Document:

Exhibit 10.4

 

EMPLOYMENT
AGREEMENT

 

This Employment
Agreement (this “Agreement”) is made and entered into as of August 1, 2012 and shall be effective
August 3, 2012 (the “Effective Date”), by and between WVT Communications
Group (the “Company”) and Brian H. Callahan 
(“Executive”).

 

1.            Employment.

 

The Company hereby
agrees to employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and subject to the conditions
set forth in this Agreement.

 

2.            Term
of Employment.

 

(a)          The
period of Executive’s employment under this Agreement shall begin as of the Effective Date and shall continue until August
1, 2014 (the “Initial Term”), and shall be renewed automatically for successive one-year periods thereafter
(each, a “Renewal Period”), unless Executive or the Company gives written notice of nonrenewal to the other
at least sixty (60) days before the expiration of the Initial Term or any subsequent Renewal Period.

 

(b)          Notwithstanding
the foregoing, Executive’s employment may be terminated by the Company or by Executive at any time for any reason.

 

(c)          As
used in this Agreement, the term “Employment Term” refers to Executive’s period of employment from the
Effective Date until the date his employment terminates.

 

3.            Duties
and Responsibilities.

 

(a)          The
Company will employ Executive as its Executive Vice President, Chief Financial Officer. In such capacity, Executive shall perform
the customary duties and have the customary responsibilities of such positions and such other duties as may be assigned to Executive
from time to time by the Chief Executive Officer (the “CEO”) pursuant to the CEO’s properly delegated authority.
Executive will exercise his judgment in accordance with the highest ethical standards.

 

(b)          Executive
agrees to faithfully serve the Company, devote his full working time, attention and energies to the business of the Company, its
subsidiaries and affiliated entities, and perform the duties under this Agreement to the best of his abilities.

 

(c)          Executive
agrees (i) to comply with all applicable laws, rules and regulations; (ii) to comply with the Company’s rules, procedures,
policies, requirements, and directions; and (iii) not to engage in any other business or employment without the written consent
of the Company except as otherwise specifically provided herein.

 

(d)          Executive
acknowledges that he has received a copy of the Company’s Code of Ethics, that he has read the Code of Ethics and that this
Agreement does not supersede that policy.

 

    	 

    	 

    
 

4.            Compensation
and Benefits.

 

(a)          Base
Salary. During the Employment Term, the Company shall pay Executive a base salary at the annual rate of $205,000 per year or
such higher rate as may be determined annually by the Company (“Base Salary”). Such Base Salary, less applicable
withholdings, shall be paid in accordance with the Company’s standard payroll practice for executives.

 

(b)          Annual
Bonus. During the Employment Term, Executive will be eligible to receive an Annual Bonus each year, as determined in accordance
with the Applicable Plan approved by the Board (or Compensation Committee as the case may be) for Executive for such year. An example
of the Applicable Plan for 2012 is attached as Appendix A to this Agreement for illustration purposes only. Subsequent measurement
metrics will be determined by the Board (or Compensation Committee as the case may be) at their sole discretion for 2012 and each
subsequent year. The Board (or Compensation Committee as the case may be) has the right to change or eliminate the Applicable Plan
in its sole discretion at any time. The Annual Bonus to be paid to Executive in 2012 shall be based on the Company’s financial
performance in 2012, continuing in like progression with the Annual Bonus to be paid in any year based on the Company’s prior
year’s performance. Such Annual Bonus, less applicable withholdings, shall be paid within 2.5 months of the end of the taxable
fiscal year during which it was earned. Except as otherwise provided by Section 7, in order to be eligible to receive payment of
any portion of an Annual Bonus, Executive must be actively employed by the Company on the payment date. Notwithstanding the foregoing,
Executive acknowledges that whether any Annual Bonus is to be paid for a given year and the amount of that Annual Bonus is completely
at the discretion of the Board (or Compensation Committee as the case may be).

 

(c)          Incentive
Compensation. Executive shall be eligible to receive incentive compensation (“Incentive Compensation”) each
year, in accordance with the Applicable Plan approved by the Board (or Compensation Committee as the case may be) for Executive
for such year. The Incentive Compensation shall be in the form of equity-based awards (stock options and restricted stock of the
Company) under the Company’s incentive compensation plans. An example of the Applicable Plan for 2012 is attached as Appendix
A to this Agreement for illustration purposes only. Subsequent measurement metrics will be determined by the Board (or Compensation
Committee as the case may be) at their sole discretion for 2012 and each subsequent year. The Board (or Compensation Committee
as the case may be) has the right to change or eliminate the Applicable Plan in its sole discretion at any time. The Incentive
Compensation to be paid to Executive in 2012 shall be based on the Company’s financial performance in 2012, continuing in
like progression with the Incentive Compensation to be paid in any year based on the Company’s prior year performance. Such
Incentive Compensation shall be delivered to Executive within 2.5 months of the end of the taxable fiscal year during which it
was earned. Except as otherwise provided by Section 7, in order to be eligible to receive payment of any portion of the Incentive
Compensation, Executive must be actively employed by the Company on the payment date. Notwithstanding the foregoing, Executive
acknowledges that whether any Incentive Compensation is to be paid for a given year and the amount of that Incentive Compensation
is completely at the discretion of the Board (or Compensation Committee as the case may be).

 

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(d)          Benefit
Plans, Fringe Benefits and Vacation. Executive shall be eligible to participate in any 401(k) savings plan generally made available
by the Company to other executives in accordance with the eligibility requirements of such plans and subject to the terms and conditions
set forth in such plans, except for any pension benefit. Executive shall be eligible to participate in any health and welfare plans
made available to other executives, including, but not limited to, any medical and dental benefits plan, life insurance plan, short-term
and long-term disability plans, or other executive benefit or fringe benefit plan. Executive will also be eligible to receive at
least five (5) weeks of vacation per calendar year, accrued and earned on a daily basis, as well as other types of paid time-off
(e.g., holidays, personal days, absence due to illness, etc.) according to the Company’s vacation and paid time-off policy.

 

(e)          Expense
Reimbursement. The Company shall promptly reimburse Executive for the ordinary and necessary business expenses incurred by
Executive in the performance of the duties under this Agreement in accordance with the Company’s customary practices applicable
to executives, provided that such expenses are incurred and accounted for in accordance with the Company’s expense reimbursement
policy. Reimbursement shall be made as soon as administratively practicable following Executive’s submission of the necessary
documents and receipts required under the Company’s expense reimbursement policy, but in no event later than December 31st
of the calendar year following the calendar year in which the expense was incurred.

 

(f)          Concession.
Executive will be provided with paid PDA or mobile phone service for one electronic device, as well as concession Telephone and
Toll Service and Internet Service consistent with those benefits available to other executives.

 

(g)          Indemnification.
Executive will be covered by the Company’s standard Director’s and Officer’s Indemnification Agreement, providing
for indemnification consistent with the New York Business Corporation Law and the Company’s by-laws.

 

5.            Termination
of Employment.

 

Executive’s employment
may be terminated by the Company or by Executive at any time for any reason. Upon termination, Executive shall be entitled to receive
the compensation and benefits described in Section 7. Executive’s employment will terminate under the following conditions:

 

(a)           Death.
Executive’s employment shall terminate upon Executive’s death.

 

(b)          Total
Disability. The Company may terminate Executive’s employment upon his becoming Totally Disabled. For purposes of this
Agreement, Executive shall be “Totally Disabled” if Executive is physically or mentally incapacitated so as
to render Executive incapable of performing his usual and customary duties under this Agreement without reasonable accommodation.
Executive’s receipt of disability benefits under the Company’s long-term disability plan, if any, or receipt of Social
Security disability benefits shall be deemed conclusive evidence of Total Disability for purpose of this Agreement; provided, however,
that in the absence of Executive’s receipt of such long-term disability benefits or Social Security benefits, the Company
may, in its reasonable discretion (but based upon appropriate medical evidence), determine that Executive is Totally Disabled.

 

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(c)           Termination
by the Company for Cause.

 

		(i)	The Company may terminate Executive’s employment
for Cause at any time after providing written notice to Executive.

