NON-SOLICITATION AND RIGHT OF FIRST REFUSAL AGREEMENT
This Non-Solicitation and Right of
First Refusal Agreement (the
“Agreement”),
dated as of May 4, 2018 (the “Effective
Date”), is made and
entered into by and between Fusion Connect, Inc.
(f/k/a Fusion Telecommunications
International, Inc.), a Delaware corporation
(“Fusion”),
and Lingo
Management, LLC, a Georgia
limited liability company (“Lingo”).
Fusion and Lingo are sometimes hereinafter referred to collectively
as the “Parties”
and individually as a “Party.” Capitalized terms used
in this Agreement and not otherwise defined shall have the meaning
assigned to each such term in the Merger Agreement (as defined
below).
WHEREAS, Fusion, Birch Communications Holdings,
Inc., a Georgia corporation (“BCHI”),
and Fusion BCHI Acquisition LLC, a Delaware limited liability
company, previously entered into that certain Merger Agreement,
dated as of August 25, 2017, as amended (the “Merger
Agreement”); and
WHEREAS, as a condition to closing the Merger,
BCHI was obligated to spin-off its Consumer/SMB
Business to BCHI Holding LLC, in accordance with the Merger
Agreement and as further agreed by the Fusion and BCHI (the
“Spin-Off”);
and
WHEREAS,
the Spin-Off was accomplished by BCHI through the formation of
Lingo, the transfer of certain assets (including the stock of
certain Subsidiaries of BCHI) to Lingo and the distribution of the
membership interests in Lingo to BCHI Holding LLC; and
WHEREAS,
the Parties acknowledge that the execution of this Agreement is a
condition precedent to the closing of the Merger.
NOW,
THEREFORE, in consideration of the covenants and mutual promises
and agreements contained in this Agreement, and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1.
Non-Solicitation.
a. For
a period of three (3) years from the Effective Date, each Party
agrees that it will not, either directly or indirectly (including
through its Affiliates (which, for purposes of this provision, does
not include Fusion and its Subsidiaries)) or as an agent on behalf
of, or in conjunction with any Person: (A) solicit for employment
or in any way induce or attempt to induce to leave the employ of,
or engagement by, the other Party, any individual who is, on the
date of the solicitation or attempted inducement, a director,
officer, employee or consultant to the other Party; or (B) induce
or attempt to induce any Person who is a director, officer,
employee or consultant to the other Party to leave the employ of,
or terminate or breach their respective agreements with, the other
Party, or in any other way deliberately interfere with the
relationship between the other Party and any such Person; provided,
however, that no general advertisement or general solicitation of
employment not targeted to the directors, officers, employees or
consultants of the other Party shall be deemed to be a solicitation
of such Persons in violation of this Section; and provided further
that the foregoing restrictions shall not apply to the hiring of
employees by a Party from the other Party as contemplated by the
terms of the Transition Services Agreement, date the date hereof,
by and between Fusion and Lingo.
b. In
recognition of the various services to be performed by Lingo and
Fusion for each other pursuant to the Transition Services Agreement
of even date herewith, including the sharing of computer systems
that include customer records (the period of time during which such
sharing of systems and records continues being referred to herein
as the “Shared Records
Period”), each Party
agrees that it will not, either directly or indirectly (including
through Affiliates (provided, that for purposes of this Agreement,
Lingo and its Subsidiaries are not deemed to be Affiliates of
Fusion and its Subsidiaries)) or as an agent on behalf of, or in
conjunction with any Person, during the Specified Period (as
defined below), (A) solicit, attempt to solicit, or assist any
other Person in soliciting or attempting to solicit, any customer
of the other Party as of the date hereof or that is subsequently
acquired by the other Party after the date of this Agreement and
prior to the end of the Shared Records Period, or (B) take any
action to deliberately interfere with the relationship between the
other Party and any Person who is a lessor, licensor, customer,
supplier, licensee or other business associate or relation of the
other Party. As used hereinabove, Specified Period shall mean the
period ending 24 months after the end of the Shared Records Period,
but in no event ending later than the 3rd
anniversary of the Effective
Date.
2.
