EXHIBIT 10.18
HYPERION TELECOMMUNICATIONS, INC.
REGISTRATION RIGHTS AGREEMENT
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THIS AGREEMENT, made as of this 25th day of October, 1996, between
Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxxxxxx X. Xxxxxx (each a "Holder"
and collectively, the "Holders"), Adelphia Communications Corporation
("Adelphia") and Hyperion Telecommunications, Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the Holders are each the record and beneficial holder of
366,660 shares (collectively, the "Shares") of the Company's Class B Common
Stock, par value $.01 per share ( the "Class B Common Stock"), and Adelphia is
the record and beneficial holder of the remaining 8,900,020 shares of
outstanding Class B Common Stock;
WHEREAS, the Holders and Adelphia are parties to a Pre-Incorporation
and Shareholder Restrictive Agreement dated as of October 7, 1991, as amended by
that certain Letter Agreement ("Letter Agreement") dated effective March 19,
1996 (as so amended, the "Shareholder Agreement") pursuant to which the Holders
and Adelphia originally acquired their shares of common stock and which
contemplates the execution of this Agreement;
WHEREAS, the Holder, Adelphia and the Company all contemplate the
consummation of a registered initial public offering (the "IPO") of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common
Stock") in which IPO the Company will sell and Adelphia may, in the over-
allotment option, also sell shares of Class A Common Stock, following a stock
split and following the charter amendment and recapitalization whereby the
Company's previously outstanding common stock was converted into Class B Common
Stock which is convertible under certain conditions into Class A Common Stock;
WHEREAS, thirty days after the signing of the underwriting agreement
for such IPO the Holders will each have the opportunity to sell Class A Common
Stock with an aggregate market value of up to $1,000,000;
WHEREAS, the Holders, Adelphia and the Company have reached the
agreements set forth herein and desire to have the Shares subject to the rights
described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. For purposes of this Agreement:
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(a) The term "Act" means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same are in effect from time to time;
(b) The term "Commission" means the Securities and Exchange
Commission or any other federal agency at the time primarily responsible for
administering the Act;
(c) The term "Registrable Securities" means (1) the Class A Common
Stock into which (i) the Shares or (ii) any additional Class B Common Stock
issued as a dividend or distribution with respect to the Shares shall be
converted pursuant to the Certificate of Incorporation of the Company, (2) any
capital stock of the Company or a successor to the Company that is issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, such shares of Class A Common Stock and (3) any capital stock
(other than Class A Common Stock) of the Company or a successor to the Company
that is issued in exchange for or in replacement of the Shares or such
additional Class B Common Stock, in each case, which are held by Holder.
2. Demand Registration.
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(a) On and after the date which is six months after the
completion of the IPO of the Company, if the Company shall receive a written
request (specifying that it is being made pursuant to this Paragraph 2) from all
Holders then holding Registrable Securities that the Company file a registration
statement under the Act, or a similar document pursuant to any other statute
then in effect corresponding to the Act, covering the registration of
Registrable Securities then outstanding, then the Company shall use its best
efforts to cause such Registrable Securities included within such request to be
registered under the Act as promptly as practicable and, subject to Section
4(a), keep such registration statement effective for a period of twelve months
(the "Effective Period"). The rights granted by this Paragraph 2(a) shall not be
deemed to have been exercised unless and until the Company has fully complied
with its obligations under this Paragraph 2(a).
(b) The rights granted by Paragraph 2(a) may be exercised on only
one (1) occasion and may not be exercised during the period commencing fifteen
(15) days before the anticipated effective date and ending one hundred twenty
(120) days after the effective date of any registration statement filed by the
Company with respect to Class A Common Stock being sold solely by the Company
(other than on Form S-8 or other form for the offering of Class A Common Stock
to a particular investor or limited group of investors).
