or for the
Company to consummate the Merger and the other transactions
contemplated by this Agreement (the “Transactions”).
The holders of Company Capital Stock are authorized to act by the
Written Consent and the Written Consent is the only vote or consent
of the holders of any of the Company Capital Stock necessary to
adopt this Agreement and to approve the Merger and the other
Transactions contemplated by this Agreement. There are no Contracts
to which the Company or any Company Subsidiary is a party 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
there are no Contracts between or among the Company or any Company
Subsidiary and 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
Merger are advisable and fair to and in the best interests of the
Company’s stockholders, and (ii) recommend that the
Company’s stockholders that they adopt this Agreement. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming this Agreement constitutes the valid and
binding agreement of Parent and Merger Sub, constitutes the valid
and binding agreement of the Company, enforceable against the
Company 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)

 

(b) Neither the
execution and delivery of this Agreement by the Company nor the
consummation of the Transactions, nor compliance by the Company
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 and subject to obtaining
the Written Consent, (A) violate any Order or other legal restraint
or prohibition (an “Injunction”),
any Law 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 assets of the Company or a Company Subsidiary are bound
or subject, or (B) 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, 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.

 

 

-13-

 

 

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 DGCL, (b) 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 any related financings by Parent (the “State
Approvals”), and (c) receipt of such consents from, or
registrations, declarations, notices or filings made to or with the
FCC 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 the other Transactions, including any related
financings by Parent (the “FCC
Approval”), no consents or approvals of, or filings or
registrations with, any Governmental Entity are necessary in
connection with (i) the execution and delivery by the Company of
this Agreement and (ii) the consummation by the Company of the
Transactions.

 

Section
3.5 Financial
Statements.

 

(a) The audited
consolidated financial statements of the Company and the Company
Subsidiaries for the years ended December 31, 2016 and 2015 and the
unaudited consolidated financial statements of the Company and the
Company Subsidiaries for the year ended December 31, 2017
(including in each case, any related notes and schedules thereto,
where applicable) (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 Company Subsidiaries for
the respective fiscal periods or as of the date therein set forth,
except the Company Financial Statements for the year ended December
31, 2017 are subject to normal year-end audit adjustments which, in
the aggregate, would not be material in amount. Each of the Company
Financial Statements have been prepared in accordance with GAAP
consistently applied during the periods involved, except as
indicated in such statements or in the notes thereto. Each of the
representations and warranties in this Section 3.5(a) is qualified as
follows: for the period from January 1, 2015 through March 31,
2015, the Company Financial Statements reflect only the assets,
liabilities, revenue and expenses of the Company directly
attributable to its Cloud Operations division, as well as
allocations deemed reasonable by management to present the Company
Financial Statements for such period on a carve-out basis in
accordance with GAAP standards, and do not necessarily reflect the
Company Financial Statements as they would have been presented for
such Cloud Operations division had it been a separate, stand-alone
entity during such period.

 

(b) Except for those
liabilities and obligations that are (i) reflected or reserved
against on the December 31, 2017 unaudited consolidated balance
sheet of the Company and the Company Subsidiaries or disclosed in
the notes thereto, or (ii) incurred in the ordinary course of
business consistent with past practice since December 31, 2017,
neither the Company nor any of the Company Subsidiaries has
incurred any Indebtedness or liability, obligation or claim of a
type required to be reflected or reserved for on a balance sheet
prepared in accordance with GAAP (excluding immaterial liabilities,
obligations and claims to the extent that, if they were not so
reflected, would not cause such balance sheet, taken as a whole, to
not be prepared in accordance with GAAP).

 

 

-14-

 

 

(c) The Company and
Company Subsidiaries make and keep and, for all periods covered by
the Company Financial Statements, have made and kept books, records
and accounts which, in reasonable detail, accurately and fairly
reflect in all material respects the transactions and dispositions
of the assets of the Company and Company Subsidiaries. The Company
and Company Subsidiaries maintain systems of internal accounting
controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s
general or specific authorization, (ii) transactions are recorded
as necessary to permit the preparation of financial statements in
conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the actual
levels at reasonable intervals and appropriate action is taken with
respect to any differences.

 

Section
3.6 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
3.7 Legal
Proceedings.

 

(a) Except as set forth
on Section 3.7(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, 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.

 

(b) There is no
Injunction or judgment imposed upon the Company, any of the Company
Subsidiaries or the assets of the Company or any of the Company
Subsidiaries.

 

 

-15-

 

 

Section
3.8  
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
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 is covered by
adequate reserves in accordance with GAAP in the Company Financial
Statements. There are no disputes pending, or claims asserted (in
writing or otherwise), for Taxes or assessments upon the Company or
any of the Company Subsidiaries for which the Company does not have
adequate reserves. Neither the Company nor any of the Company
Subsidiaries is a party to or is bound by any Tax, allocation or
indemnification agreement or arrangement the primary subject matter
of which is Taxes (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. 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 taxable
period (or any portion thereof) ending on or prior to 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,
or as a result of any contractual obligation 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 Parent or any of its Affiliates or result in a
material Tax liability for Parent or any of its Affiliates for any
Tax period (or portion thereof) ending after the Closing Date.
Neither the Company nor any Company Subsidiary 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. Since December 31, 2013, 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. Each of the Company and the Company Subsidiaries is in
compliance in all material respects with all terms and conditions
of any applicable material Tax exemption, Tax holiday, or other Tax
reduction agreement, and no such applicable material Tax exemption,
Tax holiday, or other Tax reduction agreement will be adversely
affected by the Transactions. None of the Company nor any Company
Subsidiary has elected to relinquish the carryback of any of its
respective net operating losses pursuant to Treasury Regulations
Sections 1.502 21(b)(3)(ii)(B) or Section 172(b)(3) of the Code, or
any similar provision of applicable Law.

 

 

-16-

 

 

Section
3.9 Employee Benefit
Plans; Labor.

 

(a) Section 3.9(a) of the Company
Disclosure Letter contains a true and complete list of (i) each
nonqualified deferred compensation or retirement plan for employees
located in the United States, (ii) each qualified “defined
contribution plan” (as such term is defined under Section
3(34) of ERISA), (iii) each qualified “defined benefit
plan” (as such term is defined under Section 3(35) of ERISA)
(the plans set forth in clauses (ii) and (iii) are collectively
referred to herein as the “Pension
Plans”), (iv) each “welfare benefit plan”
(as such term is defined under Section 3(1) of ERISA) (the
“Welfare
Plans”), and (v) each compensatory or benefit plan or
program, or stock option plan, including written individual
contract, employee agreement, plan, program, or arrangement, in
each case, whether funded or unfunded, that currently are
maintained or sponsored in whole or in part, or contributed to by
any of the Company, the Company Subsidiaries or any 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 or the Company Subsidiaries, or 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 (v) are referred to as “Company Benefit
Plans”).

 

(b) Each 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
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 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. The Company Benefit Plans comply in all respects
in both form and in operation with the requirements of the Code,
ERISA and all other applicable Laws.

 

(c) To the knowledge of
the Company, there have been no “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 3.9(c) of the Company
Disclosure Letter, none of the assets of any Pension Plan or
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).

 

 

-17-

 

 

(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 (a “Company Commonly
Controlled Entity”) (A) sponsors, maintains or
contributes to, or is obligated to maintain or contribute to, or
has any liability under, or has in the preceding seven (7) years
sponsored, maintained, or contributed to, or had any obligation to
maintain or contribute to, any Pension Plan or any “pension
plan” (as defined in Section 3(2) of ERISA) that is subject
to Title IV of ERISA, Section 412 or Section 430 of the Code, or
any “multiemployer plan” (as defined in Section 3(37)
of ERISA) or (B) has any unsatisfied liability imposed under Title
IV of ERISA or Section 412 or Section 430 of the Code 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 guidance. No Pension Plan or related trust
has been terminated during the last seven years. No assets of the
Company or any Company Subsidiary are subject to any Lien under
Section 412(n) or 430(k) of the Code or Section 302(f) or 302(k) or
Title IV of ERISA.

 

(e) Neither the Company
nor any Company Subsidiary has communicated a commitment, whether
orally or in writing, generally to employees 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) Except as set forth
in Section 3.9(f)
of the Company Disclosure Letter, none of the Welfare Plans
obligates the Company or any Company Subsidiary to provide any
current employee or former employee (or any dependent thereof) any
life insurance or health benefits or other welfare 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.

 

(g) 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.

 

 

-18-

 

 

(h) Except as set forth
in Section
3.9(h)(i) of the Company Disclosure Letter, no payment or
benefit under any Company Benefit Plan that will or may be made by
the Company or any Company Subsidiary in connection with the Merger
to any current employee of the Company or Company Subsidiaries
could reasonably be characterized as an “excess parachute
payment” within the meaning of Section 280G(b)(2) of the
Code. Except as set forth in Section 3.9(h)(ii) of the
Company Disclosure Letter, as provided in this Agreement or as
required by applicable Law, 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 Company Employee, current employee, or
former employee (or any spouse, dependent, or other family member
of such employee), in each case under any Company Benefit Plan.
Except as set forth in Section 3.9(h)(iii) of the
Company Disclosure Letter, 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.

 

(i) The Company and the
Company Subsidiaries have correctly classified Persons engaged as
consultants or independent contractors for employment purposes
under applicable Law.

 

(j) Except as would not
reasonably be expected to result in a Tax or penalty, 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 in documentary
and operational compliance with Section 409A of the Code and any
guidance issued with respect thereto.

 

(k) The Company has
complied in all material respects with all applicable Laws
concerning employment rights and obligations. Neither the Company
nor any Company Subsidiary is a party to a collective bargaining
agreement in respect of the employees of the Company or a Company
Subsidiary on the date of this Agreement, or a member in any
employers’ organization which is entitled to conclude a
collective bargaining agreement on behalf of its member companies,
and there is no 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 reasonably be expected to 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, 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.

 

 

-19-

 

 

(l) There is no
liability under ERISA or otherwise with respect to any Company
Benefit Plan other than for the payment or provision of the
benefits due thereunder in accordance with its terms, which has
been incurred or, based upon such facts as exist on the date
hereof, may reasonably be expected to be incurred. 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).

 

(m) No Welfare Plan is
or at any time in the past seven years 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 within the past seven years 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
3.10 Compliance
with Law. At all times
since December 31, 2013, the Company and each of the Company
Subsidiaries have complied in all material respects with and are
not in default under any Law or Order relating to the Company or
any of the Company Subsidiaries or by which any material property
or asset of the Company or any Company Subsidiary is bound. As of
the date hereof, no investigation by any Governmental Entity with
respect to the Company or any Company Subsidiary is pending, nor,
to the knowledge of the Company, has any Governmental Entity
indicated to the Company an intention to conduct any such
investigation.

 

Section
3.11 Environmental
Matters. 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. There have been no Releases of Hazardous Substances by the
Company or any Company Subsidiary at, on, above, under or from any
properties currently or formerly owned, leased or operated 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. The
Company has provided to Parent 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 3.11 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 the Company or any Company
Subsidiary under any Environmental Law.

 

 

-20-

 

 

Section
3.12 Material
Contracts.

 

(a) Except as listed in
Section 3.12(a) of
the Company Disclosure Letter, or any Company Benefit Plan that is
listed in Section
3.9(a) of the Company Disclosure Letter, 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
“non-compete” or similar agreement 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;

 

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

 

(iii) an
agreement (other than a future contract, option contract or other
derivative transaction) that involves future expenditures or
receipts by the Company or any Company Subsidiary of more than
$150,000 in any one year period that cannot be terminated on less
than 90 days’ notice without material payment or
penalty;

 

(iv) an
acquisition agreement that contains “earn-out” or other
contingent payment obligations that would reasonably be expected to
result in future payments by the Company or a Company Subsidiary in
excess of $150,000;

 

(v) an agreement
relating to indebtedness for borrowed money or any financial
guaranty, in each case pertaining to indebtedness in excess of
$150,000 individually;

 

(vi) a
lease or sublease with respect to real property;

 

(vii) an
agreement pursuant to which the Company or any Company Subsidiary
(1) is granted or obtains any right to use any Intellectual
Property (excluding standard form Contracts granting rights to use
readily available shrink wrap or click wrap software), (2) is
restricted in its right to use or register any Company Intellectual
Property, or (c) permits any other Person to use, enforce, or
register any Company Intellectual Property, in each case including
any license agreements, coexistence agreements, and covenants not
to sue (other than the ordinary course limited license granted
pursuant to the Company’s standard form of customer
agreement);

 

(viii) an
employment agreement with an employee of the Company or a Company
Subsidiary, or an agreement with an independent contractor
requiring payments in excess of $75,000 in any calendar
year;

 

 

-21-

 

 

(ix) a
capital lease;

 

(x) an agreement that
involves a forward, future, hedge, swap, collar, put, call, option
or similar derivative transaction;

 

(xi) an
agreement of guaranty, surety or indemnification;

 

(xii) an
agreement for severance or retention payments or under which the
Company or a Company Subsidiary is obligated to make any payment of
Transaction Bonuses; or

 

(xiii) 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;

 

(xiv) a
collective bargaining agreement; or

 

(xv) an
agreement that has not been fully satisfied or terminated in
accordance with its terms relating to the disposition or
acquisition by the Company or any Company Subsidiary of assets or
properties in excess of $100,000, not made in the ordinary course
of business consistent with past practice.

 

(all
contracts of the type described in this Section 3.12(a), being referred
to herein as a “Company Material
Contract”).

 

(b) Neither the Company
nor any of the Company Subsidiaries is in material breach of or
default under the terms of any Company Material Contract. To the
knowledge of the Company, no other party to any Company Material
Contract is in any material respect in breach of or default under
the terms of any Company Material Contract. Each Company Material
Contract is a valid and binding obligation of the Company or the
Company Subsidiary that is a party thereto and is in full force and
effect; except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws, now or hereafter in effect, relating to
creditors’ rights generally; and (ii) equitable remedies of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
True, correct and complete copies of each Company Material Contract
(including all modifications and amendments thereto and waivers
thereunder) have been made available to Parent.