Right of First
Refusal.
a. Until
the sooner to occur of the 3rd
anniversary of the Effective Date, or
a Change of Control (defined below) as to Lingo, neither Lingo nor
any of its Subsidiaries shall enter into a binding agreement with
any third party that either owns or is the provider, either
directly or indirectly, of communications services (whether
regulated or unregulated) or cloud services, in each case to
business customers (each such Person, a “Third
Party”), relating to an
Acquisition without first offering Fusion the opportunity to effect
the Acquisition on the same economic terms as Lingo or its
Subsidiary, as the case may be, is prepared to effect that
Acquisition as reflected in a written letter of intent between
Lingo or its Subsidiary, as applicable, and that Third Party. The
offer to Fusion shall remain open for a period of twenty (20) days
from Lingo’s submission of a copy of the offer to Fusion (the
“Right of First Refusal
Period”). The offer to
Fusion shall set forth substantially all of the material terms of
the proposed Acquisition that would be included in a customary
letter of intent, including, but not limited to, price (including
any earnouts our other contingent consideration), whether payable
in cash or securities or other consideration, and whether the
transaction is structured as a tax free transaction and, such offer
shall be accompanied by a copy of any letter of intent signed by
Lingo or its Subsidiary with the Third Party and, if available, the
current draft of proposed agreement for the Acquisition. If, during
the Right of First Refusal Period, Fusion elects to proceed with
the Acquisition, for such election to be effective, it must include
a confirmation that such acquisition is permitted under is credit
facilities or that it has obtained an amendment or waiver in this
regard. Upon such an election, Lingo, or its Subsidiary, as
applicable, shall (i) advise the Third Party of Fusion’s
election, (ii) assign any existing letter of intent to Fusion,
(iii) provide Fusion with all applicable contact details for the
Third Party and its counsel, if known, and (iv) forward Fusion any
draft acquisition agreement. If, during the Right of First Refusal
Period, Fusion elects not to proceed with the Acquisition, or fails
to timely notify Lingo as to its election, Lingo or its Subsidiary,
as the case may be, may proceed with the Acquisition on terms
substantially consistent with the terms notified to Fusion. In the
event that Lingo or its Subsidiary subsequently negotiate terms
that are materially more beneficial to it than those previously
notified to Fusion, Lingo shall be obligated to reoffer the
opportunity to Fusion and the Right of First Refusal Period shall
commence once again. For purposes of this paragraph, the term
“Acquisition”
means any transaction in which Lingo or any of its Subsidiaries
will acquire, either directly or indirectly, all or substantially
all of the assets of a Third Party, whether by purchase of assets,
shares or other equity securities, or through a proposed merger or
similar transaction with such Third Party. A
“Change of
Control” as to Lingo
shall be deemed to have occurred should ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and
R. ▇▇▇▇▇ ▇▇▇▇▇▇ no longer own, directly or indirectly, at least a
majority of the equity interests of Lingo.
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b. In
the event that Lingo enters into an Acquisition permitted under
Section 3a, such acquired Third Party (an
“Acquired
Entity”) shall become
subject to the terms of this Agreement. Neither Lingo nor any of
its Affiliates shall disclose Confidential Information of Fusion or
its Subsidiaries to any Acquired Entity or its officers, directors,
employees, managers, agents or representatives who are not already
privy to such Confidential Information (without being in breach of
this Section 3b), or use any such Confidential Information to
compete with Fusion or its Subsidiaries or in a manner that is in
any way detrimental to Fusion or its Subsidiaries. For purposes of
this Agreement “Confidential Information” shall include
any financial, technical, sales, marketing, development, personnel,
and other confidential or proprietary information, records, or
data, however recorded or preserved, whether written or oral,
including, without limitation, customer lists, supplier lists,
trade secrets, designs, product formulations, product
specifications, and personnel information. Notwithstanding the
foregoing, “Confidential
Information” shall not
include information to the extent that the recipient thereof can
demonstrate: (i) was publicly known at the time of disclosure to
it, or has become publicly known through no act of the recipient in
breach of this Section 3b, or (ii) was rightfully received from a
third party without a duty of confidentiality.