(c) Notwithstanding the foregoing, the Company shall not be
obligated to cause a registration statement to be filed and declared effective
pursuant to this Paragraph 2 or, if the registration statement is effective, the
Company may request each Holder not to (and upon
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such request each Holder hereby agrees not to) make any sales pursuant thereto,
for up to two periods of ninety (90) days each, as the Company shall specify,
provided that the Company shall furnish to each Holder a certificate signed by
the President or a Vice President or a Vice Chairman of the Company stating that
in the good faith judgment of the Company there would be a material adverse
effect on the Company if a registration statement were to be filed or sales were
to occur under an effective registration statement and, if such Holder is a
director and officer of the Company, stating the reason therefor.
(d) Each Holder shall promptly notify the Company in writing of
any sales or transfers of Registrable Securities made pursuant to any
registration statement filed pursuant to this Agreement.
3. Piggyback Registration Duties Discharged; Other Matters.
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(a) The Holders, the Company and Adelphia hereby agree that the
registration of the Company's Class A Common Stock in the IPO and the Holders'
opportunity to each sell up to $1 million worth of such Class A Common Stock in
the open market beginning 30 days after the effective date of the registration
statement for the IPO, shall satisfy the piggyback registration requirements of
Section 9(i) of the Letter Agreement and the requirements of Section 20(ii) of
the Shareholder Agreement and shall thereby operate to terminate the Shareholder
Agreement effective as of the time of the first closing of the IPO (without
reference to any closing of any over-allotment option).
(b) Upon such termination the Shareholder Agreement shall have no
further force or effect, provided that such termination shall not change or
alter the provisions of the Letter Agreement that did not amend the Shareholder
Agreement.
(c) All parties waive any rights they may have under the
Shareholder Agreement with respect to gifts of Shares or Class A Common Stock to
permitted family member transferees as defined under paragraph 8(c) of the
Shareholder Agreement by any Holder prior to the termination of the Shareholder
Agreement, provided that the aggregate of such gifts for any Holder shall not be
in excess of 70,000 shares of such stock calculated prior to and without taking
into account the stock split referenced in the recitals hereto and provided
further that any such donee of such a gift agrees in writing to be bound by this
Agreement and to provide all voting rights with respect to such gifted shares to
the Holder donor in the event that the IPO has not occurred by January 1, 1997.
With respect to any such gift, the Company agrees to release the Shares or Class
A Common Stock so gifted from the pledge of such shares as collateral for any
loans to such Holder donor by the Company that are outstanding on the date of
this Agreement.
(d) In connection with the closing of the IPO, the Company and the
Holders hereby agree that each of the Holders will pay in full all amounts owing
under the Term Loan Notes dated May 10, 1996 in the principal amount of
$1,000,000 and the related Term
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Loan and Stock Pledge Agreement dated as of May 10, 1996 (the "Term Loans"). It
is contemplated that Xxxxxxx Sachs & Co. will provide a $1,000,000 loan to each
of the Holders secured by a portion of the Holder's shares of the Company's
common stock (the "Margin Loan") to provide a portion of the monies needed to
pay off the Term Loans. An amount equal to the interest that accrues on the
Margin Loan for the period from the date the Margin Loan was made until March 1,
1997 shall be paid on March 1, 1997 to each of the Holders as a bonus by the
Company (the "Bonus Payment").
In addition, the Company shall make an additional payment (the "Gross-Up
Payment") to each of the Holders in an amount equal to the Federal, state and
local income taxes payable by such Holder with respect to the Bonus Payment. In
computing the Gross-Up Payment, the Bonus Payment shall be reduced by the
amount, if any, of the interest that accrued on the Margin Loan for the period
from the date the Margin Loan was made until March 1, 1997 that is deductible by
such Holder for Federal, state or local tax purposes. After the Gross-Up
Payment is so determined, such Holder shall also be entitled to receive
additional payments in an amount such that after payment by such Holder of all
Federal, state and local income taxes imposed upon the Gross-Up Payment such
Holder shall retain an amount equal to the Gross-Up Payment.