 

Section
3.13 Intellectual
Property; Data Privacy.

 

(a) Either the Company
or a Company Subsidiary owns, or is licensed or otherwise possesses
all rights necessary to use, all Intellectual Property used in
their respective businesses as currently conducted (collectively,
the “Company
Intellectual Property”).

 

 

-22-

 

 

(b) Section 3.13(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 3.13(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.

 

(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.

 

 

-23-

 

 

(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) To the knowledge of
the Company, 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. To the knowledge of the Company, within the past five (5)
years 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.

 

 

-24-

 

 

(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
3.14 Title
to Properties; Assets. The Company and
each of the Company Subsidiaries have good and valid fee simple
title to its owned properties and tangible assets or good and valid
leasehold interests in all of its leasehold properties and tangible
assets except for such 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 consistent with past practices. All 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. The equipment and
other tangible assets of the Company and the Company Subsidiaries
are in all material respects in good operating condition, normal
wear and tear and ordinary maintenance requirements
excepted.

 

Section
3.15 Real
Property. Section 3.15 of the Company
Disclosure Letter sets forth a list of all real property currently
owned or leased by the Company or any Company Subsidiaries. The
Company or one of the Company Subsidiaries has good and fee simple
title to all real property owned by the Company or any such Company
Subsidiary 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 Company Subsidiary as of the date
of this Agreement (including improvements thereon, the
“Company Leased Real
Property”). The Company Subsidiaries have exclusive
possession of each Company Leased Real Property and Company Owned
Real Property, other than any Permitted Liens and use and occupancy
rights granted to third-party owners, tenants, guests, hosts or
licensees pursuant to agreements with respect to such real
property.

 

Section
3.16 Regulatory
Matters.

 

(a) 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 Company Subsidiary by a Governmental Entity (the
“Company
Licenses”) that are required for the Company and each
Company Subsidiary to conduct its business, as presently conducted.
Section 3.16(a) of
the Company Disclosure Letter sets forth a list of all Company
Licenses, together with the name of the entity holding such Company
License. True correct and complete copies of each Company License
(including all modifications and amendments thereto and waivers
thereunder) have been made available to Parent.

 

 

-25-

 

 

(b) Each Company
License is valid and 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 jurisdictions,
or (ii) any pending proceeding by or before the FCC or State PSCs
to suspend, revoke or cancel such Company License, or any judicial
review of a decision by 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) Company License is
in compliance in all material respects with such Company License
and has fulfilled and performed all of its obligations with respect
thereto, including all reports, notifications and applications
required by the Communications Act of 1934, as amended (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 for 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 3.16(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”).

 

(e) Except as set forth
in Section 3.16(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.

 

 

-26-

 

 

(f) Except as set forth
in Section 3.16(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. Except as set forth in Section 3.16(f) 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.

 

(g) The Company or a
wholly-owned Subsidiary of the Company directly or indirectly owns
100% of the Equity Interests and controls 100% of the voting power
and decision-making authority of each holder 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
3.17 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
State PSC. The Company and any Company Subsidiary, as applicable,
that is a party to a Company Interconnection Agreement has
performed in all material respects all obligations required to be
performed by it under such Company Interconnection
Agreement.

 

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

 

(a) All Company Owned
Network Facilities and, to the knowledge of the Company, all
Company leased 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 industry, (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.

 

 

-27-

 

 

(b) The Company or a
Company Subsidiary owns, free and clear of all Liens (other than
Permitted Liens and Liens to be discharged at the 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
3.19 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
3.20 Application
of Takeover Laws. The Company and
the Stockholders 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
Parent or Merger Sub as a result of the Transactions, including the
conversion of Company Capital Stock pursuant to Section 1.5(a).

 

 

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Section
3.21 Affiliate
Transactions. 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 wholly-owned Subsidiaries of
the Company) or other Persons on the other hand.

 

Section
3.22 Customers and
Suppliers.

 

(a) Section 3.22(a) of the Company
Disclosure Letter sets forth (i) the top thirty customers of the
Company based on aggregate consideration paid to the Company for
each of the two (2) most recent fiscal years (collectively, the
“Material
Customers”); and (ii) the amount of consideration paid
by each Material Customer during such periods. Except as set forth
in Section 3.22(a)
of the Company Disclosure Letter, the Company has not received any
notice (in writing, including by e-mail to the Company’s
legal department, or otherwise in accordance with the terms of any
applicable contract with the Material Customer), that any of its
Material Customers has ceased, or intends to cease after the
Closing, to use its goods or services or to otherwise terminate or
materially reduce its relationship with the Company.

 

(b) Section 3.22(b) of the Company
Disclosure Letter sets forth (i) each supplier to whom the Company
has paid consideration for goods or services rendered in an amount
greater than or equal to $50,000 for each of the two (2) most
recent fiscal years (collectively, the “Material
Suppliers”); and (ii) the amount of purchases from
each Material Supplier during such periods. Except as set forth in
Section 3.22(b) of
the Company Disclosure Letter, the Company has not received any
notice (in writing, including by e-mail to the Company’s
legal department, or otherwise in accordance with the terms of any
applicable contract with the Material Supplier), that any of its
Material Suppliers has ceased, or intends to cease, to supply goods
or services to the Company or to otherwise terminate or materially
reduce its relationship with the Company.

 

Section
3.23 Directors,
Officers, Managers. Section 3.23 of the Company
Disclosure Letter sets forth a list of all officers, directors,
partners and/or managers of the Company and each Company Subsidiary
as of the date hereof.

 

Section
3.24 Books
and Records. The minute books
and stock record books of the Company and the Company Subsidiaries,
all of which have been made available to Parent, are complete and
correct and have been maintained in accordance with sound business
practices. The minute books of the Company and the Company
Subsidiaries contain accurate and complete records of all meetings,
and actions taken by written consent of, the stockholders, the
members, the board of directors, any committee of the board, or the
manager, as applicable, and no meeting, or action taken by written
consent, of any such stockholders, members, board, committee or
manager has been held for which minutes have not been prepared and
are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the
Company.

 

 

-29-

 

 

Section
3.25 Broker’s
Fees. None of the
Company, any Company Subsidiary or any of their respective officers
or directors has employed any broker or finder or incurred any
liability for any broker’s fees, commissions or
finder’s fees in connection with the Transactions, other than
as set forth on Section
3.25 of the Company Disclosure Letter. The Company has
heretofore provided to Parent a correct and complete copy of the
Company’s engagement letters with the entities set forth on
Section 3.25 of the
Company Disclosure Letter, which letters describe all fees payable
to the entities set forth on Section 3.25 of the Company
Disclosure Letter, in connection with the Transactions and all
Contracts under which any such fees or any expenses are payable and
all indemnification and other Contracts with the entities set forth
on Section 3.25 of
the Company Disclosure Letter, entered into in connection with the
Transactions.

 

ARTICLE
IV

REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB

 

Parent
and Merger Sub represent and warrant to the Company as
follows:

 

Section
4.1 Parent
Corporate Organization. Parent is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. Parent has the corporate
power and corporate 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 be so licensed or qualified would not
reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.

 

Section
4.2 Merger
Sub Corporate Organization. Merger Sub is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent. 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.

 

Section
4.3 Authority; No
Violation.

 

(a) Each of Parent and
Merger Sub 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 Parent and the sole stockholder of Merger Sub, and,
except for the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, no other corporate
proceedings on the part of Parent or Merger Sub are necessary to
authorize the consummation of the Transactions. This Agreement has
been duly and validly executed and delivered by Parent and Merger
Sub and, assuming this Agreement constitutes the valid and binding
agreement of the Company, this Agreement constitutes the valid and
binding agreement of Parent and Merger Sub, enforceable against
Parent and Merger Sub 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).

 

 

-30-

 

 

(b) None of the
execution and delivery of this Agreement by Parent or Merger Sub,
the consummation of the Transactions, nor compliance by Parent or
Merger Sub, as applicable, with any of the terms or provisions of
this Agreement, will (i) violate any provision of the Parent
Charter, the Parent Bylaws, the Merger Sub Charter or the Merger
Sub Bylaws or (ii) assuming that the consents, approvals and
filings referred to in Section 4.4 are duly obtained
and/or made, violate any Injunction or Law applicable to Parent,
Merger Sub, any of the Parent Subsidiaries or any of their
respective properties or assets.

 

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 Delaware pursuant to the DGCL, (b) the State
Approvals and (c) the FCC Approval, no consents or approvals of or
filings or registrations with any Governmental Entity are necessary
in connection with (i) the execution and delivery by Parent or
Merger Sub of this Agreement and (ii) the consummation by Parent
and Merger Sub, as applicable, of the Transactions except as would
not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.

 

Section
4.5 Financing.
Parent will have at the Effective Time access to immediately
available funds sufficient to pay the amounts required to be paid
by Parent hereunder and to pay all related fees and expenses to be
paid by Parent at the Closing. Parent’s and Merger
Sub’s obligations under this Agreement are not subject to any
condition regarding Parent’s or Merger Sub’s ability to
obtain financing to enable Parent to meet its obligations
hereunder.

 

Section
4.6 Legal
Proceedings.

 

(a) Neither Parent nor
any of the Parent Subsidiaries is a party to any, and there are no
pending or, to the knowledge of Parent, threatened, Actions,
against Parent or any Parent Subsidiary except as would not
reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.

 

(b) There is no
Injunction or judgment imposed upon Parent, any of the Parent
Subsidiaries or the assets of Parent or any Parent Subsidiary that
would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.

 

Section
4.7 SEC
Reports. No report on Form
10-K, Form 10-Q or Form 8-K (including exhibits and all other
information incorporated therein) filed by Parent with, or
furnished by Parent to, the SEC during the twenty-four month period
prior to the date hereof contained any untrue statement of material
fact or omitted any material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, in each case determined as of the date of such
filing or furnishing of such item.

 

Section
4.8 Parent
Common Stock. The shares of
Parent Common Stock to be issued to the Stockholders pursuant to
the terms of this Agreement have been duly authorized, and when
issued in accordance with the terms of this Agreement, will be duly
and validly issued, fully paid and non-assessable, will not be
issued in violation of the preemptive or similar rights of any
stockholder, and will be listed for trading on the principal stock
exchange on which the shares of common stock of Parent are traded
as of the date of this Agreement.

 

 

-31-

 

 

Section
4.9 Investment
Intent. Parent is
acquiring all of the shares of the Company Capital Stock for its
own account and not with a view to the distribution of those
interests within the meaning of Section 2(11) of the Securities
Act.

 

Section
4.10 Broker’s
Fees. None of Parent,
any Parent Subsidiary or any of their respective officers or
directors has employed any broker or finder or incurred any
liability for any broker’s fees, commissions or
finder’s fees in connection with the Merger.

 

ARTILCE
V

PRE-CLOSING
COVENANTS

 

Section
5.1 Conduct
of Businesses by the Company 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 or as Parent
may otherwise consent in writing (which consent will not be
unreasonably withheld, conditioned or delayed)), the Company will,
and will cause each of the Company Subsidiaries to use commercially
reasonable efforts to (a) conduct, in all material respects, its
business in the ordinary course, including the timely payment in
accordance with historical practice of all Taxes, accounts payable
and other liabilities, (b) preserve intact its business
organization and its significant business relationships and to
preserve satisfactory relationships with its employees, (c)
maintain insurance upon all of the material assets of the Company
in such amounts and of such kinds comparable to that in effect on
the date of this 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 set
forth on Section 5.2 of the Company Disclosure Letter or as
contemplated or permitted by this Agreement or as required by
applicable Law, the Company will not, and will not permit any of
the Company Subsidiaries to, without the prior written consent of
Parent (which consent will not be unreasonably withheld,
conditioned or delayed):

 

(a) incur any
Indebtedness;

 

(b)
(i) adjust, split,
combine or reclassify any of its capital stock;

 

(ii) 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 (other than from employees that have
ceased to be employed by the Company or a Company Subsidiary
pursuant to Contracts in effect on the date of this Agreement) 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 dividends paid by any of the Company
Subsidiaries to the Company or to any of its wholly owned
Subsidiaries; provided that nothing in this Agreement shall
restrict the Company from declaring and paying a cash dividend or
making a cash distribution to its stockholders prior to the Closing
Date; or

 

 

-32-

 

 

(iii) issue,
sell, grant or authorize the issuance, sale or grant of any shares
of Company Capital Stock or other ownership interest in the Company
or any Company Subsidiary or any securities convertible into or
exchangeable for any such shares or ownership interest, or any
rights, options, or warrants with respect to any such shares of
Company Capital Stock, ownership interests or convertible or
exchangeable securities;

 

(c) except as required
by Law or an agreement (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) increase any wages,
salaries, compensation, pension, or other fringe benefits or
perquisites payable to any director, executive officer or employee
other than ordinary course annual wage and salary increases for
employees (other than employees with a title of Vice President or a
title senior to Vice President) that do not increase the aggregate
amount of such wages and salaries for all such affected employees
by more than $125,000;

 

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

 

(iii) establish
any 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 other than pursuant to the 2017
Annual Bonus Plans in effect on the date of this Agreement;
or

 

(d) become a party to,
amend or commit itself to, any pension, retirement, profit-sharing
or welfare benefit plan or agreement or employment agreement with
or for the benefit of any employee of the Company or a Company
Subsidiary;

 

(e) sell, lease,
transfer or otherwise dispose of any of its material 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;

 

(f) compromise, settle
or agree to settle any Action in which damages are being sought
against the Company or any Company Subsidiary, other than
compromises, settlements or agreements in the ordinary course of
business consistent with past practice that (i) involve only the
payment of monetary damages not in excess of $50,000 individually
or $250,000 in the aggregate, and (ii) do not involve any
imposition of equitable relief on, or any admission of wrongdoing
or, in the context of any actual or potential violation of any
criminal Law, any nolo contendere or similar plea by, the Company
or any Company Subsidiaries;

 

 

-33-

 

 

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

 

(h) purchase or
otherwise acquire any real property;

 

(i) enter into or renew
any contract with a term greater than one year and annual payments
by the Company or any Company Subsidiary greater than
$250,000;

 

(j) 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 in the ordinary course of business or as
required by applicable Law;

 

(k) amend the Company
Charter or the Company Bylaws, except as otherwise required by
Law;

 

(l) except as required
by GAAP as concurred in by its independent auditors or in the
ordinary course of business, make any material change in its
methods or principles of accounting;

 

(m) except as required
by applicable Law, make, change or rescind any material 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;

 

(n) waive or amend in
any material respect any of its material rights under any Company
Material Contract;

 

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

 

(p) fail to maintain,
or allow to lapse or abandon, any material foreign or U.S.
registrations in connection with any Company Intellectual
Property;

 

(q) except as required
by Law, enter into or amend in any material respect any collective
bargaining agreement;

 

(r) 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;

 

 

-34-

 

 

(s) 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;

 

(t) terminate or permit
any material Permit of the Company 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;

 

(u) change recurring or
non-recurring rates, promotions, credit policies or collections
procedures, or sales incentives and commission plans for employees
of the Company or a Company Subsidiary or any other agent of the
Company or a Company Subsidiary;

 

(v) accelerate the
billing, collection or other realization of accounts receivable or
other sums payable to the Company or any of the Company
Subsidiary;

 

(w) fail to pay or
satisfy, or delay the payment or satisfaction of, any accounts
payable or other obligations;

 

(x) take any action
outside the ordinary course of business consistent with past
practices that would materially impact the Working Capital of the
Company and the Company Subsidiaries; or

 

(y) 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.