 

		(ii)	For purposes of this Agreement, the term “Cause”
shall mean any of the following: (A) conviction of a crime or a nolo contendere plea involving the alleged commission
by Executive of a felony or of a criminal act involving, in the good faith judgment and sole discretion of the Board, fraud, dishonesty,
or moral turpitude; (B) refusal or failure to perform employment duties reasonably requested by the Board after fifteen (15) days’
written notice by certified mail of such failure to perform, specifying that the failure constitutes cause (other than as a result
of vacation, sickness, illness or injury); (C) fraud or embezzlement as determined by the Board; (D) gross misconduct or gross
negligence in connection with the business of the Company or an affiliate which has a substantial adverse effect on the Company
or the affiliate; (E) breach of the terms of the confidentiality, non-solicitation and non-competition provisions of Section 9
or (F) job performance which, in the collective determination of the CEO, Chairman of the Board and Chairman of the Audit Committee,
consistently or significantly, fails to fulfill the duties and responsibilities contemplated by this Agreement, as generally described
in Section 3.

 

		(iii)	Regardless of whether Executive’s employment initially
was considered to be terminated for any reason other than Cause, Executive’s employment will be considered to have been
terminated for Cause for purposes of this Agreement if the Board subsequently determines that Executive engaged in an act constituting
Cause during the Employment Period or Executive breached the terms of the terms of the confidentiality, non-solicitation and non-competition
provisions of Section 9 after his termination.

 

(d)          Termination
by the Company Without Cause. The Company may terminate Executive’s employment at any time under this Agreement without
Cause after providing written notice to Executive.

 

(e)          Termination
by Executive. Executive may terminate his employment under this Agreement after providing thirty (30) days’ written notice
to the Company.

 

(f)          Expiration
of Initial Term or Renewal Period. In the event that either party gives written notice of non-renewal of the Initial Term or
a Renewal Period, as applicable, pursuant to Section 2, Executive’s employment shall terminate upon the expiration of the
Initial Term or Renewal Period.

 

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6.             Return
of Property and Information.

 

Executive agrees that
when his employment with the Company ends, he will immediately return to the Company all property, data, information and knowledge
which are in his possession or under his control, including without limitation all documents, forms, correspondence, financial
records and forecasts, operation manuals, notebooks, reports, proposals, computer programs, software, software documentation, employee
handbooks, supervisor’s manuals, lists of clients and referral sources, client data, and all copies thereof, relating in
any way to the business of the Company, whether relating to the Company directly or to a client of the Company, made or obtained
by Executive during his employment with the Company, whether or not such data, information, or knowledge constitute confidential
or trade secret information.

 

7.            Compensation
Following Termination of Employment.

 

(a)          Termination
for Any Reason. Upon termination of Executive’s employment for any reason under this Agreement, Executive (or his designated
beneficiary or estate, as the case may be) shall be entitled to receive the following compensation:

 

		(i)	Earned but Unpaid Compensation. The Company shall
pay Executive any accrued but unpaid Base Salary for services rendered through the date of termination, any appropriately documented
and accrued but unpaid expenses required to be reimbursed under this Agreement, and any unused vacation accrued to the date of
termination.

 

		(ii)	Other Compensation and Benefits. Except as may
be provided under this Agreement, any benefits to which Executive may be entitled through the date of Executive’s termination
pursuant to the plans, policies and arrangements referred to in Section 4(d) shall be determined and paid in accordance with the
terms of such plans, policies and arrangements, and except as otherwise provided by this Agreement, Executive shall have no right
to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to future periods
after such termination or resignation.

 

(b)          Termination
by the Company Without Cause not in Connection With a Change in Control. In the event Executive’s employment is terminated
without Cause before a Change in Control (as defined by Section 7(c)(iii)) or more than twenty-four (24) months after a Change
in Control, if Executive executes the Release and Waiver required by Section 8 and such Release and Waiver is not revoked on or
before the expiration of the revocation period thereof, and Executive has complied with the return of property and information
provision set forth in Section 6, then in addition to the payments to be made pursuant to Section 7(a), the Company shall also:

 

		(i)	Severance Pay. Pay to Executive severance pay
in an amount equal to 100% of his Base Salary in effect as of the date of his termination of employment. Payment of such Severance
Pay shall be made in a lump sum as soon as administratively practicable after the date of Executive’s termination (or if
required by Section 409A, on the six (6) month anniversary of his termination), but no later than ninety (90) days thereafter,
and not before the expiration of the revocation period for the Release and Waiver.

 

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		(ii)	Annual Bonus. Pay to Executive the target amount
of the Annual Bonus under the Applicable Plan for the year in which the termination of Executive’s employment occurs. Payment
of such Annual Bonus shall be made in a lump sum as soon as administratively practicable after the date of Executive’s termination
(or if required by Section 409A, on the six (6) month anniversary of his termination), but no later than ninety (90) days thereafter,
and not before the expiration of the revocation period for the Release and Waiver.

 

		(iii)	Benefits Continuation. Continue to provide Executive
and his family for the one-year period following Executive’s termination with the health and welfare benefits, including,
but not limited to, benefits under any medical and dental benefits plan, life insurance plan, short-term and long-term disability
plans, or other executive benefit or fringe benefit plan, which Executive and his family were receiving as of the date of Executive’s
termination. The Company shall provide such benefits at the same cost to Executive as the cost, if any, charged to Executive for
those benefits at the time of his termination. To the extent that the provision of such benefits at the Company’s expense
during the six (6) month period following Executive’s termination would violate the requirements of Section 409A, then Executive
shall be required to pay to the Company the Company portion of the cost of such benefits during such six (6) month period, and
the Company shall reimburse Executive for the amounts so paid by Executive on the six (6) month anniversary of his termination,
or as soon as administratively practicable thereafter, but no later than ninety (90) days thereafter.

 

(c)           Termination
by the Company Without Cause or by Executive for Good Reason in Connection With a Change in Control.

 

		(i)	In the event Executive’s employment is terminated
by the Company without Cause, or by Executive for Good Reason, within the twenty-four (24) month period following a Change in
Control, if Executive executes the Release and Waiver required by Section 8 and such Release and Waiver is not revoked on or before
the expiration of the revocation period thereof, and Executive has complied with the return of property and information provision
set forth in Section 6, then in addition to the payments to be made pursuant to 7(a), but subject to Section 7(c)(iv), the Company
shall also:

 

		(A)	Severance Pay. Pay to Executive severance pay
in an amount equal to 150% of his Base Salary at its highest level in effect from the date of the Change in Control through
his termination of employment. Payment of such Severance Pay shall be made in a lump sum as soon as administratively practicable
after the date of Executive’s termination (or if required by Section 409A, on the six (6) month anniversary of his termination),
but no later than ninety (90) days thereafter, and not before the expiration of the revocation period for the Release and Waiver.

 

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		(B)	Annual Bonus. Pay to Executive 150% of the target
amount of the Annual Bonus under the Applicable Plan for the year in which the termination of Executive’s employment occurs.
Payment of such Annual Bonus shall be made in a lump sum as soon as administratively practicable after the date of Executive’s
termination (or if required by Section 409A, on the six (6) month anniversary of his termination), but no later than ninety (90)
days thereafter, and not before the expiration of the revocation period for the Release and Waiver.

 

		(C)	Equity Vesting Acceleration. Accelerate the vesting
of and the lapsing of restrictions on any unvested or restricted equity compensation (e.g., stock options, restricted stock, etc.).

 

		(D)	Benefits Continuation. Continue to provide Executive
and his family for the one-year period following Executive’s termination with the health and welfare benefits, including,
but not limited to, benefits under any medical and dental benefits plan, life insurance plan, short- term and long-term disability
plans, or other executive benefit or fringe benefit plan, which Executive and his family were receiving as of the date of Executive’s
termination. The Company shall provide such benefits at the same cost to Executive as the cost, if any, charged to Executive for
those benefits at the time of his termination. To the extent that the provision of such benefits at the Company’s expense
during the six (6) month period following Executive’s termination would violate the requirements of Section 409A, then Executive
shall be required to pay to the Company the Company portion of the cost of such benefits during such six (6) month period, and
the Company shall reimburse Executive for the amounts so paid by Executive on the six (6) month anniversary of his termination,
or as soon as administratively practicable thereafter, but no later than ninety (90) days thereafter.

