VECTOR CAPITAL One Market Street Steuart Tower, 23rd Floor San Francisco, California 94105
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VECTOR CAPITAL
Xxx
Xxxxxx Xxxxxx
Xxxxxxx
Xxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
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May 4,
2018
CONFIDENTIAL
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxxx, Xx., EVP and General Counsel
Xxxxx
X. Xxxxxxxx, Xx.:
Reference is made
to that certain First Lien Credit and Guaranty Agreement dated as
of May 4, 2018, among Fusion Connect, Inc., a Delaware corporation
(the “Borrower”), certain
subsidiaries of the Borrower, as Guarantor Subsidiaries, Vector
Capital V, L.P., Vector Entrepreneur Fund V, L.P.,VC4 Debt
Investments (U.S.), L.L.C., Vector Fusion Holdings (Cayman), Ltd.
and Vector Trading (Cayman), L.P. (each, a “Vector Capital Lender”
and, collectively, “Vector Capital”), as
Lenders, the other Lenders party thereto and Xxxxxxx Sachs Bank
USA, as Administrative Agent and Collateral Agent (such agreement,
as may be amended, modified, restated, supplemented and extended
from time to time, the “Credit
Agreement”).
This
letter (the “Side
Letter”) expressly sets out the agreement between the
Borrower and Vector Capital with respect to Vector Capital’s
observation rights on the Board of Directors (as defined below), as
further described in Section 1 herein. Capitalized terms used
herein without definition are used as defined in the Credit
Agreement.
1. Board
Observation Rights. Until the earlier of (a) such date
on which neither Vector Capital nor any of its affiliates under
common control holds any Loans under the Credit Agreement, and (b)
the Subordinated Note Mandatory Prepayment Date (as defined in the
Credit Agreement, dated as of May 4, 2018, by and among Vector
Fusion Holdings (Cayman), Ltd., Xxxxxxx Xxxxx Lending Partners LLC,
Xxxxxxx Sachs, and the other lenders parties thereto), Vector
Capital (or its affiliate, including limited partners of Vector,
holding a Loan) shall have the right to appoint one observer (the
“Observer”) to the board
of directors of the Borrower (the “Board of Directors”), who
shall be entitled to attend (or at the option of such Observer,
monitor by telephone) one (1) regularly scheduled meeting per
fiscal quarter (the “Quarterly Meetings”) of
the Board of Directors (other than any portions of any Quarterly
Meeting that (x) involve the exchange of privileged
attorney-client information or work product, or (y) are
subject to a conflict of interest with a Vector Capital Lender or
other Lenders, in the reasonable discretion of Borrower) but shall
not be entitled to vote, and who shall receive all reports, meeting
materials (including copies of all board presentations), notices,
written consents, minutes and other materials with respect to such
Quarterly Meetings (in each case other than any portions of such
reports or materials that contain information (i) that is
subject to a conflict of interest with a Vector Capital Lender or
other Lenders or (ii) that is subject to the attorney-client
privilege, in the reasonable discretion of Borrower) as and when
provided to the members of the Board of Directors. The Borrower
shall reimburse the Observer for the reasonable and documented
out-of-pocket travel expenses incurred by any such Observer in
connection with such attendance at any in-person Quarterly
Meetings, to the extent consistent with the Borrower’s
policies of reimbursing directors generally for such expenses. The
Board of Directors shall use reasonable commercial efforts to hold
at least one regularly scheduled meeting each fiscal quarter, but
to the extent that the Board of Directors does not convene
(telephonically, in-person or otherwise) during a fiscal quarter,
the Observer shall not have any observation rights during such
quarter. The Observer shall not have any observer, information,
notice or other rights with respect to the meetings of any
committees or sub-committees of the Board of Directors, any special
meetings of the Board of Directors, or any meetings of the Board of
Directors other than the Quarterly Meetings; provided, that if the
matters that would normally be discussed by the Board of Directors
at the Quarterly Meeting (i.e., the periodic financial health and
performance of Borrower) are instead discussed by the Board of
Directors at a special meeting, or by a committee or sub-committee
of the Board of Directors, then the Observer shall have observer
and information rights for such special meeting or committee or
sub-committee meeting, as applicable. The rights set forth in this
paragraph 1 are the “Observer
Rights.”