 

ARTICLE
VI

ADDITIONAL
AGREEMENTS

 

Section
6.1 Filings; Other
Actions; Notification.

 

(a) The Company, Parent
and Merger Sub will use their respective commercially reasonable
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, 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 Parent,
Merger Sub or the Company, or any of their respective Subsidiaries,
or to avoid any Action by any Governmental Entity, 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 ten (10)
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, (B) as
promptly as reasonably practicable, and in any event within seven
(7) 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 (C) 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 Parent 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.

 

 

-35-

 

 

(b) The Company will
give (or will cause the Company Subsidiaries to give) any notices
to third parties, and use, and cause the Company Subsidiaries to
use, their commercially reasonable efforts to obtain any third
party consents (i) required under the terms of any Company Material
Contract or Permit of the Company or any Company Subsidiary to
consummate the Transactions, or (ii) required to prevent a Company
Material Adverse Effect 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 Governmental Entity with
respect to the Transactions or filings contemplated by Section 6.1(a); and (v) use
commercially reasonable efforts to prevent the entry in any Action
brought by a Governmental Entity or any other Person of any
Injunction which would prohibit, make unlawful or delay the
consummation of the Transactions. Each Party hereto 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 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) Without limiting
the generality of the foregoing, each of Parent, Merger Sub and the
Company agrees to (and the Company will cause each Company
Subsidiary to) use commercially reasonable efforts to: (A) promptly
provide all information requested by any Governmental Entity in
connection with the Transactions; (B) obtain such approvals,
consents and clearances as may be necessary, proper or advisable
under any applicable Laws; (C) promptly provide all notifications
required by, and file all applications with, the FCC seeking the
consent of the FCC that are necessary or appropriate to consummate
the Transactions, including the FCC Approvals listed on
Section 6.1(d) of
the Company Disclosure Letter; and (D) promptly provide all
notifications and registrations required by, and file all
applications with, each applicable State PSC that are necessary or
appropriate to consummate the Transactions, including the State
Approvals listed on Section 6.1(d) of the Company
Disclosure Letter.

 

 

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Section
6.2 Written
Consent. Immediately
following the execution and delivery of this Agreement by the
Parties, the Company will, in accordance with the DGCL, the Company
Charter, the Company Bylaws and any applicable Contract to which
the Company is a party, use commercially reasonable efforts to seek
and obtain a written consent (the “Written Consent”)
approving all of the Transactions contemplated by this Agreement
and executed by the holders of at least 95% of the Company Capital
Stock, determined on an as-converted basis. If the duly executed
Written Consent executed by such holders of Company Capital Stock
is not delivered to Parent within two (2) Business Days following
the date of this Agreement, Parent will have the right to terminate
this Agreement pursuant to Section 8.1. In the event the
Written Consent is executed by the holders of a majority of the
outstanding shares of each class of Company Capital Stock but not
the requisite holders of Company Capital Stock described above and
Parent does not elect to terminate this Agreement, the Company will
comply with the DGCL, the Company Charter and the Company Bylaws in
connection with the Written Consent, including giving written
notice no later than ten days after the execution of the Written
Consent, in accordance with Section 228 of the DGCL, of the taking
of the actions described in the Written Consent to all other
holders of Company Capital Stock and providing a description of any
appraisal rights of holders of Company Capital Stock available
under Section 262 of the DGCL and providing all other information
and disclosures with respect to appraisal rights required by the
DGCL. The Company will provide a copy of such notice to Parent
prior to mailing such notice to holders of Company Capital Stock
for Parent’s reasonable review and comment.

 

Section
6.3 No Solicitation of
Other Bids.

 

(a) The Company shall
not, and shall not authorize or permit any of its Affiliates or any
of its or their Representatives to, directly or indirectly, (i)
encourage, solicit, initiate, facilitate or continue inquiries
regarding an Acquisition Proposal; (ii) enter into discussions or
negotiations with, or provide any information to, any Person
concerning a possible Acquisition Proposal; or (iii) enter into any
agreements or other instruments (whether or not binding) regarding
an Acquisition Proposal. The Company shall immediately cease and
cause to be terminated, and shall cause its Affiliates and all of
its and their Representatives to immediately cease and cause to be
terminated, all existing discussions or negotiations with any
Persons conducted heretofore with respect to, or that could lead
to, an Acquisition Proposal. For purposes hereof,
“Acquisition
Proposal” shall mean any inquiry, proposal or offer
from any Person (other than Parent or any of its Affiliates)
concerning (i) a merger, consolidation, liquidation,
recapitalization, share exchange or other business combination
transaction involving the Company; (ii) the issuance or acquisition
of shares of capital stock or other equity securities of the
Company; or (iii) the sale, lease, exchange or other disposition of
any significant portion of the Company’s properties or
assets.

 

(b) In addition to the
other obligations under this Section 6.3, the Company shall
promptly (and in any event within three (3) Business Days after
receipt thereof by the Company or its Representatives) advise
Parent orally and in writing of any Acquisition Proposal, any
request for information with respect to any Acquisition Proposal,
or any inquiry with respect to or which could reasonably be
expected to result in an Acquisition Proposal, the material terms
and conditions of such request, Acquisition Proposal or inquiry,
and the identity of the Person making the same.

 

 

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(c) The Company agrees
that the rights and remedies for noncompliance with this
Section 6.3 shall
include having such provision specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that
any such breach or threatened breach shall cause irreparable injury
to Parent and that money damages would not provide an adequate
remedy to Parent.

 

Section
6.4 Access to
Information.

 

(a) Upon reasonable
notice the Company will, and will cause each Company Subsidiary to,
afford to Parent and to the officers, employees, accountants,
counsel, lenders, financial advisors and other Representatives of
Parent reasonable access during normal business hours during the
period prior to the Effective Time to all the Company’s and
the Company Subsidiaries’ 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 Laws, properties, personnel, accountants, Tax
Return preparers and Tax advisors as Parent may reasonably request;
except that Parent and its Representatives will conduct any such
activities in such a manner as not to interfere unreasonably with
the business or operations of the Company and the Company
Subsidiaries; except further that the Company and the Company
Subsidiaries will not 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.
The foregoing notwithstanding, neither Parent nor any of its
Representatives shall contact any of the employees (other than the
senior officers identified by the Company to Parent), landlords,
customers or suppliers of the Company or its Subsidiaries without
the prior written consent of the Company, which consent shall not
be unreasonably withheld, conditioned or delayed; it being
acknowledged that any and all such contacts will be arranged by and
coordinated with the Company.

 

(b) All information and
materials provided pursuant to this Agreement will be subject to
the provisions of the Confidentiality Agreement entered into
between the Company and Parent as of April 11, 2017 (the
“Confidentiality
Agreement”). Notwithstanding anything to the contrary
set forth in this Agreement or in the Confidentiality Agreement,
Parent, the Parent Subsidiaries and their respective
Representatives may disclose information of the Company and the
Company Subsidiaries and their respective Affiliates to the Debt
Financing Sources and the Debt Financing Source Related Parties (in
each case, without any obligation on the part of the Debt Financing
Sources or the Debt Financing Source Related Parties to comply with
the terms of the Confidentiality Agreement) provided, that the Debt
Financing Sources are subject to confidentiality undertakings that
are at least as restrictive as those applicable to the Debt
Financing Sources under the Debt Engagement Letter or the
Definitive Debt Financing Agreements.

 

(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.

 

 

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Section
6.5 Employee
Matters.

 

(a) After the Closing
Date, Parent will provide, or will cause its Affiliates to provide,
each employee of the Company or any Company Subsidiary as of the
Closing Date (the “Company
Employees”) with such employee compensation and
benefits as Parent or the Company or the Company Subsidiary (as
applicable), in its sole discretion, considers to be appropriate,
provided that for six months following the Closing Date Parent will
not, and will cause the Surviving Corporation and each Company
Subsidiary to not, decrease the base salary of any Company Employee
in effect immediately prior to the Closing.

 

(b) Parent (i) will
give, and cause its Affiliates to give, each Company Employee
service credit granted by the Company prior to Closing under any
comparable Company Benefit Plan for all purposes (including
eligibility to participate, vesting in eligible benefits, 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 Company Employee service credit granted by the Company
prior to Closing under any comparable personnel policies (including
any severance policies) that cover such Company Employee after the
Closing Date, for purposes of entitlement to benefits thereunder,
(iii) will allow, and cause its Affiliates to allow, such Company
Employees to participate in each Company Benefit Plan providing
welfare benefits (including medical, life insurance, long-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 Company Employee with any expenses that
were covered by the Company Benefit Plans for purposes of
determining deductibles, co-pays and other applicable limits under
the Company Benefit Plan in which they participate and any similar
replacement plans.

 

(c) Parent will
continue, and cause its Affiliates to continue, to credit to each
Company Employee all vacation and personal holiday pay that the
Company Employee is entitled to use but has not used as of the
Closing Date (including any earned vacation or personal holiday pay
to be used in future years), subject to Parent’s vacation day
carryover policy.

 

(d) Nothing in this
Agreement will create any right or obligation which is enforceable
by any employee, former employee, Company 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’, Parent’s
and the Surviving Corporation’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, Parent or the Surviving
Corporation which are independent of the consummation of this
Agreement or any continuing obligations hereunder.

 

 

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Section
6.6 Advice
of Changes. Each of the
Company and Parent will promptly advise the other of any change or
event, of which it has knowledge, (a) having or reasonably likely
to have a Company Material Adverse Effect or a Parent 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 6.6 will not constitute
the failure of any condition set forth in Article VII to be satisfied
unless the underlying Company Material Adverse Effect, Parent
Material Adverse Effect or material breach would independently
result in the failure of a condition set forth in Article VII to be
satisfied.

 

Section
6.7 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 Parent, 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 6.7, the Company and
Parent 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
6.8 Control
of the Other Party’s Business. Nothing contained
in this Agreement will give Parent, 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 Parent
or its Subsidiaries prior to the Effective Time. Prior to the
Effective Time, each of Parent 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.

 

 

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Section
6.9 Subsidiary
Compliance. Parent will cause
Merger Sub to comply with and perform all of Merger Sub’s
obligations under or relating to this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement.
Merger Sub will not engage in any business which is not in
connection with the Merger

 

Section
6.10 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 the Parent and the Company. Following such initial press
release, none of the Company, Parent or Merger Sub will, and
neither the Company nor Parent 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 Parent, 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 Parent or Merger Sub; except that
either Party may, without the prior consent of the other Party (but
after prior consultation with the other Party 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 6.10 will not apply to
any release or public statement in connection with any dispute
between the Parties regarding this Agreement or the Transactions,
or limit the ability of any Party hereto 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
6.11 Takeover
Laws. If any Takeover
Law is or may become applicable to the Transactions, the Company
and Parent, including the Company Board and the board of directors
of Parent, 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
6.12 Indemnification of
Officers and Directors.

 

(a) All rights to
indemnification by the Company existing in favor of all current and
former directors and officers of the Company (the
“Covered
Persons”) for their acts and omissions occurring prior
to the Effective Time, as provided in the Company Charter and
Company Bylaws (as in effect as of the date of this Agreement) and
as provided in any indemnification agreements between the Company
and the Covered Persons (as in effect as of the date of this
Agreement) in the forms made available by the Company to Parent
prior to the date of this Agreement, shall survive the Merger and
shall be observed by the Surviving Corporation for a period of six
years from the Effective Time, and any claim made requesting
indemnification pursuant to such indemnification rights within such
six-year period shall continue to be subject to this Section 6.12(a) until
disposition of such claim.

 

 

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(b) In the event the
Company or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to
any Person, then, and in each such case, Parent shall ensure that
the successors and assigns of the Company or the Surviving
Corporation, as the case may be, or at Parent’s option,
Parent, shall assume the obligations set forth in this Section 6.12.