 

(ii)         “Good
Reason.” For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any
of the following in connection with a Change in Control, without Executive’s express written consent: (A) the assignment
of duties to Executive materially inconsistent with Executive’s current authorities, duties, responsibilities and status;
(B) any reduction in Executive’s title, position, or reporting lines; (C) the relocation of Executive to an office or location
more than seventy-five (75) miles from the office or location of Executive’s work as of the date of the Change in Control;
(D) requiring Executive to travel on Company business to a substantially greater extent than required as of the date of the Change
in Control; or (E) the reduction in Executive’s Base Salary as in effect on the date of the Change in Control.

 

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(iii)          “Change
in Control.” For purposes of this Agreement, the term “Change in Control” shall mean the happening
of any of the following:

 

(A)         Any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (a “Person”) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more of either (1) the then outstanding common shares of the Company (the “Outstanding
Company Common Shares”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however,
that such beneficial ownership shall not constitute a Change in Control if it occurs as a result of any of the following acquisitions
of securities: (I) any acquisition directly from the Company, (II) any acquisition by the Company or any corporation, partnership,
trust or other entity controlled by the Company (a “Subsidiary”), (III) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (IV) any acquisition by an underwriter temporarily
holding Company securities pursuant to an offering of such securities, (V) any acquisition by an individual, entity or group that
is permitted to, and actually does, report its beneficial ownership on Schedule 13-G (or any successor schedule); provided that,
if any such individual, entity or group subsequently becomes required to or does report its beneficial ownership on Schedule 13D
(or any successor schedule), then, for purposes of this paragraph, such individual, entity or group shall be deemed to have first
acquired, on the first date on which such individual, entity or group becomes required to or does so report, beneficial ownership
of all of the Outstanding Company Common Stock and Outstanding Company Voting Securities beneficially owned by it on such date,
or (VI) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (I ), (2) and (3) of Section 7(c)(iii)(C) are satisfied. Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”)
became the beneficial owner of 25% or more of the Outstanding Company Common Shares or Outstanding Company Voting Securities as
a result of the acquisition of Outstanding Company Common Shares or Outstanding Company Voting Securities by the Company which,
by reducing the number of Outstanding Company Common Shares or Outstanding Company Voting Securities, increases the proportional
number of shares beneficially owned by the Subject Person; provided, that if a Change in Control would be deemed to have occurred
(but for the operation of this sentence) as a result of the acquisition of Outstanding Company Common Shares or Outstanding Company
Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the beneficial owner
of any additional Outstanding Company Common Shares or Outstanding Company Voting Securities which increases the percentage of
the Outstanding Company Common Shares or Outstanding Company Voting Securities beneficially owned by the Subject Person, then a
Change in Control shall then be deemed to have occurred; or

 

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(B)         Individuals
who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation;
or

 

(C)         The
consummation of a reorganization, merger, statutory share exchange, consolidation, or similar corporate transaction involving the
Company or any of its direct or indirect Subsidiaries (each a “Business Combination”) in each case, unless,
following such Business Combination, (1) the Outstanding Company Common Shares and the Outstanding Company Voting Securities immediately
prior to such Business Combination, continue to represent (either by remaining outstanding or being converted into voting securities
of the resulting or surviving entity or any parent thereof) more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from Business Combination (including, without limitation, a corporation that, as a result
of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one
or more subsidiaries), (2) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company, a Subsidiary
or such corporation resulting from such Business Combination or any parent or a subsidiary thereof, and any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 25% or more of the Outstanding
Company Common Shares or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly,
25% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination
(or any parent thereof) or the combined voting power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors, and (3) at least a majority of the members of the board of directors of the corporation
resulting from such Business Combination (or any parent thereof) were members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing for such Business Combination; or

 

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(D)         The
consummation of the sale, lease, exchange or other disposition of all or substantially all of the assets of the Company, unless
such assets have been sold, leased, exchanged or disposed of to a corporation with respect to which following such sale, lease,
exchange or other disposition (1) more than 50% of, respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such corporation (or any parent thereof) entitled to
vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Shares and Outstanding
Company Voting Securities immediately prior to such sale, lease, exchange or other disposition in substantially the same proportions
as their ownership immediately prior to such sale, lease, exchange or other disposition of such Outstanding Company Common Shares
and Outstanding Company Voting Shares, as the case may be, (2) no Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or a Subsidiary of such corporation or a subsidiary thereof and any Person beneficially owning, immediately
prior to such sale, lease, exchange or other disposition, directly or indirectly, 25% or more of the Outstanding Company Common
Shares or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of such corporation (or any parent thereof) and the combined voting power
of the then outstanding voting securities of such corporation (or any parent thereof) entitled to vote generally in the election
of directors, and (3) at least a majority of the members of the board of directors of such corporation (or any parent thereof)
were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for
such sale, lease, exchange or other disposition of assets of the Company; or

 

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(E)         Approval
by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

(iv)         Potential
Section 280G Adjustment. In the event that any amount or benefit to be paid or provided to Executive pursuant to Section 7(c)(i),
taken together with any amounts or benefits otherwise paid or provided to Executive by the Company or any affiliated company (collectively,
the “Covered Payments”), would be an “excess parachute payment,” as defined in Section 280G
of the Internal Revenue Code and the related Treasury Regulations and other guidance issued thereunder, and would thereby subject
Executive to the tax imposed under Section 4999 of the Internal Revenue Code (the “Excise Tax”), then the Company
shall either (A) make the Covered Payment to Executive without adjustment and subject to the Excise Tax, or (B) reduce the Covered
Payments to the maximum amount that may be paid without Executive becoming subject to the Excise Tax (such reduced amount, the
“Payment Cap”), whichever provides the greater net after-tax benefit to Executive. In the event that the reduction
of the Covered Payments will provide Executive with the greater net after-tax benefit, Executive shall have the right to designate
which of the payments and benefits otherwise provided for in Section 7(c)(i) that he will receive in connection with the application
of the Payment Cap.

 

(d)          Termination
of Employment. For purposes of this Section 7, the term “termination of employment” and words of similar
import shall mean a “separation from service” as defined by Section 409A, and this Section 7 shall be interpreted
and administered consistent with such definition.

 

(e)          No
Mitigation; No Set-Off Against Severance Benefits. Executive shall not be required to mitigate damages or the amount of any
payment or benefits provided for under Section 7 by seeking other employment or otherwise, nor shall the amount of any payment
or benefits provided for in Section 7 be reduced by any compensation earned by Executive as a result of employment by another employer
after the date of termination of Executive’s employment with the Company, except as otherwise provided by the confidentiality,
non-solicitation and non-competition provisions of Section 9. In addition, the Company’s obligations under this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have
against Executive.

 

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8.            Release
and Waiver.

 

(a)          In
exchange for the additional consideration under Section 7 to which Executive would not otherwise be entitled, Executive shall generally
and completely release the Company, its subsidiaries and affiliates, and its directors, officers, executives, shareholders, partners,
agents, attorneys, predecessors, successors, insurers and assigns from any and all claims, liabilities and obligations, both known
and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to
or at Executive’s termination. Such general release shall include, but shall not be limited to: (i) all claims arising out
of or in any way related to Executive’s employment with the Company or the termination of that employment; (ii) all claims
related to Executive’s compensation or benefits from the Company, including salary, bonuses, incentive compensation, vacation
pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, restricted stock, or any other ownership or
equity interests in the Company, or its subsidiaries or affiliates under all State and federal statutes such as the Fair Labor
Standards Act, the Family and Medical Leave Act, the Employee Retirement and Income Security Act, the New York Labor Law and any
similar State or local statute, regulation or order; (iii) all claims for breach of contract, wrongful termination, and breach
of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims
for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under, for example, the Age Discrimination
in Employment Act (the “ADEA”), Title VII of the Civil Rights Act of 1964, as amended, the Rehabilitation Act
of 1973, the Americans With Disabilities Act, the Equal Pay Act, the Family Medical Leave Act, the New York Human Rights Law and
any similar State or local statute, regulation or order. Notwithstanding the foregoing, Executive shall not be required to release
the Company or its subsidiaries or affiliates from: (A) any obligation to indemnify Executive pursuant to the articles and bylaws
of the Company, any valid fully executed indemnification agreement with the Company, any applicable directors and officers liability
insurance policy, and applicable law; or (B) any obligations to make payments to Executive under Section 7. Executive shall be
required to represent that he has no lawsuits, claims or actions pending in his name, or on behalf of any other person or entity,
against the Company or its subsidiaries or affiliates, or any other person or entity subject to the release to be granted under
this Section.