4. Registration Procedures. Whenever required under Paragraph 2 to
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effect the registration of any Registrable Securities, the Company shall:
(a) As promptly as practicable, prepare and file with the
Commission a registration statement with respect to such Registrable Securities
and cause such registration statement to become and remain effective as promptly
as practicable; provided, however, that in connection with any periods of
proposed registration under or in satisfaction of Paragraph 2, the Company shall
in no event be obligated to cause any such registration to remain effective for
more than twelve months, excluding any periods of suspension of sales during
effectiveness pursuant to Paragraph 2(c) or 9 or occurring as a result of an
event described in the next succeeding sentence. In connection therewith, the
Company shall use its best efforts to notify each Holder (the "Notice") of the
happening of any event during the period a registration statement is effective
which makes any statement made in such registration statement or the related
prospectus untrue in any material respect or which requires the making of any
changes in such registration statement or prospectus so that, as of such date,
the statements therein are not misleading and do not omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (which advice shall be accompanied by an instruction to suspend
the use of the prospectus until the requisite changes have been made) and use
its best efforts as promptly as practicable to prepare a supplement or post-
effective amendment to a registration statement or the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, that the Company, upon written notice
specifying such event or information to each
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Holder that is a director and officer of the Company, shall not be required to
update, pursuant to this Paragraph 4, any such document during a period where
the Company shall, in good faith and using reasonable business judgment, believe
that the premature disclosure of any event or information would have a material
adverse effect on the Company.
Each Holder agrees that, upon receipt of any such Notice from the
Company of the happening of any event of the kind described herein, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to
such registration statement until such Holder's receipt of the copies of the
supplemented or amended prospectus, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(b) As promptly as practicable, prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to each Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such United States jurisdictions as shall be reasonably requested by
Holder for the distribution of the securities covered by the registration
statement, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions, and
further provided that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that jurisdiction be
borne by selling shareholders, then such expenses shall be payable by the Holder
pro rata based upon the number of shares registered, to the extent required by
such jurisdiction.
5. Obligation to Furnish Information. It shall be a condition
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precedent to the obligations of the Company to take any action pursuant to this
Agreement that each Holder shall furnish to the Company such information
regarding such Holder, or the Registrable Securities held by such Holder, and
the intended method of disposition of such securities, as the Company shall
reasonably request or as shall be required to be disclosed in connection with
the action to be taken by the Company hereunder, including but not limited to
information required by Items 507 and 508 of Regulation S-K under the Act.
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6. Expenses of Registration. All expenses incurred in connection
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with a registration effected pursuant to Paragraph 2 (excluding in any case
underwriters' discounts and commissions and counsel, advisory or consultant fees
of a selling Holder), including without limitation all registration and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
7. Delay of Registration. A Holder shall not have any right to take
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any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Agreement:
(a) To the extent not prohibitedby law, the Company will indemnify
and hold harmless each Holder joining in a registration, any underwriter (as
defined in the Act) for it, and each person, if any, who controls such
underwriter within the meaning of the Act, against any losses, claims, damages,
or liabilities, joint or several, to which they may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus, or any amendments or
supplements thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arise out of any
violation by the Company of the Act or of any rule or regulation promulgated
under the Act applicable to the Company and relating to action or inaction
required of the Company in connection with any registration; and will reimburse
such Holder, such underwriter, or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Paragraph 8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, expenses
or action if such settlement is effected without the consent of the Company nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, expenses, or action to the extent that it arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or controlling
person.
(b) To the extent not prohibited by law, each Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, and each agent and any underwriter for
the Company (within the meaning of the Act) against any losses, claims, damages,
or liabilities, joint or several, to which the Company and/or any such director,
officer, controlling person, agent, or underwriter may become subject, under
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the Act or otherwise, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus, or any amendments or supplements thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement, preliminary or final prospectus, or amendments
or supplements thereto, in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and such Holder will reimburse any legal or other expenses
reasonably incurred by the Company and/or any such director, officer,
controlling person, agent, or underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Paragraph 8(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, expense
or action if such settlement is effected without the consent of such Holder.
(c) Promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this paragraph, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
paragraph, but the omission so to notify the indemnifying party will not relieve
him of any liability that he may have to any indemnified party otherwise than
under this paragraph.