 

(c) Prior to the
Effective Time, the Company shall purchase, at its expense (which
shall constitute a Transaction Expense), in effect for six years
after the Effective Time, insurance “tail” or other
insurance policies with respect to directors’ and
officers’ liability insurance with respect to acts or
omissions existing or occurring at or prior to the Effective Time
in an amount and scope at least as favorable as the coverage
applicable to directors and officers as of immediately prior to the
Effective Time under the Company’s directors’ and
officers’ liability insurance policy (the “D&O Tail
Policy”). The Surviving Corporation shall maintain
such policy for its duration.

 

(d) The provisions of
this Section 6.12
shall survive the consummation of the Merger and are (i) intended
to be for the benefit of, and will be enforceable by, each of the
Covered Persons and their successors, assigns and heirs, and (ii)
in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Person may have by
contract or otherwise. This Section 6.12 may not be
amended, altered or repealed after the Effective Time without the
prior written consent of the affected Covered Persons

 

Section
6.13 Related
Party Agreements. Prior to Closing,
the Company will terminate all Contracts between the Company or any
Company Subsidiary, on the one hand, and any stockholder of the
Company or any of such stockholder’s respective Affiliates,
on the other hand

 

Section
6.14 Organizational
Integration. From the date of
this Agreement and until the Closing, the Parties shall work
together in good faith to develop effective plans for the
integration of the Company with the operations of Parent and its
subsidiaries (the “Integration
Plan”), which Integration Plan shall not be
implemented until Closing. Furthermore, the Integration Plan shall
be considered confidential information. Parent shall advise the
Company at least fifteen (15) days prior to Closing of any
employee(s) of Company and any Company Subsidiary who are not
included in the Integration Plan and who, therefore, will not be
retained following Closing. Nothing in the foregoing shall
guarantee any employee of the Company continued employment
following the Closing, and Parent reserves the right to make all
decisions affecting personnel of the Company form and after the
Closing.

 

 

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Section
6.15 Resignations.
The Company shall deliver to Parent written resignations, effective
as of the Closing Date, of the managers, officers and directors, as
applicable, of the Company and each Company Subsidiary set forth on
Section 6.15 of the
Company Disclosure Letter at least three (3) Business Days prior to
the Closing. The total severance costs associated with the
resignation or termination of the Chief Executive Officer and the
Chief Financial Officer and fifty percent (50%) of the severance
costs associated with any other employees of the Company who have a
change of control agreement and that are terminated within sixty
(60) days following the Closing (subject to a cap of $250,000)
shall constitute Transaction Expenses.

 

Section
6.16 Rule
144 Reporting. Parent will use
its commercially reasonable efforts to (i) file in a timely manner
all reports and other documents required to be filed by it under
the Securities Exchange Act and the rules and regulations adopted
by the SEC thereunder, and will, upon request of any holder of
Parent Common Stock following the expiration of the applicable Rule
144 holding period, use commercially reasonable efforts to cause
its transfer agent to remove restrictive legends from the
certificates evidencing such shares of Parent Common Stock,
including by providing such opinions of counsel as may be required
by the transfer agent.

 

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 at or prior to the Effective Time of the following
conditions:

 

(a) Written Consent. The Written
Consent will have been executed and delivered to Parent within the
time frame specified in Section 6.2.

 

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

 

(c) No Injunctions or Restraints;
Illegality. No Injunction preventing the consummation of the
Transactions will be in effect. No statute, rule, regulation,
Order, Injunction or decree will have been enacted, entered,
promulgated or enforced by any Governmental Entity that prohibits
or makes illegal consummation of the Merger.

 

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

 

 

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(a) Representations and Warranties.
The representations and warranties of the Company set forth in
Article III of this
Agreement (except for representations and warranties that are
Fundamental Representations will 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), provided 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 or
contained in any defined terms used in such representations and
warranties). The representations and warranties of the Company set
forth in Section
3.1(a), Section
3.1(c), Section
3.2, Section 3.3(a)
and (b)(i) and Section 3.20 (the
“Fundamental
Representations”) will 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. The Company will 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.

 

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

 

(d) FIRPTA Certificate. The Company
will have delivered to Parent 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 Parent and dated as of the Closing Date
(the “FIRPTA
Certificate”), along with written authorization for
Parent to deliver such FIRPTA Certificate to the IRS on behalf of
the Company following the Closing.

 

(e) Dissenting Shares. No more than
one percent (1.0%) of the Shares shall be Dissenting
Shares.

 

(f) Indebtedness.

 

(i) Parent will have
received payoff letters (the “Payoff
Letters”) reasonably acceptable to it from each
creditor of the Company and Company Subsidiaries to whom
Indebtedness is owed with respect to the payment of the
Indebtedness Payoff Amount and the release of all Liens related
thereto; and

 

(ii) Except
for the Indebtedness described in the Payoff Letters that is being
paid off at the Closing, the Company and the Company Subsidiaries
will have no Indebtedness;

 

(g) Closing Certificate. Parent
will have received a certificate signed on behalf of the Company by
the Chief Executive Officer of the Company certifying that the
conditions set forth in Section 7.2(a), Section 7.2(b), Section 7.2(c), Section 7.2(e) and Section 7.2(f)(ii) are
satisfied as of the Effective Time;

 

 

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

 

(a) Representations and Warranties.
The representations and warranties of Parent and Merger Sub set
forth in Article IV
of this Agreement will 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 Parent Material Adverse Effect at the
Closing Date (ignoring solely for purposes of this exception any
reference to Parent Material Adverse Effect or other materiality
qualifiers contained in such representations and warranties), and
the Company will have received a certificate signed on behalf of
Parent and Merger Sub by the President and Chief Operating Officer
of Parent to the foregoing effect.

 

(b) Performance of Obligations of
Parent. Parent and Merger Sub will have performed in all
material respects all covenants and agreements required to be
performed by them under this Agreement at or prior to the Closing
Date, and the Company will have received a certificate signed on
behalf of Parent and Merger Sub by the President and Chief
Operating Officer of Parent to such effect.

 

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 Parent duly authorized by each
of the Company Board and the board of directors of Parent,
respectively;

 

(b) by either of the
Company or Parent 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 condition set forth in Section 7.1(b) is 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 by the
mutual written agreement of Parent and the Company at or before
11:59 p.m. New York, New York time on the Outside Date; and except
that the right to terminate this Agreement under this Section 8.1(b) 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 the other
Party has filed (and is then pursuing) an action seeking specific
performance as permitted by Section 11.11;

 

 

-45-

 

 

(c) by either of the
Company or Parent by written notice to the other Party if any
Injunction having the effect set forth in Section 7.1(c) is in effect and
has become final and nonappealable; or

 

(d) by Parent as
described in Section
6.2.

 

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 and the provisions in Article X (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 Parent, Merger Sub, the Company 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 intentional breach by such Party of this Agreement prior to
such termination or (ii) impair the right of any Party to compel
specific performance by the Party terminating this Agreement of
such terminating Party’s obligations under this Agreement as
provided in Section
10.11 of this Agreement

 

ARTICLE
IX

INDEMNIFICATION

 

Section
9.1 Survival.
All representations and warranties in this Agreement shall expire
on the first anniversary of the Closing; provided, however, that (a) Fundamental
Representations shall survive for a period of two (2) years after
the Closing, and (b) the representations in Section 3.8 shall survive for
the full period of all applicable statutes of limitations (giving
effect to any waiver, mitigation or extension thereof) plus 60
days. All covenants and agreements of the Parties contained herein
shall survive the Closing for the applicable statute of limitations
or for the period explicitly specified therein. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by
notice from the Indemnified Party to the Indemnifying Party prior
to the expiration date of the applicable survival period shall not
thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until
finally resolved.

 

Section
9.2 Indemnification
By Stockholders and Optionholders. Subject to the
other terms and conditions of this Article IX, (i) each of the
Stockholders, severally and not jointly (in accordance with their
respective Individual Share Percentages), and (ii) each of the
Optionholders, severally and not jointly (in accordance with their
respective Individual Option Percentages), shall indemnify and
defend each of Parent and its Affiliates (including the Company)
and their respective Representatives (collectively, the
“Parent
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
the Parent Indemnitees based upon, arising out of, with respect to
or by reason of:

 

 

-46-

 

 

(a) any inaccuracy in
or breach of any of the representations or warranties of the
Company contained in this Agreement or in any certificate or
instrument delivered by or on behalf of the Company pursuant to
this Agreement as of the date such representation or warranty was
made or as if such representation or warranty was made on and as of
the Closing Date (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach
of which will be determined with reference to such specified date);
and

 

(b) any breach or
non-fulfillment of any covenant, agreement or obligation to be
performed by the Company pursuant to this Agreement.

 

Subject
to the foregoing, the Stockholders shall be liable for the Share
Percentage of, and the Optionholders shall be liable for the Option
Percentage of, the foregoing indemnification
obligations.

 

Section
9.3 Indemnification
By Parent. Subject to the
other terms and conditions of this Article IX, Parent shall
indemnify and defend each of the Stockholders and the Optionholders
and their Affiliates and their respective Representatives
(collectively, the “Stockholder
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
the Stockholder Indemnitees based upon, arising out of, with
respect to or by reason of:

 

(a) any inaccuracy in
or breach of any of the representations or warranties of Parent and
Merger Sub contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Parent or Merger Sub
pursuant to this Agreement, as of the date such representation or
warranty was made or as if such representation or warranty was made
on and as of the Closing Date (except for representations and
warranties that expressly relate to a specified date, the
inaccuracy in or breach of which will be determined with reference
to such specified date); or

 

(b) any breach or
non-fulfillment of any covenant, agreement or obligation to be
performed by Parent or Merger Sub pursuant to this
Agreement.

 

Section
9.4 Certain
Limitations. The
indemnification provided for in Section 9.2 and Section 9.3 shall be subject to
the following limitations:

 

(a) The Stockholders
and the Optionholders shall not be liable to the Parent Indemnitees
for indemnification under Section 9.2(a) until the aggregate amount
of all Losses in respect of indemnification under Section 9.2(a) exceeds $500,000
(the “Basket”), in which event the Stockholders and
Optionholders shall be required to pay or be liable for all such
Losses from the first dollar in accordance with the provisions, and
subject to the limitations, of this Agreement. Except for Losses
arising from a breach of a Fundamental Representations or a breach
of the representations and warranties set forth in Section 3.8, a claim by Parent
hereunder shall be limited to the amount of the remaining Escrow
Fund. Losses arising from a breach of the Fundamental
Representations and a breach of Sections 3.8, shall not be so
limited but the aggregate amount of all Losses for which any
Stockholder or Optionholder shall be liable pursuant to
Section 9.2 shall
not exceed the overall consideration received by such Stockholder
or Optionholder under this Agreement.

 

 

-47-

 

 

(b) Parent shall not be
liable to the Stockholder Indemnitees for indemnification under
Section 9.3(a)
until the aggregate amount of all Losses in respect of
indemnification under Section 9.3(a) exceeds the
Basket, in which event Parent shall be required to pay or be liable
for all such Losses from the first dollar. The aggregate amount of
all Losses for which Parent shall be liable pursuant to
Section 9.3(a)
shall not exceed $2,500,000.

 

(c) The amount of any
Loss subject to indemnification shall be calculated net of (a) any
Tax Benefit inuring to the Indemnified Party on account of such
Loss and (b) any insurance proceeds or any indemnity, contribution
or other similar payment recoverable by the Indemnified Party from
any third party with respect thereto. If the Indemnified Party
receives such insurance proceeds, contribution or similar payments
after being indemnified with respect to some or all of such Loss,
such Indemnified Party shall pay to the Indemnifying Party the
lesser of (i) the amount of such insurance proceeds or indemnity,
contribution or similar payment, less reasonable out-of-pocket
expenses incurred in connection with such recovery and (ii) the
aggregate amount paid to such Indemnified Party with respect to
such Loss. If the Indemnified Party receives a Tax Benefit after an
indemnification payment is made to it, the Indemnified Party shall
promptly pay to the Indemnifying Party the amount of such Tax
Benefit at such time or times as and to the extent that such Tax
Benefit is realized by the Indemnified Party. For purposes hereof,
“Tax
Benefit” shall mean any refund of Taxes paid or
reduction in the amount of Taxes which otherwise would have been
paid, in each case computed at the highest marginal tax rates
applicable to the recipient of such benefit. The Indemnified Party
shall seek full recovery under all insurance policies covering any
Loss to the same extent as it would if such Loss were not subject
to indemnification hereunder.

 

(d) Each Person
entitled to indemnification hereunder shall take all reasonable
steps to mitigate all losses, costs, expenses and damages after
becoming aware of any event which could reasonably be expected to
give rise to any losses, costs, expenses and damages that are
indemnifiable or recoverable hereunder or in connection
herewith.

 

(e) Notwithstanding the
fact that any Indemnified Party may have the right to assert claims
for indemnification under or in respect of more than one provision
of this Agreement in respect of any fact, event, condition or
circumstance, no Indemnified Party shall be entitled to recover the
amount of any Losses suffered by such Indemnified Party more than
once, regardless of whether such Losses may be as a result of a
breach of more than one representation, warranty or covenant.
Without limiting the generality of the foregoing, the Parent
Indemnitees shall have no right to indemnification hereunder with
respect to any Loss to the extent such Loss is included in the
calculation of the Indebtedness, Working Capital or Transaction
Expenses as finally determined hereunder.

 

 

-48-

 

 

(f) Parent and Merger
Sub acknowledge that the representations and warranties of the
Company contained herein constitute the sole and exclusive
representations and warranties of the Company, the Stockholders and
the Optionholders in connection with the transactions contemplated
hereby, and Parent and Merger Sub understand, acknowledge and agree
that all other representations and warranties of any kind or nature
expressed or implied (including any relating to the future or
historical financial condition, results of operations, assets or
liabilities of the Company, or the quality, quantity or condition
of the Company’s or its Subsidiaries’ assets) are
specifically disclaimed by the Company, the Stockholders and the
Optionholders. Except as expressly provided in this Agreement, the
Company, the Subsidiaries, the Stockholders and the Optionholders
do not make or provide, and Parent and Merger Sub hereby waive, any
warranty or representation, express or implied, as to the quality,
merchantability, as for a particular purpose, conformity to
samples, or condition of the Company’s and its
Subsidiaries’ assets or any part thereto.