 

(b)          Executive
shall acknowledge that: (i) he is knowingly and voluntarily waiving and releasing any rights he may have under the ADEA; (ii) that
the consideration given for the waiver and release (i.e., the additional consideration to be provided under Section 7) is in addition
to anything of value to which he is already entitled; and (iii) that he has been advised, as required by the ADEA, that: (A) his
waiver and release does not apply to any rights or claims that may arise after the date that he signs such release; (B) he should
consult with an attorney prior to signing the release (although he may choose voluntarily not to do so); (C) he has twenty-one
(21) days from the date he receives the proposed release to consider the release (although he may choose voluntarily to sign it
earlier); (D) he has seven (7) days following the date he signs the release to revoke the release by providing written notice of
his revocation to the Board; and (E) the release will not be effective until the date upon which the revocation period has expired,
which will be the eighth day after the date that the release is signed by Executive.

 

    	12

    	 

    
 

(c)          The
claims included in this release and waiver do not include vested rights, if any, under any qualified retirement plan in
which Executive participates, and his COBRA, unemployment compensation and worker’s compensation rights, if any. Nothing
in this release shall be construed to constitute a waiver of: (i) any claims Executive may have against the Company that arise
from acts or omissions that occur after the effective date of this Release; (ii) Executive’s right to file an administrative
charge with any governmental agency concerning the termination of that employment; or (iii) Executive’s right to participate
in any administrative or court investigation, hearing or proceeding. Executive agrees, however, to waive and release any right
to receive any individual remedy or to recover any individual monetary or non-monetary damages as a result of any such administrative
charge or proceeding. In addition, this release does not affect Executive’s rights as expressly created by this Agreement,
and does not limit his ability to enforce this Agreement.

 

9.            Executive
Covenants.

 

(a)          Non-Disclosure
of Confidential Information and Trade Secrets.

 

		(i)	During the course of Executive’s employment with
the Company, Executive will acquire and have access to Confidential Information and Trade Secrets belonging to the Company, its
affiliates, subsidiaries, divisions and joint ventures (collectively referred to as the “Company” throughout
and for purposes of this Section 9). Such Confidential Information and Trade Secrets include, without limitation, business and
technical information, whatever its nature and form and whether obtained orally, by observation, from written materials or otherwise,
as for example: (A) financial and business information, such as information with respect to costs, commissions, fees, profits,
profit margins, sales, markets, mailing lists, accounts receivables and accounts payables, pricing strategies, strategies and
plans for future business, new business, product or other development, potential acquisitions or divestitures, and new marketing
ideas; (B) marketing information, such as information on markets, end users and applications, the identity of the Company’s
customers, vendors, suppliers, and distributors, their names and addresses, the names of representatives of the Company’s
customers, vendors, distributors or suppliers responsible for entering into contracts with the Company, the Company’s financial
arrangements with its distributors and suppliers, the amounts paid by such customers to the Company, specific customer needs and
requirements, leads and referrals to prospective customers; and (C) personnel information, such as the identity and number of
the Company’s employees, personal information such as social security numbers, skills, qualifications, and abilities. Executive
acknowledges and agrees that the Confidential Information and Trade Secrets are not generally known or available to the general
public, but have been developed, complied or acquired by the Company at its great effort and expense and for commercial advantage
and, therefore, takes every reasonable precaution to prevent the use or disclosure of any part of it by or to unauthorized persons.
Confidential Information and Trade Secrets can be in any form or media, whether oral, written or machine readable, including electronic
files.

 

    	13

    	 

    
 

		(ii)	Executive agrees he will not, while associated with the
Company and for so long thereafter as the pertinent information or documentation remains confidential, directly or indirectly
use, disclose or disseminate to any other person, organization or entity or otherwise use any Confidential Information and Trade
Secrets, except as specifically required in the performance of Executive’s duties on behalf of the Company or with prior
written authorization from the Board.

 

(b)          Non-Solicitation
of Customers. Executive acknowledges and agrees that during the course of and solely as a result of employment with the Company,
he will come into contact with some, most or all of the Company’s customers and will have access to Confidential Information
and Trade Secrets regarding the Company’s customers, distributors and suppliers. Consequently, Executive covenants and agrees
that in the event of the termination of his employment, whether such termination is voluntary or involuntary, Executive will not,
for a period of twelve (12) months following such termination, directly or indirectly, solicit or initiate contact with any customer,
former customer or prospective customer of the Company for the purpose of selling products or services to the customer competitive
with the products or services purchased by the customer from the Company. This restriction shall apply to any customer, former
customer or prospective customer of the Company with whom Executive had contact or about whom Executive obtained Confidential Information
or Trade Secrets during his employment with the Company. For the purposes of this Section, “contact” means interaction
between Executive and the customer or then prospective customer which takes place to further the business relationship, or making
sales to our performing services for the customer or prospective customer on behalf of the Company. This restriction will not apply
when a former employee who is not working in a competitive capacity responds to a request for proposal on behalf of his new employer
who is not engaged in the same or similar businesses as the Company.

 

(c)          Non-Compete.
Executive acknowledges that his services are special and unique, and compensation is partly in consideration of and conditioned
upon Executive not competing with Company, and that a covenant on Executive’s part not to compete is essential to protect
the business and good will of the Company. Accordingly, except as hereinafter provided, Executive agrees that for twelve (12) months
after the termination of his employment, Executive shall not be engaged or interested as a director, officer, stockholder (except
as provided herein), employee, partner, individual proprietor, lender or in any other capacity, in any business, which competitive
with the business of the Company as conducted at the time of Executive’s termination and which involves Executive’s
knowledge, actions or assistance within the states of Pennsylvania, New Jersey, New York, Delaware, Maryland, Connecticut, Rhode
Ilsand or Massachusetts (the “Restricted Territory”); however, this restriction will not apply to new kinds
of business in which Executive may engage in the future, after such termination, unless Executive has been actively engaged in
the development or otherwise involved in such business while an employee of the Company. In addition, Executive agrees that for
this same twelve (12) months, he shall not recruit or recommend any other person who is or was an employee of the Company while
Executive was also an employee, to any business which is competitive with the business of Executive as conducted at the time of
Executive’s termination and which involves Executive’s knowledge, actions or assistance within the Restricted Territory.
Nothing herein shall prohibit Executive from investing in any securities of any corporation which is in competition with the Company,
whose securities are listed on a national exchange or traded in the over-the-counter market if Executive shall own less than 5%
of the outstanding securities of such operation.

 

    	14

    	 

    
 

(d)          Enforcement
of Covenants. Executive acknowledges and agrees that compliance with the covenants set forth in this Section 9 is necessary
to protect the Confidential Information and Trade Secrets, business and goodwill of the Company, and that any breach of this Section
9 will result in irreparable and continuing harm to the Company, for which money damages may not provide adequate relief. Accordingly,
in the event of any breach or anticipatory breach of Section 9 by Executive, the Company and Executive agree that the Company shall
be entitled to the following particular forms of relief as a result of such breach, in addition to any remedies otherwise available
to it at law or equity: (i) injunctions, both preliminary and permanent, enjoining or restraining such breach or anticipatory breach,
and Executive hereby consents to the issuance thereof forthwith and without bond; and (ii) recovery of all reasonable sums and
costs, including attorneys’ fees, incurred by the Company to enforce the provisions of this Section 9.

 

10.          Withholding
of Taxes

 

The Company shall withhold
from any compensation and benefits payable under this Agreement all applicable federal, state, local or other taxes.

 

11.           No
Claim Against Assets.

 

Nothing in this Agreement
shall be construed as giving Executive any claim against any specific assets of the Company or as imposing any trustee relationship
upon the Company in respect of Executive. The Company shall not be required to establish a special or separate fund or to segregate
any of its assets in order to provide for the satisfaction of its obligations under this Agreement. Executive’s rights under
this Agreement shall be limited to those of an unsecured general creditor of the Company and its affiliates.