9. Lockup Agreement. In consideration for the Company agreeing to
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its obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's securities to be sold by the Company, upon the
request of the Company or the underwriters managing any underwritten offering by
the Company of the Company's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than, subject to the requirements of Paragraph 10,
(a) those included in the registration and (b) sale transactions that are not
otherwise prohibited and that do not involve a public offering, provided that
the transferee of such Holder as a condition thereto and in connection
therewith, agrees to be bound by and joins into this Paragraph 9), without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time not to exceed 180 days from the effective date of such
registration as the Company or the underwriters may specify, provided however
that each Holder may sell Class A Common Stock with a market value of up to $1.0
million after 30 days following the effective date of the registration statement
for the IPO.
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10. Limitations on Assignment. This Agreement shall be binding upon
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and shall inure to the benefit of the parties hereto and their successors and
assigns; provided, that the registration rights granted to the Holders in
Paragraph 2 hereof may not be assigned or transferred in whole or in part to any
transferee other than to another Holder, Adelphia, or a permitted family member
transferee as defined under Paragraph 8(c) of the Shareholder Agreement that
agrees to be bound by and joins in this Agreement as a Holder and thereby agrees
among other things to provide all necessary information to the Company pursuant
to Paragraph 5 in connection with a registration hereunder.
11. Termination. Unless sooner terminated pursuant to the terms of
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this Agreement, all obligations of the Company pursuant to Paragraph 2 hereof as
to any Holder's Registrable Securities shall terminate, and the Registrable
Securities shall no longer be Registrable Securities under this Agreement, upon
the earlier of: (i) the sale or other disposition of such Registrable Securities
by a Holder (other than a sale or disposition which is made together with an
assignment of this Agreement in compliance with Paragraph 10 hereof), (ii) the
expiration of the Effective Period or (iii) as to any Holder, the date when such
Holder's Registrable Securities then outstanding may be resold during the
succeeding three-month period without such Holder being required to deliver a
prospectus with respect thereto under the Act or the rules and regulations
promulgated thereunder.
12. Entire Agreement. This Agreement and the documents referred to
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herein constitute the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and negotiations
relating thereto.
13. Governing Law. This Agreement, together with the rights and
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obligations of the parties hereunder shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
any jurisdiction's conflicts of laws provisions.
14. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15. Titles and Subtitles. The titles and subtitles used in this
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Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.
16. Notices. Any notice, request or other communication required or
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permitted under this Agreement shall be given in writing and shall be deemed to
be effectively given upon (i) personal delivery, (ii) delivery by U.S. Express
Mail or other overnight courier service which provides evidence of delivery,
(iii) legible facsimile transmission, or (iv) the expiration of three (3) days
following deposit with the United States Postal Service, by registered or
certified mail, postage prepaid, addressed, in each case, as follows:
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If to the Company:
Hyperion Telecommunications, Inc.
Attn: Xxxxxx X. Xxxxxxxx
0 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Ingersoll Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Holders:
Xxxx X. Xxxxxxxx
000 Xxxxx Xxxxx
Xxxxx Xx. Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx
0000 Xxx Xxxxxx Xxxx
Xxxxx Xx. Xxxxx, XX 00000
Xxxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx Xx. Xxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxx Xxxxxx Xxxxxx & Xxxxxxxxx
00xx Xxxxx, Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
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or at such other address as any party may designate by ten (10) days advance
written notice to the other party in accordance with the provisions of this
Paragraph.
17. Amendments. This Agreement may not be amended without the written
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consent of the Company, Adelphia and the holders of at least a majority in
interest of the then outstanding Registrable Securities.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by a duly authorized representative as of the day first above written.
HOLDERS:
/s/Xxxx X. Xxxxxxxx
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XXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
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XXXXXXX X. XXXXXXXX
/s/ Xxxxxxxx X. Xxxxxx
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XXXXXXXX X. XXXXXX
ADELPHIA COMMUNICATIONS
CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
COMPANY:
HYPERION TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President
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