 

(g) For purposes of
this Article IX,
any inaccuracy in or breach of any representation or warranty shall
be determined without regard to any materiality, Material Adverse
Effect or other similar qualification contained in or otherwise
applicable to such representation or warranty.

 

Section
9.5 Indemnification
Procedures. The Party making
a claim under this Article
IX is referred to as the “Indemnified
Party”, and the party against whom such claims are
asserted under this Article IX is referred to as
the “Indemnifying
Party”. For purposes of this Article IX, (i) if Parent (or
any other Parent Indemnitee) comprises the Indemnified Party, any
references to Indemnifying Party (except provisions relating to an
obligation to make payments) shall be deemed to refer to the
Stockholder Representative acting on behalf of the Stockholders and
Optionholders, and (ii) if Parent comprises the Indemnifying Party,
any references to the Indemnified Party (except provisions relating
to a right to receive payments) shall be deemed to refer to
Stockholder Representative acting on behalf of the Stockholders and
Optionholders. Any payment due to the Stockholders and
Optionholders as the Indemnified Party shall be distributed to the
Stockholder Representative, or upon written instruction of the
Stockholder Representative, the Payments Administrator for further
distribution to Stockholders and Optionholders in accordance with
this Agreement.

 

 

-49-

 

 

(a) Third Party Claims. If any
Indemnified Party receives notice of the assertion or commencement
of any Action made or brought by any Person who is not a party to
this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party
Claim”) against such Indemnified Party with respect to
which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall
give the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than thirty (30) calendar days
after receipt of such notice of such Third Party Claim. The failure
to give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or
defenses or is otherwise materially prejudiced by reason of such
failure. Such notice by the Indemnified Party shall describe the
Third Party Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated
amount, if reasonably practicable, of the Loss that has been or may
be sustained by the Indemnified Party. The Indemnifying Party shall
have the right to participate in, or by giving written notice to
the Indemnified Party, to assume the defense of any Third Party
Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, and the Indemnified Party
shall cooperate in good faith in such defense; provided, however, that if the
Indemnifying Party is a Stockholder, such Indemnifying Party shall
not have the right to defend or direct the defense of any such
Third Party Claim that (x) is asserted directly by or on behalf of
a Person that is a supplier or customer of the Company, or (y)
seeks an Injunction or other equitable relief against the
Indemnified Parties. In the event that the Indemnifying Party
assumes the defense of any Third Party Claim, subject to
Section 9.5(b), it
shall have the right to take such action as it deems necessary to
avoid, dispute, defend, appeal or make counterclaims pertaining to
any such Third Party Claim in the name and on behalf of the
Indemnified Party. The Indemnified Party shall have the right to
participate in the defense of any Third Party Claim with counsel
selected by it subject to the Indemnifying Party’s right to
control the defense thereof. The fees and disbursements of such
counsel shall be at the expense of the Indemnified Party;
provided,
however, that if in
the reasonable opinion of counsel to the Indemnified Party, (A)
there are legal defenses available to an Indemnified Party that are
different from or additional to those available to the Indemnifying
Party; or (B) there exists a conflict of interest between the
Indemnifying Party and the Indemnified Party that cannot be waived,
the Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel to the Indemnified Party in each jurisdiction
for which the Indemnified Party determines counsel is required. If
the Indemnifying Party elects not to compromise or defend such
Third Party Claim, fails to notify the Indemnified Party in writing
of its election to defend as provided in this Agreement within 30
days of its receipt of notice of such Third Party Claim, or fails
to diligently prosecute the defense of such Third Party Claim, the
Indemnified Party may defend such Third Party Claim, provided that
the Indemnified Party shall not settle such Third Party Claim
without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, delayed or conditioned.
The Stockholder Representative and Parent shall cooperate with each
other in all reasonable respects in connection with the defense of
any Third Party Claim, including making available records relating
to such Third Party Claim and furnishing, without expense (other
than reimbursement of actual out-of-pocket expenses) to the
defending party, management employees of the non-defending party as
may be reasonably necessary for the preparation of the defense of
such Third Party Claim.

 

 

-50-

 

 

(b) Settlement of Third Party
Claims. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not enter into settlement
of any Third Party Claim without the prior written consent of the
Indemnified Party, except as provided in this Section 9.5(b). If a firm offer
is made to settle a Third Party Claim and provides, in customary
form, for the unconditional release of each Indemnified Party from
all liabilities and obligations in connection with such Third Party
Claim and the Indemnifying Party desires to accept and agree to
such offer, the Indemnifying Party shall give written notice to
that effect to the Indemnified Party. If the Indemnified Party
fails to consent to such firm offer within ten (10) days after its
receipt of such notice, the Indemnified Party may continue to
contest or defend such Third Party Claim and in such event, the
maximum liability of the Indemnifying Party as to such Third Party
Claim shall not exceed the amount of such settlement offer. If the
Indemnified Party fails to consent to such firm offer and also
fails to assume defense of such Third Party Claim, the Indemnifying
Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the
Indemnified Party has assumed the defense pursuant to Section 9.5(a), it shall not
agree to any settlement without the written consent of the
Indemnifying Party (which consent shall not be unreasonably
withheld or delayed).

 

(c) Direct Claims. Any Action by an
Indemnified Party on account of a Loss which does not result from a
Third Party Claim (a “Direct
Claim”) shall be asserted by the Indemnified Party
giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than thirty (30) days after the
Indemnified Party becomes aware of such Direct Claim. The failure
to give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the
Loss that has been or may be sustained by the Indemnified Party.
The Indemnifying Party shall have thirty (30) days after its
receipt of such notice to respond in writing to such Direct Claim.
The Indemnified Party shall allow the Indemnifying Party and its
professional advisors to investigate the matter or circumstance
alleged to give rise to the Direct Claim, and whether and to what
extent any amount is payable in respect of the Direct Claim and the
Indemnified Party shall assist the Indemnifying Party’s
investigation by giving such information and assistance (including
access to the Company’s premises and personnel and the right
to examine and copy any accounts, documents or records) as the
Indemnifying Party or any of its professional advisors may
reasonably request. If the Indemnifying Party does not so respond
within such thirty (30) day period, the Indemnifying Party shall be
deemed to have rejected such claim, in which case the Indemnified
Party shall be free to pursue such remedies as may be available to
the Indemnified Party on the terms and subject to the provisions of
this Agreement.

 

 

-51-

 

 

Section
9.6 Payments; Escrow
Fund.

 

(a) Once a Loss is
agreed to by the Indemnifying Party or finally adjudicated to be
payable pursuant to this Article IX, the Indemnifying
Party shall satisfy its obligations within ten (10) Business Days
of such final, non-appealable adjudication by wire transfer of
immediately available funds. The Parties hereto agree that should
an Indemnifying Party not make full payment of any such obligations
within such ten (10) Business Day period, any amount payable shall
accrue interest from and including the date of agreement of the
Indemnifying Party or final, non-appealable adjudication to and
including the date such payment has been made at a rate per annum
equal to one and one half percent (1.5%) per month. Such interest
shall be calculated daily on the basis of a 365-day year and the
actual number of days elapsed

 

(b) Any Losses payable
to a Parent Indemnitee pursuant to this Article IX shall be satisfied:
(i) first from the Escrow Fund; and (ii) solely in the case of
Losses exceeding the amount in the Escrow Fund that arise from a
breach of a Fundamental Representation or a breach of Section 3.8, from (i) each of
the Stockholders, severally and not jointly (in accordance with
their respective Individual Share Percentages), and (ii) each of
the Optionholders, severally and not jointly (in accordance with
their respective Individual Option Percentages); provided, however, that such direct
indemnification obligations of any Stockholder or Optionholder
shall be satisfied first from any funds remaining in the Escrow
Fund that would otherwise be payable to such Stockholder or
Optionholder pursuant to Section 2.8, and any
indemnification obligations of a Stockholder or Optionholder in
excess of such funds shall be paid directly by such Stockholder or
Optionholder.

 

(c) If Parent or any of
its Affiliates or the Stockholder Representative receives notice
from any Governmental Entity of any proposed or actual audit,
examination, adjustment, claim, assessment or demand concerning the
Taxes of the Company or any or its Subsidiaries that are subject to
indemnification under Section 9.2(a), such Party
shall inform the other Party thereof within ten (10) Business Days
after receipt of such notice. No failure or delay in providing such
notice shall reduce or otherwise affect the obligations or
liabilities of any Party, except to the extent such failure or
delay adversely affects the recipient Party’s ability to
defend against any liability or claim with respect to such Taxes.
Any notice shall be accompanied by a copy of any written notice or
other document received from the applicable Governmental Entity
with respect to such matter. The Stockholder Representative shall
have the sole right to control, at the expense of the Stockholders
and the Optionholders, the contest of any audit, dispute or
administrative, judicial or other proceeding relating to such Taxes
of the Company or any of its Subsidiaries, provided that Parent
may, at its expense, participate in such contest. No such audit,
dispute or administrative, judicial or other proceeding may be
settled by the Stockholder Representative without Parent’s
prior written consent if such settlement would have an adverse
impact on Parent or any of its Affiliates, provided that such
consent shall not be unreasonably withheld, delayed or
conditioned.

 

 

-52-

 

 

Section
9.7 Tax
Treatment of Indemnification Payments. All
indemnification payments made under this Agreement shall be treated
by the Parties as an adjustment to the Merger Consideration for Tax
purposes, unless otherwise required by Law.

 

Section
9.8 Effect
of Investigation. The
representations, warranties and covenants of the Indemnifying
Party, and the Indemnified Party’s right to indemnification
with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified
Party (including by any of its Representatives) or by reason of the
fact that the Indemnified Party or any of its Representatives knew
or should have known that any such representation or warranty is,
was or might be inaccurate or by reason of the Indemnified
Party’s waiver of any condition set forth in Section 7.1 or Section 7.2, as the case may
be.

 

Section
9.9 Exclusive
Remedies. Subject to
Section 10.11 the
Parties acknowledge and agree that their sole and exclusive remedy
with respect to any and all claims (other than claims arising from
fraud, criminal activity or willful misconduct on the part of a
Party hereto in connection with the Transactions) for any breach of
any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this
Agreement, shall be pursuant to the indemnification provisions set
forth in this Article
IX. In furtherance of the foregoing, each Party hereby
waives, to the fullest extent permitted under Law, any and all
rights, claims and causes of action for any breach of any
representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this
Agreement it may have against the other Parties and their
Affiliates and each of their respective Representatives arising
under or based upon any Law, except pursuant to the indemnification
provisions set forth in this Article IX. Nothing in this
Section 9.9 shall
limit any Person’s right to seek and obtain any equitable
relief to which any Person shall be entitled or to seek any remedy
on account of any Party’s fraudulent, criminal or intentional
misconduct.

 

ARTICLE
X

GENERAL
PROVISIONS

 

Section
10.1 Notices.
All notices and other communications in connection with this
Agreement will be in writing and will be deemed given to a Party
when delivered personally, mailed by registered or certified mail
(return receipt requested) or delivered by an express courier at
the following addresses (or at such other address for a Party as
will be specified by like notice):

 

(a) if to the Company,
to:

 

MegaPath Holding
Corporation

6800
Koll Center Parkway, Suite 200

Pleasanton,
California 94566

Attention: Birch
Blair

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

 

Morgan,
Lewis & Bockius LLP

600
Anton Drive, Suite 1800

Costa
Mesa, CA 92626

Attention: Tim
Rupp, Esq.

Email:
timothy.rupp@morganlewis.com

 

 

-53-

 

 

(b) if to Parent,
Merger Sub or the Surviving Corporation, to:

 

Fusion
Connect, 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

 

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

 

Kelley
Drye & Warren, LLP

101
Park Avenue

New
York, New York 10171

Attention: Jack
Miles, Esq.

Email:
jmiles@kelleydrye.com

 

(c) if to the
Stockholders Representative, to:

 

Shareholder
Representative Services LLC

950
17th
Street, Suite 1400

Denver,
CO 80202

Attention:
Deals@srsacquiom.com

Facsimile: (303)
623-0294

Telephone: (303)
648-4085

 

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

 

Morgan,
Lewis & Bockius LLP

600
Anton Drive, Suite 1800

Costa
Mesa, CA 92626

Attention: Tim
Rupp

 

Section
10.2 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. The Company 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 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. In no event will the listing of any matter in the Company
Disclosure Letter be deemed or interpreted to expand the scope the
Company’s representations, warranties and/or covenants set
forth in this Agreement. All attachments to the Company Disclosure
Letter are incorporated by reference into the Company Disclosure
Letter. 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.

 

 

-54-

 

 

(b) 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
10.3 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
10.4 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
hereto and their respective successors and permitted assigns, any
rights or remedies hereunder; provided that the Debt
Financing Sources and the Debt Financing Source Related Parties
shall be third-party beneficiaries of, and shall be entitled to
rely on, the third sentence of Section 10.5, Sections 10.7, 10.8(b), 10.8(c) and 10.17 and this Section
10.4.

 

Section
10.5 Amendment.
Subject to compliance with applicable Law, this Agreement may be
amended prior to the Effective Time by the Company and Parent (on
behalf of itself and Merger Sub) and after the Effective Time by
the Stockholder Representative and Parent, by action taken or
authorized by the Stockholder Representative and by Parent,
provided that, after any approval of the Transactions by the
stockholders of the Company, 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 (i) to
correct manifest errors, (ii) in connection with settlements
entered into between Parent and the Stockholder Representative or
(iii) as otherwise contemplated by this Agreement. This Agreement
may not be amended except by an instrument in writing.
Notwithstanding anything to the contrary contained in this
Agreement, the proviso to Section 10.4, Sections 10.7, 10.8(b), 10.8(c) and 10.17 and this sentence (and
any provision of this Agreement to the extent that any amendment,
waiver or other modification of such provision would modify the
substance of any such Sections) may not be amended, waived or
otherwise modified in any manner that is adverse in any material
respect to any Debt Financing Source or any of its Debt Financing
Source Related Parties without the prior written consent of such
Debt Financing Source.