 

12.          Executive
Acknowledgement.

 

Executive acknowledges
that he has had the opportunity to discuss this Agreement with and obtain advice from his private attorney, has had sufficient
time to and has carefully read and fully understands all of the provisions of this Agreement, and is knowingly and voluntarily
entering into this Agreement.

 

13.          Successors
and Assignment.

 

(a)          Except
as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective heirs, representatives, successors and assigns.

 

(b)          The
Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to Executive,
to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof,
and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement by the Company.

 

    	15

    	 

    
 

(c)          The
rights and benefits of Executive under this Agreement are personal to him and no such right or benefit shall be subject to voluntary
or involuntary alienation, assignment or transfer; provided, however, that nothing in this Section 13 shall preclude Executive
from designating a beneficiary or beneficiaries to receive any benefit payable on his death.

 

14.         Entire
Agreement; Amendment.

 

This Agreement shall
supersede any and all existing oral or written agreements, representations, or warranties between Executive and the Company (or
any of its subsidiaries or affiliated entities) relating to the terms of Executive’s employment, except for the Company’s
Code of Ethics and the Director’s and Officer’s Indemnification Agreement. This Agreement may not be amended except
by a written agreement signed by both parties.

 

15.         Governing
Law.

 

This Agreement shall
be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to
any conflicts or choice of laws rule or provision that would result in the application of the domestic substantive laws of any
other jurisdiction.

 

16.         Section
409A.

 

The parties intend
that this Agreement and the payments and benefits to be provided hereunder satisfy the requirements of Section 409A, and this Agreement
shall be administered and interpreted consistent with such intention.

 

17.         Notices.

 

Any notice, consent,
request or other communication made or given in connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by registered or certified mail, return receipt requested, or by facsimile or by hand
delivery, to those listed below at their following respective addresses or at such other address as each may specify by notice
to the others:

 

	To the Company:
	Warwick Valley Telephone Company
	Attention: CEO
	47 Main Street
	Warwick, New York 10990
	 
	To Executive:
	At the address set forth below

 

    	16

    	 

    
 

18.          Miscellaneous.

 

(a)          Waiver.
The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a
waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of
this Agreement.

 

(b)          Severability.
If any term or provision of this Agreement is declared illegal or unenforceable by any court of competent jurisdiction and cannot
be modified to be enforceable, such term or provision shall immediately become null and void, leaving the remainder of this Agreement
in full force and effect.

 

(c)          Headings.
Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement.

 

(d)          Rules
of Construction. Whenever the context so requires, the use of the singular shall be deemed to include the plural and vice versa.

 

(e)          Authority
to Enter into this Agreement. The officer of the Company whose signature appears below has been authorized to enter into this
Agreement on behalf of the Company.

 

(f)          Counterparts.
This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one agreement.

 

In
Witness Whereof, the parties hereto have duly executed this Agreement as of the day and year set forth below.

 

	Warwick Valley Telephone Company	 	Executive
	 	 	 
	By:	/s/ Duane W. Albro	 	By:	/s/ Brian H. Callahan
	 	 	 	 	 
	Name:	Duane W. Albro	 	Address:	 
	 	 	 	 	 
	Title:	CEO	 	 
	 	 	 	 	 
	Date:	 	 	Date:	 
	 	 	 	 	 	 

    	17

    	 

    

 

APPENDIX
A

 

Annual Bonus Target Amount
as noted in 4(b), 7(b)(ii) and 7(c)(i)(B) is 50%

 

Incentive Compensation as
noted in 4(c) is:

 

Stock Options: 15,000

 

Restricted Shares: 3,750

 

Illustration of CFO
Annual Bonus and Incentive Compensation

 

(Long Term Incentive
Plan) Calculation

 

Annual Bonus Performance Matrix:

 

The performance matrix below will be used to calculate
the Payout Factor amounts. The Payout Factor amounts will be applied to both the Target Annual Bonus and the Target Incentive Compensation
amounts.

 

Target Annual Bonus:

Target Annual Bonus Amount: 50% x [base salary of $205,000]
= $102,500

Actual Annual Bonus Payout: [Target Annual Bonus Amount
of $102,500] x [calculated Payout Factor]

 

Methodology:

 

Target Financial Metrics will be determined for each year by
the Board of Directors on behalf of the Company and in collaboration with the CEO.

 

The matrix below reflects both the elements of performance that
will be evaluated and the weightings associated with each Financial Metric to determine the applicable payout factor that will
be used to calculate the Annual Bonus and Incentive Compensation amounts.

  

	Financial Metric	 	Weighting	 	 	Result	 	Target	 	Actual/Target	 	Payout Factor
	 	 	A	 	 	B	 	C	 	(B/C)	 	A x (B/C)
	Revenue	 	 	0.50	 	 	TBD	 	$	TBD	 	TBD	 	TBD
	EBITDA	 	 	0.30	 	 	TBD	 	$	TBD	 	TBD	 	TBD
	Net Income	 	 	0.20	 	 	TBD	 	$	TBD	 	TBD	 	TBD
	Total	 	 	1.00	 	 	 	 	 	 	 	 	 	Total Payout

 Factor

 

Illustrative Example:
By way of illustration only, assume the following Financial Metric targets: (1) Revenue: $30,000,000; (2) EBITDA: $5,000,000;
(3) Net Income: $6,000,000. Assume the following actual financial results for the fiscal year: (1) Actual Revenue: $28,000,000;
(2) Actual EBITDA: $4,000,000; (3) Actual Net Income: $5,000,000. The resulting payout factor calculations would be calculated
as follows:

 

    	18

    	 

    

 

	Financial Metric	 	Weighting	 	 	Result	 	 	Target	 	 	Actual/Target	 	 	Payout Factor	 
	 	 	A	 	 	B	 	 	C	 	 	(B/C)	 	 	A x (B/C)	 
	Revenue	 	 	0.50	 	 	$	28,000,000	 	 	$	30,000,000	 	 	 	.9334	 	 	 	.4667	 
	EBITDA	 	 	0.30	 	 	$	4,000,000	 	 	$	5,000,000	 	 	 	.8000	 	 	 	.2400	 
	Net Income	 	 	0.20	 	 	$	5,000,000	 	 	$	6,000,000	 	 	 	.8334	 	 	 	.1667	 
	Total	 	 	1.00	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	.8734	 

 

Based upon this illustration,
the actual Annual Bonus to be paid would be based on a payout factor of .8734 and result in an Annual Bonus of $102,500 x .8734
or $89,523.50.

 

Notwithstanding the foregoing matrix, in the event that
the actual results / target results are less than .9000 (90%) then the payout factor attributable to those metrics of measurement
will be zero. In the event that the actual results / target results are between 90% and 95% the payout factor attributable to those
metrics of measurement will be 70%. In the event that the actual results / target results are 95% or better the payout factor attributable
to those metrics of measurement will result in a straight line percentage. 

 

This methodology will also be applied to Incentive Compensation
payout in the same manner.

 

Incentive Compensation (Long Term Incentive Plan) Component:

 

		Ø	Target Incentive Compensation Component

  

	Stock Options:	 	 	15,000	 
	 	 	 	 	 
	Restricted Shares:	 	 	3,750	 

  

Applying the same methodological
approach used to determine the Annual Bonus payout as shown above would result in an Incentive Compensation payout of:

  

	Stock Options:	15,000  x .8734 = 13,101
	 	 
	Restricted Shares:	  3,750 x .8734 =  3,275

  

For calculating both
the Annual Bonus and the Incentive Compensation, the Board of Directors retains the sole discretion to award compensation, if any,
under this Appendix A.

 

    	19exhibit
10.5

 

AGREEMENT
FOR SALE OF SHARES

 

THIS AGREEMENT FOR
SALE OF SHARES (this “Agreement”) is made as of August 22, 2012 (the “Effective Date”),
by and among Warwick Valley Telephone Company, a New York corporation with
offices at 47 Main St., PO Box 592, Warwick, NY 10990 (“Parent”), and each of the individuals identified on
the signature page of this Agreement who have executed and delivered to Parent a signature page hereto (each, a “Selling
Holder” and collectively, the “Selling Holders”). Parent and the Selling Holders are sometimes referred
to individually as a “Party” and collectively as the “Parties”.