2. Xxxxxxx
Xxxxxxx Laws. At all times while the Observer Rights are in
effect, Vector Capital and its affiliates shall abide by all
applicable xxxxxxx xxxxxxx securities law and any related
regulations.
3. Confidential
Information. At all times while the Observer Rights are in
effect, and for two (2) years thereafter, Vector Capital shall not
use or disclose any Confidential Information of Borrower obtained
by the Observer in such capacity on the Board of Directors, except
to any directors, officers, employees, attorneys, agents, or
accountants of Vector Capital (collectively, “Representatives”) in
connection with its capacity as a Lender. Vector Capital shall
inform any Representative who receives Confidential Information of
its obligations hereunder. For purposes of this Side Letter,
“Confidential
Information” includes any legal, commercial,
financial, business, technical, marketing or other information
related to the Borrower. “Confidential Information”
will also be deemed to include all notes, analyses, compilations,
studies, interpretations or other documents prepared by recipient
thereof which contain, reflect or are based upon, in whole or in
part, Confidential Information. Notwithstanding the foregoing,
“Confidential Information” does not include information
which (a) is generally available, or becomes generally available,
to the public other than as a result of disclosure by Vector
Capital or a Representatives (including information contained in
the Borrower’s public filings with the Securities and
Exchange Commission), or (b) becomes available to Vector Capital on
a non-confidential basis from a source other than the Borrower or
its representatives; provided that the source of such information
is not bound by a confidentiality agreement with respect to such
information or other obligation to keep such information
confidential.
4. General.
This Side Letter may be executed in any number of counterparts
which, when taken together, shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page
of this Side Letter by facsimile or electronic transmission shall
be effective as delivery of a manually executed counterpart of this
Side Letter. Section headings used herein are for convenience of
reference only, are not part of this Side Letter and are not to
affect the construction of, or to be taken into consideration when
interpreting, this Side Letter. This Side Letter embodies the
entire agreement and understanding between Vector Capital, the
other Lenders and you with respect to the specific matters set
forth herein and supersedes all prior agreements and understandings
relating to the subject matter hereof. No party has been authorized
by any Vector Capital Lender or any other Lender to make any oral
or written statements inconsistent with this Side Letter. This Side
Letter is intended to be solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto.
This Side Letter may not be amended or any provision hereof waived
or modified except by an instrument in writing signed by Vector
Capital and you. This Side Letter may not be assigned by you
without the prior written consent of Vector Capital and the other
Lenders, and any attempted assignment without such consent shall be
null and void.
It is
understood and agreed that this Side Letter shall not constitute or
give rise to any obligation on the part of any Lender (in each
case, in any capacity) to provide or arrange any financing; such an
obligation will arise only under the Credit Agreement, to the
extent the Lenders are bound thereunder if accepted in accordance
with its terms.
[Signature
page follows]
VECTOR
CAPITAL V, L.P.
VECTOR
ENTREPRENEUR FUND V, L.P.
VC4
DEBT INVESTMENTS (U.S.), L.L.C.
VECTOR
TRADING (CAYMAN), L.P.
VECTOR
FUSION HOLDINGS (CAYMAN), LTD.
By:
/s/ Xxxxx
Murray______________________
Name: Xxxxx
Xxxxxx
Title:
Director
[Signature
Page to Side Letter]
Accepted
and Agreed to in all respects:
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FUSION CONNECT, INC., as Borrower
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By:
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/s/
Xxxxx X. Xxxxxxxx, Xx.
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Name:
Xxxxx X. Xxxxxxxx, Xx.
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Title: EVP and
General Counsel
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[Signature
Page to Side Letter]