3. Authority
for Judicial Enforcement. The
Parties acknowledge and agree that the covenants of each Party set
forth above in paragraphs 1 through 4 are reasonable in geographic
and temporal scope and in all other respects, and (ii) have been
made in order to induce Fusion and BCHI to consummate the
transactions contemplated by the Merger Agreement, and that Fusion
and BCHI would not have consummated the transactions contemplated
by the Merger Agreement, but for such covenants. If, at any time of
enforcement of the provisions of paragraphs 1 through 3, a
Governmental Entity determines that the duration, scope or area
restrictions stated herein are not enforceable under applicable
Law, the Parties agree that the maximum duration, scope or area (as
applicable) permitted by applicable Law shall be substituted for
the duration, area or scope (as applicable) stated herein and the
Governmental Entity shall be authorized by the Parties to revise
the restrictions contained herein to cover such maximum duration,
area or scope.
4. Remedies
Upon Breach. It is expressly
agreed by the Parties that monetary damages would be inadequate to
compensate a Party for a breach by the other Party of its covenants
and agreements in this Agreement. Accordingly, the Parties
acknowledge and agree that any such violation or threatened
violation will cause irreparable injury to the other and that, in
addition to any other remedies which may be available, such Party
shall be entitled to seek injunctive relief against any threatened
breach of this Agreement or the continuation of any such breach
without the necessity of providing actual damages and without
posting any bond or other security, and may seek to specifically
enforce the terms of this Agreement.
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5. Notices.
All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given: (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier; or (c) on the
third (3rd)
day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be
sent to the respective Parties at the following addresses (or at
such other address for a Party as shall be specified in a notice
given in accordance with this section:
if
to Lingo:
Lingo
Management, LLC
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
if
to Fusion:
Fusion
Connect, Inc. (f/k/a Fusion Telecommunications International,
Inc.)
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
General Counsel
6. Assignability
and Binding Effect. Neither
Party may assign or otherwise transfer any of its rights or
obligations under this Agreement.
7. Waivers/Remedies.
Failure of either Party to insist upon the strict compliance by the
other Party with any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver of any subsequent
breach. The election by either Party of any right or remedy
contained in this Agreement is not exclusive of any other rights or
remedies at law or in equity other than as may be limited
explicitly in this Agreement.
8. Severability.
The provisions of this Agreement are severable. If any provision of
this Agreement is held, by a court of competent jurisdiction, to be
invalid or unenforceable or to conflict with any federal, state or
local law, such portion or portions of this Agreement are hereby
declared to be of no force or effect in such jurisdiction, and this
Agreement shall otherwise remain in full force and effect and be
construed as if such portion had not been included. In the event
that any provision of this Agreement is held to be unenforceable
for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make
the provision enforceable according to applicable law and shall be
enforced as amended to the maximum legal and equitable
extent.
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9. Entire
Agreement. This Agreement is
the entire agreement between the Parties with respect to the
subject matter hereof and this Agreement supersedes and replaces
any and all prior and contemporaneous agreements, representations,
promises or understandings of any kind between the Parties with
respect thereto. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing
and signed by both Parties.
10. Interpretation
of Agreement. The Parties
acknowledge and agree that (1) this Agreement and its reduction to
final written form are the result of good faith negotiations
between the Parties through their respective counsel; (ii) said
counsel have carefully reviewed and examined this Agreement before
execution by said Parties; and (iii) any statute or rule of
construction that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this
Agreement.
11. Governing
Law/Waiver of Trial By Jury Venue. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
New York without regard to its conflict of law principles. Each
Party hereby voluntarily and irrevocably waives trial by jury in
any action or other proceeding brought in connection with this
Agreement.
12. Counterparts/Electronic
Signatures. This Agreement may
be executed in one or more counterparts with the same effect as if
both Parties had signed the same document. Each counterpart shall
be construed together and shall constitute one and the same
Agreement. Electronic signatures shall have the same force and
effect as originals, for all purposes.
13. Third
Party Beneficiaries. None of
the provisions of this Agreement is for the benefit of, or
enforceable by, any third-party beneficiary.
14. Further
Assurances. The Parties agree
to give such further assurances and to execute such documents as
may be necessary to correct, confirm and effectuate the intent and
purpose of this Agreement.
15. Headings.
The captions of the paragraphs of this Agreement are for
convenience only and shall not be considered or referenced in
resolving questions of construction or
interpretation.
[signatures appear on the following page]
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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇.
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title:
Executive Vice President and General Counsel
LINGO
MANAGEMENT, LLC
By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇.
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title:
Manager
[Lingo
Non-Solicitation Agreement]