 

RECITALS:

 

A.           Pursuant
to an Asset Purchase Agreement, dated as of July 14, 2011, among Parent, Warwick Valley Networks, Inc. and Avetla, LLC (formerly
known as Alteva, LLC), a New Jersey limited liability company (“Avetla”), and an Assignment of Rights, dated
October 20, 2011, by Avetla to the Selling Holders and the other members of Avetla (together with the Selling Holders, the “Holders”),
Parent issued to the Holders the Parent Shares (as defined in the Purchase Agreement), as set forth in Exhibit A attached
hereto (with respect to the Selling Holders).

 

B.           Pursuant
to a Lock-Up and Put Agreement, dated as of October 21, 2011, among Parent and the Holders (the “Lock-Up Agreement”),
the Holders agreed to hold the Parent Shares subject to the terms and conditions of the Lock-Up Agreement, and Parent agreed to
grant the Holders certain rights with respect to the Parent Shares.

 

C.           In
lieu of the Selling Holders exercising their put right and other rights under the Lock-Up Agreement, Parent has agreed to release
the Selling Holders from the lock-up restrictions under the Lock-Up Agreement and terminate the Lock-Up Agreement, all as set forth
below and subject to the Condition Subsequent (as defined below).

 

NOW THEREFORE, in consideration
of the foregoing and the mutual covenants contained in this Agreement, the Parties agree as follows:

 

1.           Termination
of Lock-Up Agreement.

 

(a)          Termination.
Parent and the Selling Holders hereby agree that the Lock-Up Agreement, as it relates to the Selling Holders, shall be terminated
effective as of the Effective Date, and that, from and after the Effective Date, the Parties shall have no existing, continuing
or future rights or obligations under the Lock-Up Agreement, subject in each case to reinstatement upon the occurrence of the Condition
Subsequent (as defined in Section 1(b)). Subject to the provisions of Section 1(b) (and the nullification, in whole or in part,
of this release upon the occurrence of the Condition Subsequent), each Party hereby releases and discharges each of the other Parties
from any and all further obligations arising pursuant to or otherwise in any way relating to the Lock-Up Agreement. Nothing in
this Agreement will terminate or amend the terms of the Lock-Up Agreement as it relates to David Cuthbert or any other Holder who
is not a Selling Holder.

 

    	 

    	 

    

 

(b)          Notwithstanding
the provisions of Section 1(a), if the Condition Subsequent occurs with respect to any Selling Holder then, from and after October
22, 2012, the Lock-Up Agreement termination, release and discharge of the Lock-Up Agreement described in Section 1(a) shall no
longer be applicable to, or be of any force and effect with respect to, such Selling Holder and Parent with respect to such Selling
Holder’s Parent Shares that were not sold on or before October 22, 2012 (“Unsold Parent Shares”) and all
of the terms of such Lock-Up Agreement shall be reinstated and in full force and effect with respect to such Selling Holder and
Parent related to the Unsold Parent Shares, provided, however, that Parent and such Selling Holder (and any other applicable Selling
Holders) shall amend the Lock-Up Agreement, as necessary and appropriate, to reflect or account for any sales of Parent Shares
by such Selling Holder or other Selling Holders prior to October 22, 2012. Each Selling Holder who holds Unsold Parent Shares shall
cause such Unsold Parent Shares to be returned to Parent or its transfer agent, to permit appropriate legends to be added to the
certificates for the Unsold Parent Shares, as provided in the Lock-Up Agreement. As used in this Agreement, “Condition
Subsequent” means, with respect to any Selling Holder, the failure of such Selling Holder to sell all of his or her Parent
Shares on or before October 22, 2012, unless such failure to sell all of his or her Parent Shares results primarily from such Selling
Holder’s (i) failure or refusal to participate, or to sell any portion of his or her Parent Shares, in a Sale Transaction
(A) arranged by Cantor (as defined in Section 2(a)) in accordance with this Agreement, (B) providing for a sale price per Parent
Share equal to or greater than the Minimum Price, and (C) that closed (or would have closed in the absence of such failure or refusal
by such Selling Holder) on or before October 22, 2012, or (ii) failure to comply with the terms of this Agreement; it being expressly
understood in either case (i) or (ii) that the failure or refusal of one Selling Holder shall not impact the occurrence of a Condition
Subsequent with respect to any other Selling Holder.

 

2.           Sale
of Shares.

 

(a)          Sale
Transaction. Parent shall permit the Selling Holders to sell their Parent Shares through one or more block sales prior to October
22, 2012 (collectively, the “Sale Transaction”) in accordance with this Agreement. Each Selling Holder hereby
offers and agrees to sell all of his or her Parent Shares in one or more Sale Transactions in accordance with the terms and conditions
of this Agreement and, in connection therewith, each Selling Holder agrees to open a brokerage account at Cantor Fitzgerald &
Co. (“Cantor”) and deposit all of his or her Parent Shares into such brokerage account. Each Selling Holder
agrees that, prior to October 22, 2012, he or she will not sell, assign or transfer his or her Parent Shares except in connection
with a Sale Transaction pursuant to this Agreement. Each Selling Holder will complete, and submit to Cantor, the documents attached
hereto as Exhibit B, Exhibit C and Exhibit D. Each Selling Holder will also complete all additional documentation
reasonably requested by Cantor to facilitate the Sale Transaction, subject to the Limitations (as defined in Section 2(e)). Each
Selling Holder shall instruct Cantor, pursuant to Exhibit D, to (i) sell his or her Parent Shares in a Sale Transaction
at a price (the “Minimum Price”) no less than the lower of (1) the greater of (A) ninety-five percent (95%)
of the closing price of Parent’s common stock on the NASDAQ Global Market on the trading day preceding the closing of the
Sale Transaction or (B) $10.63 per share, and (2) such lower price as Parent provides its express prior written consent to (which
consent may be provided or withheld in Parent’s sole discretion), and (ii) to consult with Parent prior to setting the price
per Parent Share in any Sale Transaction.

 

    	 

    	 

    

 

(b)          Execution
of Documents by Selling Holders. At least two business days prior to the closing of a Sale Transaction, each Selling Holder
in such Sale Transaction shall deliver to Parent (i) a signed copy of the representation letter attached hereto as Exhibit E
(the “Representation Letter”), and (ii) a written notice, in the form attached hereto as Exhibit F, setting
forth instructions for payment of the Additional Parent Payment as set forth in Section 3 hereof (“Payment Delivery Instructions”).

 

(c)          Expenses
of Sale Transaction. Parent will pay the following costs and expenses of the Sale Transaction (collectively, the “Transaction
Expenses”): (i) the fees and expenses of legal counsel, accountants or other representatives of Parent; (ii) the reasonable
legal fees and expenses of Sherman, Silverstein, Kohl, Rose & Podolsky, P.A. and Morgan, Lewis & Bockius LLP (collectively,
“Counsel”) incurred in connection with this Agreement or the Sale Transaction and the transactions contemplated
hereby and thereby (which payment shall be made within 30 days after each presentation by Counsel of an invoice for same (in the
same format as previously provided to Avetla by Counsel, and including itemized time entries showing time spent by attorney, with
applicable billing rates)); (iii) any underwriting discounts and selling commissions applicable to the
sale of Parent Shares in the Sale Transaction (including, without limitation, any fees and expenses of Cantor incurred in connection
with the Sale Transaction); and (iv) all other costs and expenses of Parent and the Selling Holders incident to and reasonably
necessary for the consummation of the Sale Transaction, but not including the Excluded Expenses. Parent shall promptly reimburse
any Selling Holder that pays a documented Transaction Expense. Notwithstanding anything set forth in this Section 2(c) to the contrary,
Parent will not be required to pay any of the following (collectively, the “Excluded Expenses”) (1) the fees
and expenses of any legal counsel other than Counsel, or any other advisor, representing any Selling Holder or Selling Holders
in connection with this Agreement or a Sale Transaction; or (2) any federal, state or local taxes payable by any Selling Holder
as a result of or in connection with the Sale Transaction.