 

 

-55-

 

 

Section
10.6 Extension;
Waiver. At any time prior
to the Effective Time, the Company and Parent (on behalf of itself
and Merger Sub), by action taken or authorized by the Company Board
and the board of directors of Parent, 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
10.7 Governing
Law. This Agreement
will be governed by, and construed and enforced 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); provided that any action, suit,
claim, investigation, or proceeding of any kind whatsoever against
the Debt Financing Sources or any of the Debt Financing Source
Related Parties, including a counterclaim, cross-claim, or defense,
regardless of the legal theory under which such liability or
obligation may be sought to be imposed, whether sounding in
contract or tort, or whether at law or in equity, or otherwise
under any legal or equitable theory, that may be based upon,
arising out of or related to this Agreement or the negotiation,
execution or performance of this Agreement or the Transactions,
including any dispute relating to the Debt Financing, will be
governed by and construed in accordance with the internal Laws of
the State of New York applicable to agreements executed and
performed entirely within such State without regard to conflicts of
law principles of the State of New York or any other jurisdiction
that would cause the Laws of any jurisdiction other than the State
of New York to apply.

 

Section
10.8 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.

 

 

-56-

 

 

(b) Notwithstanding
anything to the contrary contained in this Agreement, each of the
Parties and the Stockholder Representative, on behalf of itself and
each of the Stockholders and Optionholders, irrevocably and
unconditionally submits, for itself and its property, to the
exclusive jurisdiction and venue of the United States federal court
located in, or if that court does not have subject matter
jurisdiction, in any New York state court located in, the Borough
of Manhattan in the City of New York, New York (together, the
“Debt Financing
Chosen Courts”), in any action or proceeding against
the Debt Financing Sources or any of the Debt Financing Source
Related Parties arising out of or relating to this Agreement or the
Transactions or for recognition or enforcement of any judgment
relating thereto, including any dispute relating to the Debt
Financing, and each of the Parties and the Stockholder
Representative, on behalf of itself and each of the Stockholders
and Optionholders, hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding against the
Debt Financing Sources or any of the Debt Financing Source Related
Parties, including any dispute relating to the Debt Financing,
except in the Debt Financing Chosen Courts, (ii) agrees that any
claim in respect of any such action or proceeding against the Debt
Financing Sources or any of the Debt Financing Source Related
Parties, including any dispute relating to the Debt Financing, may
be heard and determined in the Debt Financing 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 against the Debt Financing
Sources or any of the Debt Financing Source Related Parties,
including any dispute relating to the Debt Financing, in the Debt
Financing 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 against the
Debt Financing Sources or any of the Debt Financing Source Related
Parties, including any dispute relating to the Debt Financing, in
the Debt Financing Chosen Courts.

 

(c) EACH PARTY
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 LITIGATION AGAINST ANY DEBT FINANCING SOURCE OR ANY DEBT
FINANCING SOURCE RELATED PARTIES IN RESPECT OF THE DEBT FINANCING).
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 10.8(c).

 

 

-57-

 

 

Section
10.9 Fees
and Expenses. Except as
expressly provided in this Agreement, whether or not the Merger is
consummated, all fees and expenses incurred in connection with this
Agreement and the Transactions will be paid by the Party incurring
or required to incur such fees or expenses

 

Section
10.10 Assignment.
Neither this Agreement nor any rights, interest 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 Parent and Merger Sub may assign (a) its
rights, but not its obligations, hereunder to any person providing
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 and (b) its
rights and obligations to any Affiliate of Parent, 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 hereto and their respective permitted successors and
assigns.

 

Section
10.11 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 seek 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 hereto to
consummate the Merger) in the Chosen Courts without proof of
damages or otherwise, and that such explicit rights of specific
enforcement are an integral part of the Transactions and, without
such rights, neither the Company nor Parent 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. The
Parties hereto acknowledge and agree that any Party seeking an
Injunction or Injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement
will not be required to provide any bond or other security in
connection with any such Order or Injunction.

 

Section
10.12 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, 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.

 

Section
10.13 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.

 

 

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Section
10.14 Stockholder
Representative.

 

(a) By approving this
Agreement and the transactions contemplated hereby, by executing
and delivering a Letter of Transmittal, or by the acceptance of
consideration paid pursuant to this Agreement, each Stockholder and
Optionholder has irrevocably authorized and appointed the
Stockholder Representative as such Person’s representative
and attorney-in-fact to act on behalf of such Person with respect
to this Agreement, the Escrow Agreement and any other agreements
ancillary hereto and to take any and all actions and make any
decisions required or permitted to be taken by the Stockholder
Representative pursuant to this Agreement, the Escrow Agreement or
any other agreements ancillary hereto, including the exercise of
the power to:

 

(i) give and receive
notices and communications;

 

(ii) authorize
delivery to Parent of cash from the Escrow Fund in satisfaction of
claims for indemnification made by Parent pursuant to Article IX;

 

(iii) agree
to, negotiate, enter into settlements and compromises of, and
comply with orders or otherwise handle any other matters described
in Section
2.7;

 

(iv) agree
to, negotiate, enter into settlements and compromises of, and
comply with orders of courts with respect to claims for
indemnification made by Parent pursuant to pursuant to Article IX;

 

(v) litigate,
arbitrate, resolve, settle or compromise any claim for
indemnification pursuant to pursuant to Article IX;

 

(vi) execute
and deliver all documents necessary or desirable to carry out the
intent of this Agreement and any ancillary document (including the
Escrow Agreement and the Payments Agreement);

 

(vii) make
all elections or decisions contemplated by this Agreement and any
ancillary document (including the Escrow Agreement and the Payments
Agreement);

 

(viii) engage,
employ or appoint any agents or representatives (including
attorneys, accountants and consultants) to assist the Stockholder
Representative in complying with its duties and obligations;
and

 

(ix) take
all actions necessary or appropriate in the good faith judgment of
the Stockholder Representative for the accomplishment of the
foregoing.

 

 

-59-

 

 

Parent
shall be entitled to deal exclusively with the Stockholder
Representative on all matters relating to this Agreement (including
Article IX) (except
with respect to Parent’s collection of funds from the
Stockholders and Optionholders directly) and shall be entitled to
rely conclusively (without further evidence of any kind whatsoever)
on any document executed or purported to be executed on behalf of
any Stockholder or Optionholder by the Stockholder Representative,
and on any other action taken or purported to be taken on behalf of
any Stockholder or Optionholder by the Stockholder Representative,
as being fully binding upon such Person. After the Closing, notices
or communications to or from the Stockholder Representative shall
constitute notice to or from each of the Stockholders and
Optionholders. Any decision or action by the Stockholder
Representative hereunder, including any agreement between the
Stockholder Representative and Parent relating to the defense,
payment or settlement of any claims for indemnification hereunder,
shall constitute a decision or action of all Stockholders and
Optionholders and shall be final, binding and conclusive upon each
such Person. No Stockholder or Optionholder shall have the right to
object to, dissent from, protest or otherwise contest the same. The
provisions of this Section, including the power of attorney granted
hereby, are independent and severable, are irrevocable and coupled
with an interest and shall not be terminated by any act of any one
or more Stockholders or Optionholders, or by operation of Law,
whether by death or other event.

 

(b) The Stockholder
Representative may resign at any time upon twenty (20) days prior
written notice to Parent. The Stockholder Representative may be
removed for any reason or no reason by the vote or written consent
of the Stockholders who held a majority of the shares of the
Company Capital Stock immediately prior to the Effective Time (the
“Majority
Holders”); provided, however, in no event shall the
Stockholder Representative be removed without the Majority Holders
having first appointed a new Stockholder Representative who shall
assume such duties immediately upon the removal of the Stockholder
Representative. If the Stockholder Representative resigns, the
Majority Holders shall appoint a successor within twenty (20) days
of such notice of resignation. In the event of the death,
incapacity, resignation or removal of the Stockholder
Representative, a new Stockholder Representative shall be appointed
by the vote or written consent of the Majority Holders. Notice of
such vote or a copy of the written consent appointing such new
Stockholder Representative shall be sent to Parent, such
appointment to be effective upon the later of the date indicated in
such consent or the date such notice is received by Parent;
provided, that until such
notice is received, Parent, Merger Sub and the Surviving
Corporation shall be entitled to rely on the decisions and actions
of the prior Stockholder Representative as described in
Section 10.14(a)
above

 

 

-60-

 

 

(c) The Stockholder
Representative will incur no liability of any kind with respect to
any action or omission by the Stockholder Representative in
connection with its services pursuant to this Agreement and any
agreements ancillary hereto, except in the event of liability
directly resulting from the Stockholder Representative’s
gross negligence or willful misconduct. The Stockholder
Representative shall not be liable for any action or omission
pursuant to the advice of counsel. The Stockholders and
Optionholders will indemnify, defend and hold harmless the
Stockholder Representative from and against any and all losses,
liabilities, damages, claims, penalties, fines, forfeitures,
actions, fees, costs and expenses (including the fees and expenses
of counsel and experts and their staffs and all expense of document
location, duplication and shipment) (collectively,
“Representative
Losses”) arising out of or in connection with the
Stockholder Representative’s execution and performance of
this Agreement and any agreements ancillary hereto, in each case as
such Representative Loss is suffered or incurred; provided, that in the event that any
such Representative Loss is finally adjudicated to have been
directly caused by the gross negligence or willful misconduct of
the Stockholder Representative, the Stockholder Representative will
reimburse the Stockholders and Optionholders the amount of such
indemnified Representative Loss to the extent attributable to such
gross negligence or willful misconduct. If not paid directly to the
Stockholder Representative by the Stockholders and Optionholders,
any such Representative Losses may be recovered by the Stockholder
Representative from (i) the funds in the Holdback Account and (ii)
the amounts in the Escrow Fund at such time as any such remaining
amounts would otherwise be distributable to the Stockholders and
Optionholders; provided, that while this section allows the
Stockholder Representative to be paid from the aforementioned
sources of funds, this does not relieve the Stockholders and
Optionholders from their obligation to promptly pay such
Representative Losses as they are suffered or incurred, nor does it
prevent the Stockholder Representative from seeking any remedies
available to it at law or otherwise. In no event will the
Stockholder Representative be required to advance its own funds on
behalf of the Stockholders and Optionholders or otherwise.
Notwithstanding anything in this Agreement to the contrary, any
restrictions or limitations on liability or indemnity obligations
of the Stockholders or Optionholders set forth elsewhere in this
Agreement are not intended to be applicable to the indemnities
provided to the Stockholder Representative in this section. The
foregoing indemnities will survive the Closing, the resignation or
removal of the Stockholder Representative or the termination of
this Agreement.

 

Section
10.15 Tax
Matters.

 

(a) For the avoidance
of doubt, all legally permitted Tax deductions related to the
payment of Transaction Expenses or Indebtedness on the Closing Date
shall be attributable to the Pre-Closing Tax Period.

 

(b) The Stockholders
and the Optionholders shall be entitled to receive any refund of
Taxes (including refunds paid by credit against Taxes of Parent,
the Company or any Company Subsidiary) attributable to any
Pre-Closing Tax Period and any overpayment of estimated Pre-Closing
Taxes by the Company or any Company Subsidiary, plus any interest
on any such refund or credits received from the applicable Tax
authority. Parent shall, and shall cause the Company and the
Company Subsidiaries to, cooperate with the Stockholder
Representative in obtaining any such refunds or credits. Such
cooperation shall include (i) informing the Stockholder
Representative if and the extent that Parent becomes aware of the
availability of any such refund or credit, (ii) filing claims or
amended Tax returns at the request of the Stockholder
Representative to obtain any such refund or credit and (iii) paying
the amount of such credit or refund over to the Stockholder
Representative, or upon a written instruction of the Stockholder
Representative, to the Payments Administrator (for further
distribution to the Stockholders) or to the Surviving Corporation
(for further distribution to the Optionholders), as applicable, by
wire transfer within five (5) Business Days after the receipt
thereof.

 

 

-61-

 

 

(c) If Parent, any of
its Affiliates or any Stockholder receives notice from any
Governmental Entity of any proposed or actual audit, examination,
adjustment, claim, assessment or demand concerning the amount of
Taxes of the Company or any Company Subsidiary with respect to any
Pre-Closing Tax Period, such Party shall inform the other Party
thereof within ten (10) Business Days after receipt of such notice.
No failure or delay in providing such notice shall reduce or
otherwise affect the obligations or liabilities of any Party,
except to the extent such failure or delay adversely affects the
recipient Party’s ability to defend against any liability or
claim with respect to such Taxes. Any notice shall be accompanied
by a copy of any written notice or other document received from the
applicable Governmental Entity with respect to such
matter.

 

(d) The Stockholder
Representative shall have the sole right to control, at the expense
of the Stockholders and Optionholders, the contest of any audit,
dispute or administrative, judicial or other proceeding relating to
the Taxes of the Company or any Company Subsidiary for any
Pre-Closing Tax Period. If the Stockholder Representative elects to
control any such contest, Parent may, at its expense, participate
in such contest. No such audit, dispute or administrative, judicial
or other proceeding may be settled by the Stockholder
Representative without Parent’s prior written consent if such
settlement would have an adverse impact on Parent or any of its
Affiliates; provided, however, that no such consent
shall be unreasonably withheld, conditioned or
delayed.

 

(e) Parent shall
furnish or cause to be furnished to the Stockholder Representative,
upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to
the Company and the Company Subsidiaries as is reasonably requested
in connection with the filing of any Tax returns or for the
prosecution or defense of any Tax audit or claim. Parent shall, and
shall cause the Company and the Company Subsidiaries to, preserve
and keep all books and records with respect to Taxes and Tax
returns of the Company and the Company Subsidiaries until the
expiration of the applicable statute of limitations. Any
information obtained under this Section 10.15(e) shall be kept
confidential except (i) as required by applicable Law, (ii) as may
be otherwise necessary in connection with the filing of Tax Returns
or for the prosecution or defense of any Tax audit or claim or
(iii) with the consent of Parent; provided that the Stockholder
Representative may communicate such information to its advisors and
representatives and to the Stockholders and Optionholders, in each
case on a need-to-know basis.

 

Section
10.16 Definitions.
For the purposes of this Agreement:

 

“Accounting Fees” has the
meaning set forth in Section 2.7(b).

 

“Accounting Firm” has the
meaning set forth in Section 2.7(b).

 

“Accredited Investor” has
the meaning set forth for such term in Rule 501 of Regulation D
promulgated under the Securities Act.

 

“Acquisition Proposal” has
the meaning set forth in Section 6.3.

 

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

 

 

-62-

 

 

“Additional Indebtedness”
has the meaning set forth in Section 2.7(a).

 

“Additional Per Share Merger
Consideration” means the quotient of (a) the
Additional Merger Consideration, divided by (b) the Fully Diluted Share
Number.

 

“Additional Merger
Consideration” means the aggregate of all payments to
the Stockholders and Optionholders pursuant to Section 2.7.

 

“Additional Transaction
Expenses” has the meaning set forth in Section 2.7(a).

 

“Affidavit of Loss” has
the meaning set forth in Section 2.1(f).

 

“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.

 

“Basket” has the meaning
set forth in Section
9.4(a).

 

“Book-Entry Shares” has
the meaning set forth in Section 1.5(a).

 

“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
3.16(c).

 

“Certificate of Merger”
has the meaning set forth in Section 1.3.

 

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

 

“Chosen Courts” has the
meaning set forth in Section 10.8(a).

 

“Closing” has the meaning
set forth in Section
1.2.

 

“Closing Cash” means the
cash and cash equivalents of the Company and the Company
Subsidiaries, determined in accordance with GAAP, as of 11:59 p.m.
on the Closing Date (without giving effect to the
Transactions).

 

“Closing Cash Estimate”
has the meaning set forth in Section 2.5.

 

“Closing Cash Overage”
shall exist when (and shall be equal to the amount by which) the
Closing Cash exceeds the Closing Cash Estimate.

 

 

-63-

 

 

“Closing Cash Underage”
shall exist when (and shall be equal to the amount by which) the
Closing Cash Estimate exceeds the Closing Cash.

 

“Closing Date” has the
meaning set forth in Section 1.2.

 

“Closing Indebtedness”
means the Indebtedness of the Company and the Company subsidiaries
as of 11:59 p.m. on the Closing Date (without giving effect to the
Transactions).

 

“Closing Working Capital”
means the Working Capital as of 11:59 p.m. on the Closing Date
(without giving effect to the Transactions).

 

“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 3.16(c).

 

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

 

“Company Benefit Plans”
has the meaning set forth in Section 3.9(a).

 

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

 

“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).

 

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

 

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

 

“Company Commonly Controlled
Entity” has the meaning set forth in Section 3.9(d).

 

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

 

“Company Employees” has
the meaning set forth in Section 6.4(a).

 

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

 

“Company Intellectual
Property” has the meaning set forth in Section 3.13(a).

 

“Company Interconnection
Agreements” has the meaning set forth in Section 3.17.

 

“Company Leased Network
Facilities” means Network Facilities that are leased
by the Company or any Company Subsidiary.

 

“Company Leased Real
Property” has the meaning set forth in Section 3.15.

 

 

-64-

 

 

“Company Licenses” has the
meaning set forth in Section 3.16(a).

 

“Company Material Adverse
Effect” means any change, event, effect, occurrence,
state of facts or development that, individually or in the
aggregate, 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,
provided,
however, that in no
event would any of the following, alone or in combination, be
deemed to constitute, nor shall any of the following (including the
effect of any of the following) be taken into account in
determining whether there has been or will be, a “Company
Material Adverse Effect”: (a) changes, events, effects,
occurrences, states of facts or developments generally affecting
the United States economy; (b) changes in GAAP or Law or the
interpretation thereof; (c) changes, events, effects, occurrences,
states of facts or developments generally affecting the industries
in which the Company and the Subsidiaries operate in the
geographies in which they operate; (d) changes, events, effects,
occurrences, states of facts or developments arising from the
announcement of this Agreement; (e) changes, events, effects,
occurrences, states of facts or developments resulting from any
action or omission of the Company or any of the Company
Subsidiaries prior to the Closing Date contemplated by this
Agreement or taken with the prior written consent of Parent; and
(f) 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 (f), except, in the case of clauses (a), (b), and (c) to the extent
disproportionately affecting the Company and the Company
Subsidiaries when compared to other Persons operating in the same
industries.

 

“Company Network Facility
Agreement” has the meaning set forth in Section 3.18(c).

 

“Company Material
Contract” has the meaning set forth in Section 3.12(a).

 

“Company Owned Intellectual
Property” has the meaning set forth in Section 3.13(b).

 

“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 3.15.

 

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

 

“Company Proprietary
Software” means all Software owned or purported to be
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 Stock Option
Plan” means the MegaPath Holding Corporation 2015
Equity Incentive Plan, as amended.

 

 

-65-

 

 

“Company Subsidiary” has
the meaning set forth in Section 3.1(c).

 

“Confidentiality
Agreement” has the meaning set forth in Section 6.3(b).

 

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

 

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

 

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

 

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

 

“Current Assets” means, as
of any date of determination hereunder, the current assets of the
Company and the Company Subsidiaries, determined in accordance with
GAAP, excluding cash, cash equivalents and Tax receivables (other
than sales tax receivables).

 

“Current Liabilities”
means, as of any date of determination hereunder, the current
liabilities of the Company and the Company Subsidiaries determined
in accordance with GAAP excluding (i) Tax liabilities arising from
periods prior to January 1, 2018 and reserves associated therewith,
(ii) customer credit balances, (iii) Indebtedness and Transaction
Expenses, and (iv) a percentage of deferred revenue equal to the
lower of (x) 70% of the deferred revenue, and (y) 100% of the
deferred revenue minus the average recurring margin percentage
derived from the Company’s Financial Statements for the six
most recent calendar months ended prior to the date of this
Agreement.

 

“D&O Tail Policy” has
the meaning set forth in Section 6.11(c).

 

“Debt Engagement Letter”
means the Engagement Letter, dated February 13, 2018, among Parent,
Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and The
Bank of Tokyo-Mitsubishi UFJ, Ltd.

 

“Debt Financing” means any
debt financing by Parent or any of its Subsidiaries entered into or
incurred, or to be entered into or incurred, in connection with the
Transactions contemplated by this Agreement, including the debt
financing contemplated by the Definitive Debt Financing
Agreements.

 

“Debt Financing Chosen
Courts” has the meaning set forth in Section 10.8(b).

 

“Debt Financing Sources”
means the parties to the Debt Engagement Letter, the parties to the
Definitive Debt Financing Agreements and each other Person that has
committed to provide or otherwise entered into any commitment
letter, engagement letter, credit agreement, underwriting
agreement, purchase agreement, indenture or other agreement with
Parent or any of its Subsidiaries in connection with, or that is
otherwise acting as an arranger, bookrunner, underwriter, initial
purchaser, placement agent, administrative agent, trustee or a
similar representative in respect of, all or any part of the Debt
Financing.

 

 

-66-

 

 

“Debt Financing Source Related
Parties” means the Debt Financing Sources' respective
Affiliates and any of the Debt Financing Sources’ or their
respective Affiliates’ respective former, current or future
general or limited partners, shareholders, managers, members,
agents, officers, directors, employees, accountants, advisors, or
representatives or any of their respective successors or
assigns.

 

“Deficiency Amount” has
the meaning set forth in Section 2.7(d).

 

“Definitive Debt Financing
Agreements” means the First Lien Credit and Guaranty
Agreement, dated as of May 4, 2018, among Parent, certain of
Parent’s subsidiaries, Wilmington Trust, National
Association, as administrative agent and collateral agent, and the
lenders from time to time party thereto, and any other definitive
agreements with respect to any Debt Financing.

 

“DGCL” has the meaning set
forth in Section
1.1.

 

“Direct Claim” has the
meaning set forth in Section 9.5(c).

 

“Dissenting Shares” has
the meaning set forth in Section 2.4.

 

“Dissenting Stockholder”
has the meaning set forth in Section 2.4.

 

“Effective Time” has the
meaning set forth in Section 1.3.

 

“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.

 

“Escrow Agent” means
Citibank, N.A.

 

“Escrow Agreement” means
the escrow agreement to be entered into by Parent, the Stockholder
Representative and the Escrow Agent at the Closing, substantially
in the form of Exhibit
E.

 

“Escrow Amount” means $2.5
million in cash.

 

 

-67-

 

 

“Escrow Fund” has the
meaning set forth in Section 2.1(b).

 

“Estimated Working Capital
Overage” shall exist when (and shall be equal to the
amount by which) the Working Capital Estimate exceeds the Target
Working Capital Amount.

 

“Estimated Working Capital
Underage” shall exist when (and, subject to the
limitations set forth in Section 2.7(e), shall be equal
to the amount by which) the Target Working Capital Amount exceeds
the Working Capital Estimate.

 

“Excess Amount” has the
meaning set forth in Section 2.7(c).

 

“Exercise Price” means,
with respect to any Option, the applicable exercise price payable
to the Company by the Optionholder upon the exercise of such
Option.

 

“FCC” means the Federal
Communications Commission.

 

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

 

“FCC Rules” has the
meaning set forth in Section 3.16(c).

 

“Final Closing Cash
Overage” means the Closing Cash Overage as finally
agreed or determined in accordance with Section 2.7(b).

 

“Final Closing Cash
Underage” means the Closing Cash Underage as finally
agreed or determined in accordance with Section 2.7(b).

 

“Final Working Capital
Overage” means the Working Capital Overage as finally
agreed or determined in accordance with Section 2.7(b).

 

“Final Working Capital
Underage” means the Working Capital Underage as
finally agreed or determined in accordance with Section 2.7(b).

 

“FIRPTA Certificate” has
the meaning set forth in Section 7.2(d).

 

“Fully Diluted Share
Number” means (i) the aggregate number of Shares of
Company Common Stock issuable upon exercise of all Options that are
outstanding as of immediately prior to the Effective Time, plus
(ii) the aggregate number of shares of Company Capital Stock
outstanding as of immediately prior to the Effective
Time.

 

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

 

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

 

“Governmental Entity”
means any federal, state, provincial, 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.

 

 

-68-

 

 

“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.

 

“Holdback Account” has the
meaning set forth in Section 2.6(c).

 

“Holdback Amount” means
$850,000.

 

“Indebtedness” means, with
respect to any Person at any date, without duplication: (a) all
obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures or notes (other than
any surety bonds or similar instruments issued in the ordinary
course of business), (c) all obligations in respect of letters of
credit, to the extent drawn, and bankers’ acceptances issued
for the account of such Person, (d) any indebtedness guaranteed in
any manner by such Person (including guaranties in the form of an
agreement to repurchase or reimburse), (e) obligations of such
Person under or pursuant to any capital leases, (f) any liability
with respect to interest rate swaps, collars, caps and similar
hedging arrangements, (g) obligations for the deferred purchase
price of property or services (other than trade accounts payable
and accrued liabilities), and (h) any accrued and unpaid interest
related to any of the foregoing and prepayment premiums or
penalties related to any of the foregoing that are due or become
due as a result of the consummation of the Merger or the prepayment
of such Indebtedness; provided that in no event will
Indebtedness of any Party include Indebtedness of such Party owing
to any of its Subsidiaries or Indebtedness of any of its
Subsidiaries owing to it or any of its other
Subsidiaries.

 

“Indebtedness
Payoff Amount” means the aggregate amount of Indebtedness of
the Company and Company Subsidiaries as of the Effective Time as
evidenced by the Payoff Letters.

 

“Individual Option
Percentage” means, for any Optionholder, the
quotient (expressed
as a percentage) obtained by dividing (a) the aggregate number of
shares of Company Common Stock issuable upon exercise of all
Options held by such holder that are outstanding as of immediately
prior to the Effective Time, by (b) the aggregate number of shares
of Company Common Stock issuable upon exercise of all Options that
are outstanding as of immediately prior to the Effective
Time.

 

“Indemnified Party” has
the meaning set forth in Section 9.5.

 

“Indemnifying Party” has
the meaning set forth in Section 9.5.

 

“Individual Share
Percentage” means for any Stockholder, the
quotient (expressed
as a percentage) obtained by dividing (a) the aggregate number of
shares of Company Capital Stock held by such holder that are
outstanding immediately prior to the Effective Time, by (b) the
aggregate number of shares of Company Capital Stock that are
outstanding immediately prior to the Effective Time.

 

 

-69-

 

 

“Initial Merger
Consideration” means (a) $71.5 million (of which up to
$10.0 million may be paid by Parent in shares of Parent Common
Stock in accordance with Section 1.5(a)), plus (b) any Estimated Working Capital
Overage, plus (c) the
amount of the Closing Cash Estimate, plus (d) the aggregate amount of the
Exercise Prices all Options that are outstanding as of immediately
prior to the Effective Time, minus (e) the amount of Closing
Indebtedness, as determined prior to the Closing, minus (f) the Transaction Expenses
Payoff Amount, as determined prior to the Closing, minus (g) the Escrow Amount,
minus (h) the Holdback
Amount, and minus (i) any
Estimated Working Capital Underage.