 

(d)          Compliance
with Securities Laws. Parent shall take all such actions as may be necessary or appropriate to cause the Sale Transaction to
be completed in accordance with all Securities Laws and any other applicable laws, rules or regulations. As used in the Agreement,
“Securities Laws” means all applicable (i) federal securities laws including, without limitation, the
Securities Act of 1933, as amended (the “Securities Act”) and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (ii) state securities laws, and (iii) rules
and regulations promulgated under such securities laws. Parent and the Selling Holders acknowledge that it is contemplated that
the Sale Transaction will be completed in reliance upon Rule 144 of the Securities Act. Each Selling Holder represents that such
Selling Holder has held the Parent Shares for the requisite six-month holding period required by Rule 144(d) of the Securities
Act. Parent represents that during the 12 month period preceding the closing of the Sale Transaction (i) it has filed all reports
required under Section 13 or 15(d) of the Exchange Act, as applicable, other than Form 8-K reports; (ii) it has submitted electronically
and posted on its corporate Web site, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation
S-T; and (iii) (a) to its knowledge, no Selling Holder is, or has been during the preceding three months, an “affiliate”
of Parent as that term is defined in paragraph (a)(1) of Rule 144 (an “affiliate” meaning a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a company); and
(b) no Selling Holder who is an employee or officer of Parent or one of its subsidiaries is an “affiliate” of Parent
due to such status as such an employee or officer. 

 

    	 

    	 

    

 

(e)          Further
Assurances. Each Selling Holder agrees to take such actions (including providing Parent with any reasonably requested information
regarding such Selling Holder or the Parent Shares that such Selling Holder holds), and to execute and deliver such other
documents, affidavits or agreements, as Parent or Cantor may reasonably request in connection with any Sale Transaction. Notwithstanding
anything in this Agreement to the contrary, in no event shall a Selling Holder be obligated to provide any representations, warranties
or covenants broader, in any material respect, than those contained in this Agreement or the Representation Letter in connection
with a Sale Transaction or to provide (or cause to be provided) any legal opinion, and any indemnification shall be limited to
customary indemnification provided within the context of an affidavit for a lost certificate, if one is required for any Selling
Holder who has lost his or her certificate(s) for Parent Shares (collectively, the “Limitations”). Parent agrees
to take such actions, and to execute and deliver such other documents or agreements, as a Selling
Holder may reasonably request in connection with any Sale Transaction, if such actions, documents or agreements are required to
be taken or delivered by Parent in order to consummate the Sale Transaction. Without limiting the foregoing, Parent shall cause
its outside legal counsel to provide to Parent’s transfer agent (and any purchaser in the Sale Transaction if requested by
such purchaser or Cantor) a customary legal opinion regarding the compliance of each Sale Transaction with Rule 144 (with a copy
to each Selling Holder participating in such Sale Transaction), and each Selling Holder participating in such Sale Transaction
(provided that such Selling Holder has delivered its Representation Letter to Parent with respect to such Sale Transaction) shall
be entitled to rely on such legal opinion in connection with its consummation of such Sale Transaction.

 

(f)          Representations.
Each Selling Holder represents and warrants that: (i) such Selling Holder has the legal capacity and right to enter into this Agreement
and to sell and transfer his or her Parent Shares; and (ii) such Selling Holder owns his or her Parent
Shares free and clear of any and all liens, security interest, liabilities, claims, or encumbrances of any kind whatsoever,
other than the restrictions on transfer set forth in this Agreement, the Lock-Up Agreement or under Securities Laws.

 

3.           Price
Protection Payment. If the Average Per Share Sale Price (as defined below) that any Selling Holder receives in the Sale
Transaction is less than $14.68, then Parent will pay to such Selling Holder an amount (an “Additional Parent Payment”)
determined by multiplying (a) the difference between $14.68 and the Average Per Share Sale Price for such Selling Holder, by (b)
the aggregate number of Parent Shares that such Selling Holder sold in the Sale Transaction. Each Selling Holder entitled to receive
an Additional Parent Payment (an “Entitled Holder”) must promptly provide Parent with an account statement (the
“Account Statement”) from Cantor evidencing the occurrence and details of a Sale Transaction. Parent shall pay
any Additional Parent Payment due to any Selling Holder pursuant to this Section 3 to the Selling Holder in immediately available
funds, in accordance with the Payment Delivery Instructions provided by such Selling Holder, on October 22, 2012 (or with respect
to any Entitled Holder who has not delivered an Account Statement or Payment Delivery Instructions, the later of October 22, 2012
or the date that is five business days’ following the date on which such Entitled Holder has delivered its Account Statement
and Payment Delivery Instructions). As used in this Agreement, the “Average Per Share Price” for any Selling
Holder means the greater of (i) the Minimum Price or (ii) the aggregate amount of proceeds payable to such Selling Holder as consideration
for his or her Parent Shares in the Sale Transaction divided by the aggregate number of Parent Shares that such Selling Holder
sold in the Sale Transaction.

 

    	 

    	 

    

 

4.          Indemnification.
Notwithstanding anything in this Agreement to the contrary, Parent shall indemnify and hold each Selling Holder harmless against
any and all losses, claims, damages, liabilities, cost and expenses including, without limitation, reasonable attorneys’
fees (collectively, “Claims”) that such Selling Holder incurs as a result of this Agreement or the transactions
contemplated by this Agreement including, without limitation, the Sale Transaction, or any breach by Parent of this Agreement (collectively,
“Losses”), except for any Losses to the extent resulting from or attributable to (a) such Selling Holder’s
breach of this Agreement or such Selling Holder’s Representation Letter, (b) the inaccuracy of
written information furnished by or on behalf of any Selling Holder expressly for use in connection with the Sale Transaction,
or (c) such Selling Holder’s willful misconduct (such Losses, “Excluded Losses”). If for any reason the
foregoing indemnification for Losses is unavailable to a Holder or insufficient to hold it harmless for such Losses, then Parent
shall contribute to the amount paid or payable by such Selling Holder as a result of such Losses (other than Excluded Losses) in
such proportion as is appropriate to reflect the relative economic interests of Parent and its stockholders on the one hand and
each such Selling Holder on the other hand in the matters contemplated by this Agreement as well as the relative fault of Parent
and each such Selling Holder with respect to such Losses and any other relevant equitable considerations. Parent will promptly
(and in any event within twenty business days after receipt of a request for reimbursement) reimburse each Selling Holder for its
reasonable legal and other expenses (including the reasonable cost of any investigation and preparation) incurred in connection
with any Claims for Losses (subject only to the receipt of a customary undertaking of such Selling Holder to repay such amounts
in the event they ultimately are determined by a court of competent jurisdiction (i) to constitute Excluded Losses or (ii) to otherwise
not constitute Losses for which such Selling Holder is entitled to indemnification or contribution hereunder). The indemnity, contribution
and reimbursement obligations of Parent under this Section 4 shall be in addition to any liability which Parent may otherwise have.
The provisions of this Section 4 shall survive any termination or completion of this Agreement or the Sale Transaction.

 

5.          Assignments
and Transfers; No Third Party Beneficiaries. This Agreement and the rights and obligations of the Parties hereunder shall
inure to the benefit of, and be binding upon, their respective successors, heirs, assigns and legal representatives, but shall
not otherwise be for the benefit of any third party.

 

6.          Notices.
Any notice required or permitted by any provision of this Agreement shall be given in writing and shall be delivered personally
or by courier, or by registered or certified mail, postage prepaid, addressed (a) in the case of Parent, to its principal office
and set forth in the caption to this Agreement, and (b) in the case of any Selling Holder, to such Selling Holder’s registered
address for its Parent Shares shown in the records of Parent (or of Parent’s transfer agent). Notices that are mailed shall
be deemed received five (5) days after deposit in the United States mail. Notices sent by courier or overnight delivery shall be
deemed received two (2) days after they have been so sent.

 

    	 

    	 

    

 

7.          Further
Instruments and Actions. The Parties agree to execute such further instruments and to take such further action as may reasonably
be necessary to carry out the intent of this Agreement.

 

8.          Entire
Agreement. This Agreement contains the entire understanding of the Parties hereto with respect to the subject matter hereof,
supersedes all other agreements among the Parties with respect to the subject matter hereof and cannot be altered or otherwise
amended except pursuant to an instrument in writing signed by each of the Parties to this Agreement. This Agreement shall be interpreted
under the laws of New York without reference to conflicts of law provisions.

 

9.          Amendments
and Waivers. Any provision of this Agreement may be amended and the observance of any provision of this Agreement may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent
of Parent and Selling Holders holding a majority of the then outstanding Parent Shares held by all Selling Holders.

 

10.         Severability.
In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

 

11.         Governing
Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York without giving
effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of New York.

 

12.         Counterparts;
Facsimile Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. The exchange of executed copies of this Agreement by facsimile,
portable document format (PDF) or other reasonable form of electronic transmission shall constitute effective execution and delivery
of this Agreement.

 

13.         Stock
Splits and Stock Dividends. In the event of a dividend or distribution in each case payable in shares of stock, a forward
or a reverse stock split or other reclassification of shares of common stock of the Parent prior to any Sale Transaction, then
the Minimum Price and the Additional Parent Payment shall be proportionately adjusted as necessary to give effect to such dividend
or distribution, a forward or a reverse stock split or other reclassification of shares.

 

14.         Cumulative
Remedies. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law or in equity.

 

[Signature page follows]

 

    	 

    	 

    

 

IN WITNESS WHEREOF, and intending to be
legally bound hereby, the Parties hereto have executed this Agreement as of the date first written above.

 

	 	PARENT:
	 	 
	 	WARWICK VALLEY TELEPHONE COMPANY

 

	 	By:	/s/ Duane W.Albro
	 	Name: Duane W. Albro
	 	Its: Chief Executive Officer

 

	 	SELLING HOLDERS:
	 	 
	 	/s/ William Bumbernick
	 	William Bumbernick
	 	 
	 	/s/ Mardoqueo Marquez
	 	Mardoqueo Marquez
	 	 
	 	/s/ Louis Hayner
	 	Louis Hayner
	 	 
	 	/s/ Kathleen Cuthbert
	 	Kathleen Cuthbert
	 	 
	 	/s/ Stephen Cuthbert
	 	Stephen Cuthbert
	 	 
	 	/s/ Bruce Baker
	 	Bruce Baker
	 	 
	 	/s/ Thomas Daley
	 	Thomas Daley
	 	 
	 	/s/ Cesidio Colasante
	 	Cesidio Colasante

 

[Signature Page for Agreement for Sale of Shares]

 

    	 

    	 

    

 

	 	/s/ Vincent Colasante
	 	Vincent Colasante
	 	 
	 	/s/ Joseph Weir
	 	Joseph Weir
	 	 
	 	/s/ Gary Porter
	 	Gary Porter
	 	 
	 	/s/ Deborah Deney
	 	Deborah Deney
	 	 
	 	/s/ W. Anthony Hitschler
	 	W. Anthony Hitschler
	 	 
	 	/s/ Linda Hitschler
	 	Linda Hitschler
	 	 
	 	/s/ Christopher Lange
	 	Christopher Lange

 

[Signature Page for Agreement for Sale
of Shares]

 

    	 

    	 

    

 

Exhibit A

 

Selling Holders and Parent Shares

 

	Selling Holder	 	Parent Shares	 
	 	 	 	 
	William Bumbernick	 	 	125,754	 
	Mardoqueo Marquez	 	 	25,148	 
	Louis Hayner	 	 	25,148	 
	Kathleen Cuthbert	 	 	8,551	 
	Stephen Cuthbert	 	 	5,533	 
	Bruce Baker	 	 	8,050	 
	Thomas Daley	 	 	8,050	 
	Cesidio Colasante	 	 	4,023	 
	Vincent Colasante	 	 	4,023	 
	Joseph Weir	 	 	4,023	 
	Gary Porter	 	 	4,023	 
	Deborah Deney	 	 	4,023	 
	W. Anthony Hitschler	 	 	9,483	 
	Linda Hitschler	 	 	1,008	 
	Christopher Lange	 	 	10,491	 
	 	 	 	 	 
	 	 	 	247,331	 

 

    	 

    	 

    

 

Exhibit B

 

Cantor Fitzgerald Retail Brokerage Account
Application

    	 

    	 

    

 

Exhibit C

 

W-9

 

    	 

    	 

    

 

Exhibit D

 

Form of Cantor Instruction Letter

 

August __, 2012

 

Cantor Fitzgerald & Co.

_____________________

_____________________

 

To Whom it May Concern:

 

I have deposited in my account with Cantor Fitzgerald
& Co., as identified below, the number of shares of the common stock of Warwick Valley Telephone Company (the “Company”)
set forth below under my name (the “WVTC Shares”).

 

I hereby authorize you to sell the WVTC Shares on my behalf,
through one or more block sale transactions (each, a “Sale Transaction”), at a sale price (the “Minimum
Price”) no less than the lower of (1) the greater of (A) ninety-five percent (95%) of the closing price of the Company’s
common stock on the NASDAQ Global Market on the trading day preceding the closing of the Sale Transaction or (B) $10.63 per share,
and (2) such lower price as the Company provides its express prior written consent to (which consent may be provided or withheld
in the Company’s sole discretion).

 

Provided that the price per WVTC Share in a Sale Transaction
is greater than the Minimum Price, you are authorized to sell all of my WVTC Shares in the Sale Transaction, without further approval
from me; provided, however, that you are authorized and directed to consult with the chief financial officer of the Company prior
to setting the price per WVTC Share in any Sale Transaction.

 

	 	 	 
	 	 
	 	Name (Printed): ______________________________________	 
	 	 
	 	Number of WVTC Shares: ______________________________	 
	 	 
	 	Cantor Account No. ___________________________________	 

 

    	 

    	 

    

 

Exhibit E

 

Representation Letter

 

Brian H. Callahan

Executive Vice President and Chief Financial Officer

Warwick Valley Telephone Company

47 Main Street

PO Box 592

Warwick, New York 10990

 

Dear Mr. Callahan:

 

In connection with the proposed sale of
up to _________ shares of the common stock (the “Shares”) of Warwick Valley Telephone Company (the "Company")
pursuant to Rule 144(b)(1) promulgated under the Securities Act of 1933, as amended ("Rule 144"), I hereby represent
to the Company that:

 

		1.	I acquired the Shares over six months ago in connection with the Company’s acquisition
of substantially all of the assets of Alteva, LLC (the “Acquisition”) and have continuously held the Shares from the
time I received them free and clear of any liens, claims or encumbrances (other than those contained under applicable securities
laws or under that certain Lock-Up and Put Agreement, dated as of October 21, 2011 and that certain Agreement for Sale of Shares,
dated as of August __, 2012, each by and among the undersigned, the Company and the other signatories thereto).

 

		2.	I am not, and have not been during the preceding three months, an "affiliate" of the Company as that term is defined
in paragraph (a)(1) of Rule 144 (an "affiliate" meaning a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a company).

 

		3.	I agree that the Company and its counsel may rely upon the foregoing representations in authorizing the removal of the restrictive
legend from the Shares.

 

	 	 	 
	 	 
	 	Printed Name:_________________________

 

	Dated:	 	 

 

    	 

    	 

    

 

Exhibit F

 

Form of Payment Delivery Instructions

 

Pursuant
to Section 2(b) of the Agreement for Sale of Shares dated as of August__, 2012 (the “Sale Agreement”), by and
among Warwick Valley Telephone Company, a New York corporation (“Parent”), and the “Selling Holders”
identified therein, the undersigned Selling Holder hereby instructs Parent to cause the consideration for such Selling Holder’s
Additional Parent Payment, to be paid to such Selling Holder in accordance with the following instructions:

 

		 ̈	Send by Wire Transfer:

 

	Account Name:	 	 
	Account Number:	 	 
	Bank Name:	 	 
	Bank ABA Number:	 	 
	Bank Address:	 	 
	 	 	 
	For credit to:	 	 
	Special Instructions:	 	 
	 	 	 

 

		 ̈	Send Bank Check:

 

	Payee Name:	 	 
	Mailing Address:	 	 
	 	 	 
	 	 	 

 

Capitalized terms used but not defined in
these Payment Delivery Instructions have the meanings given to them in the Sale Agreement. Parent and Purchase are entitled to
rely on these Payment Delivery Instructions for all purposes.

 

SELLING HOLDER:

 

	 	 	 
	Printed Name:_________________________	 	 
	Date:________________________________

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