 

“Initial Per Share Merger
Consideration” means the quotient of (a) the Initial
Merger Consideration, divided by (b) the Fully Diluted Share
Number.

 

“Injunction” has the
meaning set forth in Section 3.3(b).

 

“Integration Plan” has the
meaning set forth in Section 6.13.

 

“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 computer software
(including source and object code), firmware, development tools,
proprietary languages, algorithms, files, records, technical
drawings and related documentation, data and manuals, (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, (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).

 

“IRS” means the Internal
Revenue Service or any successor agency.

 

“knowledge of the Company”
means the actual knowledge of D. Craig Young, Dan Foster, Paul
Milley, Mike Perusse and Birch Blair after reasonable inquiry of
employees that ordinarily report directly to them.

 

 

-70-

 

 

“knowledge of Parent”
means the actual knowledge of Gordon Hutchins, Jr., Michael R.
Bauer and James P. Prenetta, Jr., after reasonable inquiry of
employees that ordinarily report directly to them.

 

“Law” means any federal,
state, 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.

 

“Letter of Transmittal”
has the meaning set forth in Section 2.1(a)(i).

 

“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.

 

“Losses” means losses,
damages, liabilities, deficiencies, Actions, judgments, interest,
awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of
enforcing any right to indemnification hereunder and the cost of
pursuing any insurance providers; provided, however, that
“Losses” shall not include damages calculated on
multiples of earnings or cash flow, lost profits, indirect damages,
consequential damages, incidental damages, exemplary damages or
punitive damages, except to the extent actually recovered from and
Indemnified Party pursuant to a Third Party Claim.

 

“Majority Holders” has the
meaning set forth in Section 10.14(b).

 

“Material Customer” has
the meaning set forth in Section 3.22(a).

 

“Material Supplier” has
the meaning set forth in Section 3.22(b).

 

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

 

“Merger Consideration”
means the aggregate consideration that the holders of Shares are
entitled to receive pursuant to the Merger and the terms of this
Agreement.

 

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

 

“Merger Sub Bylaws” means
the bylaws of Merger Sub.

 

“Merger Sub Charter” means
the articles of incorporation of Merger Sub.

 

“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.

 

 

-71-

 

 

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

 

“Notice of Disagreement”
has the meaning set forth in Section 2.7(b).

 

“Option” means any option
to purchase shares of Company Common Stock issued pursuant to the
Company Stock Option Plan and still outstanding immediately prior
to the Effective Time.

 

“Option Percentage” means
the quotient
(expressed as a percentage) obtained by dividing (a) the aggregate number of
shares of Company Common Stock issuable upon exercise of all
Options that are outstanding as of immediately prior to the
Effective Time by (b) the Fully Diluted Share Number.

 

“Optionholder” means a
holder of an Option.

 

“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 June
30, 2018, or if extended to a later date pursuant to and in
accordance with Section
8.1(b)(ii), any such later date.

 

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

 

“Parent Adjustment Amount”
means the sum of
(i) the Final Working Capital Underage, if any, plus (ii) the Final Closing Cash
Underage, if any, plus
(iii) the Additional Transaction Expenses, if any, plus (iv) the Additional Indebtedness,
if any.

 

“Parent Bylaws” means the
bylaws of Parent, as amended and restated.

 

“Parent Charter” means the
certificate of incorporation of Parent, as amended and
restated.

 

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

 

“Parent Material Adverse
Effect” means any change, event, development,
conditions, occurrence or effect that (a) has a material adverse
effect on the ability of either Parent or Merger Sub to consummate
the Transactions or perform their respective obligations under this
Agreement or (b) would prevent or materially delay the consummation
of the Transactions by Parent.

 

“Parent Subsidiary” has
the meaning set forth in Section 3.1(c).

 

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

 

“Payments Administrator”
means Acquiom Financial LLC, a Colorado limited liability
company.

 

 

-72-

 

 

“Payments Agreement” means
that certain Acquiom Payments Administration Agreement to be
entered into at or prior to Closing by and between the Stockholder
Representative and the Payments Administrator.

 

“Payoff Letter” has the
meaning set forth in Section 7.2(f).

 

“Pension Plans” has the
meaning set forth in Section 3.9(a).

 

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

 

“Permitted Lien” means (a)
Liens in respect of any liabilities and obligations reflected in
the Company Financial Statements, (b) with respect to the owned
real property and leased real property of the Company and the
Company Subsidiaries, (i) defects, exceptions, restrictions, rights
of way, easements, covenants, encroachments and other 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 Financial Statements, (d) 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 (e) Liens to be released
on or prior to the Closing Date.

 

“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.

 

“Pre-Closing Tax Period”
means any taxable period (or portion thereof) ending prior to or on
(and including) the Closing Date.

 

“Pre-Closing Taxes” means
all Taxes imposed on the Company and the Company Subsidiaries for
the Pre-Closing Tax Period other than the Uncollected Sales
Taxes.

 

 

-73-

 

 

“PSC Rules” has the
meaning set forth in Section 3.16(c).

 

“Regulatory Approvals” has
the meaning set forth in Section 7.1(a).

 

“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.

 

“Representative Losses”
has the meaning set forth in Section 10.14(c).

 

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

 

“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.

 

“SEC” means the U.S.
Securities and Exchange Commission.

 

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

 

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

 

“Share Percentage” means
the quotient
(expressed as a percentage) obtained by dividing (a) the aggregate number of
shares of Company Capital Stock that are outstanding as of
immediately prior to the Effective Time, by (b) the Fully Diluted
Share Number.

 

“Slamming” has the meaning
set forth in Section
3.16(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.

 

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

 

“Statement” has the
meaning set forth in Section 2.7(a).

 

“State PSCs” has the
meaning set forth in Section 3.16(a).

 

“State Telecommunications
Laws” has the meaning set forth in Section 3.16(c).

 

“Stockholder” means a
holder of a Share.

 

“Stockholder Adjustment
Amount” means (i) the Final Working Capital Overage,
if any, plus (ii) the Final
Closing Cash Overage, if any.

 

 

-74-

 

 

“Stockholder Payment
Account” has the meaning set forth in Section
2.1(a)(iii).

 

“Stockholder
Representative” has the meaning set forth in the
Preamble.

 

“Subsidiary” has the
meaning set forth in Section 3.1(c).

 

“Surviving Corporation”
has the meaning set forth in Section 1.1.

 

“Target Working Capital
Amount” means $0.00.

 

“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 Benefit” has the
meaning set forth in Section 9.4(c).

 

“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,
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.

 

“Telecommunications Act”
has the meaning set forth in Section 3.17.

 

“Third Party Claim” has
the meaning set forth in Section 9.5(a).

 

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

 

“Transaction Bonuses”
means any bonuses, success fees, change of control or other similar
payments paid or payable to any Person by the Company or any of its
Subsidiaries solely as a result of the Transactions.

 

 

-75-

 

 

“Transaction Expenses”
means, (a) any legal, accounting, financial advisory or other third
party advisory or consulting fees or expenses incurred by the
Company or any Company Subsidiaries (i) in connection with the
Transactions at or prior to the Closing or (ii) in connection with
the audit of the Company Financial Statements for the fiscal year
ended December 31, 2017, whether prior to or after the Closing, and
in each case which remain unpaid as of the Closing, including any
broker’s fees described in the engagement letters with the
entities set forth in Section 3.25 of the Company
Disclosure Letter, (b) the costs and expenses of the D&O Tail
Policy, (c) any Transaction Bonuses, (d) the severance costs
specified in Section
6.15.

 

“Transaction Expenses Payoff
Amount” means the aggregate amount of Transaction
Expenses that are unpaid as of the Effective Time as evidenced by
final invoices or other applicable documentation.

 

“Transaction Litigation”
has the meaning set forth in Section 6.6.

 

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

 

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

 

“Uncollected Sales Taxes”
means sales Taxes for which the corresponding receivables in
respect of such Taxes have not been collected from the customers of
the Company and the Company Subsidiaries prior to the Closing
Date.

 

“UNEs” has the meaning set
forth in Section
3.17.

 

“USF Programs” has the
meaning set forth in Section 3.16(c).

 

“Welfare Plans” has the
meaning set forth in Section 3.9(a).

 

“Working Capital” means,
at any date, all Current Assets minus all Current Liabilities as of
such date. An illustrative example of the calculation of Working
Capital as of December 31, 2017 is attached as Exhibit
F.

 

“Working Capital Estimate”
has the meaning set forth in Section 2.5.

 

“Working Capital Overage”
shall exist when (and shall be equal to the amount by which) the
Closing Working Capital exceeds the Working Capital
Estimate.

 

“Working Capital Underage”
shall exist when the Working Capital Estimate exceeds the Closing
Working Capital.

 

“Written Consent” has the
meaning set forth in Section 6.2.

 

 

-76-

 

 

Section
10.17 Liability
of Financing Source Parties. Without limiting
the rights of Parent under the Debt Financing Agreements,
notwithstanding anything to the contrary contained in this
Agreement, each Party hereto (in the case of the Stockholder
Representative, on behalf of itself and each of the Stockholders
and Optionholders) irrevocably agrees that none of the Debt
Financing Sources or the Debt Financing Source Related Parties
shall have any liability or obligation to the Parties, any
Stockholder, any Optionholder or any Affiliate of any of the
foregoing relating to this Agreement or the negotiation, execution
or performance of this Agreement or the Transactions, including any
dispute relating to the Debt Financing, whether sounding in
contract or tort, or whether at law or in equity, or otherwise
under any legal or equitable theory.

 

 

 

 [Remainder of Page Intentionally Left Blank]

 

 

 

 

-77-

 

 

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

 

MEGAPATH
HOLDING CORPORATION

 

By:
/s/ D. Craig
Young

Name:
D. Craig
Young

Title:
CEO

 

 

FUSION MPHC ACQUISITION CORP..

 

By:
/s/ James P. Prenetta,
Jr.

Name:
James P. Prenetta, Jr.

Title:
Executive Vice President and General Counsel

 

 

FUSION
TELECOMMUNICATIONS INTERNATIONAL, INC.

 

By:
/s/ James P. Prenetta,
Jr.

Name:
James P. Prenetta, Jr.

Title:
Executive Vice President and General Counsel

 

 

For the
purposes of Section
2.1, Section
2.7, Section
2.8, Article
IX and Section
10.14 only:

 

 

SHAREHOLDER REPRESENTATIVE SERVICES LLC,
solely in its capacity as the Stockholder
Representative

 

By:
/s/ Sam
Riffe

Name:
Sam
Riffe

Title:
Executive Director

 

 

[Signature page to Agreement and Plan of Merger]Blueprint

 

REGISTRATION RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and
entered into effective as of May 4, 2017, by and among Fusion
Connect, 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 I

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.

 

“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.

 

 

-1-

 

 

“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.

 

“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.

 

“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.

 

 

 

-2-

 

 

 

“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.

 

ARTICLE II

 

CLOSING
SHARES REGISTRATION STATEMENT;

 

Demand
and Piggyback Rights

 

Section
2.1 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

 

 

 

-3-

 

 

 

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.

 

Section
2.2 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.

 

 

 

-4-

 

 

 

Section
2.3 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.

 

Section
2.4 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
2.5 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.

 

 

 

-5-

 

 

 

Section
2.6 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) 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.

 

 

 

-6-

 

 

 

ARTICLE III

 

Notices,
Cutbacks and Other Matters

 

Section
3.1 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.

 

Section
3.2 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
3.3 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
3.4 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.

 

 

 

-7-

 

 

 

Section
3.5 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.

 

Section
3.6 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
3.7 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 IV

 

FACILITATING
REGISTRATIONS AND OFFERINGS

 

Section
4.1 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.

 

 

 

-8-

 

 

 

Section
4.2 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:

 

(a) 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;

 

 

 

-9-

 

 

 

(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;

 

(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
4.3 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
4.4 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
4.5 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.

 

 

 

-10-

 

 

 

(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
4.6 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;

 

 

 

-11-

 

 

 

(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;

 

(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

 

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

 

 

 

-12-

 

 

 

ARTICLE V

 

INDEMNIFICATION

 

Section
5.1 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
5.2 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.

 

 

 

-13-

 

 

 

Section
5.3 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.

 

 

 

-14-

 

 

 

Section
5.4 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.

 

ARTICLE VI

 

OTHER
AGREEMENTS

 

Section
6.1 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.

 

 

 

-15-

 

 

 

(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
6.2 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
6.3 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.

 

Section
6.4 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
6.5 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.

 

 

 

-16-

 

 

 

ARTICLE VII

 

MISCELLANEOUS

 

Section
7.1 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
Connect, Inc.

420
Lexington Avenue, Suite 17

New
York, New York 10170

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

Email:
jprenetta@fusionconnect.com

 

Section
7.2 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
7.3 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
7.4 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).

 

 

 

-17-

 

 

 

Section
7.5 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
7.6 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.

 

Section
7.7 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
7.8 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.

 

 

 

-18-

 

 

 

Section
7.9 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
7.10 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]

 

 

 

-19-

 

 

 

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

 

FUSION
CONNECT, INC.

 

 

By:
/s/ James P. Prenetta, Jr.
 

Name:
James P. Prenetta, Jr.

Title:
Executive Vice President and

          General
Counsel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page to Registration Rights Agreement]

 

 

 

-20-

 

 

 

BCHI
HOLDINGS, LLC

 

 

By:
/s/ Holcombe T. Green, Jr.
 

Name:
Holcombe T. Green, Jr.

Title:
Manager

 

Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page to Registration Rights Agreement]

 

 

-21-

 

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 Connect, 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]

 

 

 

-22-

 

 

 

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

 

STOCKHOLDER:

 

 

By:
_________________________

 

Name:

 

Title:

 

 

ADDRESS:

 

 

 

 

Date:

 

 

 

-23-

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