May 4, 2018 PRIVATE & CONFIDENTIAL Fusion Connect, Inc.
May
4, 2018
PRIVATE & CONFIDENTIAL
Fusion Connect, Inc.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
New
York, New York 10170
Attention:
General Counsel
Ladies
and Gentlemen:
Reference is made to the Merger Agreement, dated
as of August 25, 2017, as amended (the “Merger
Agreement”),
by and among the Fusion Connect, Inc. (formerly known as Fusion
Telecommunications International, Inc.), a Delaware
corporation (“Fusion”),
Birch Communications Holdings, Inc., a Georgia
corporation, and Fusion BCHI Acquisition LLC, a Delaware limited
liability company (“Fusion
BCHI”). Capitalized terms
used but not defined herein have the meaning given to them in the
Merger Agreement.
For a period of twenty four (24) months following
the Closing (the “Indemnity
Period”),
BCHI Holdings, LLC, a Georgia limited liability company
(“Holdings”),
agrees to indemnify and hold
harmless Birch Communications, LLC (“BCLLC'')
and each other subsidiary that remained a subsidiary of BCLLC after
the Closing (BCLLC and each such other subsidiary of BCLLC
hereinafter collectively referred to as a “Covered
Subsidiary”)
from and against any and all asserted and/or actual liabilities for
unpaid state income or
franchise taxes, late fees and
penalties and interest owed for 2017 and prior years and paid by
BCLLC after the Closing.
Notwithstanding the foregoing, Fusion
BCHI agrees that Fusion BCHI shall cover the initial
$1,000,000 of any actual tax liabilities (but not any
late fees, penalties and interest associated therewith). Holdings
shall have the right to assume the defense of these matters and
shall have the right to settle such matters so long as such
settlement does not involve any monetary payment by the Company
and/or its Subsidiaries and does not otherwise have
a material adverse effect on the business of the
Company and its Subsidiaries with respect to any state
taxes.
Amounts owed by Holdings under the foregoing
indemnity may be paid in cash or through the transfer to Fusion of
a number of shares of Fusion common stock equal to (rounded up or
down to the nearest whole share) (1) the amount of such obligation
divided by (2) the greater of (A) $3.00, or (B) the weighted
average daily closing bid price of the Fusion common
stock, as reported by NASDAQ (or any successor to such exchange),
for five (5) consecutive trading days ending immediately prior to
the third (3rd) business day preceding the date of such transfer.
Any cash payment and/or return of shares of Fusion common stock
shall be completed within five (5) business days of the date that
the Covered Subsidiary's liability has been
determined. During the Indemnity Period, Holdings
shall, at all times, maintain in its name liquid assets
and shares of Fusion common stock with an aggregate value of no
less than $5.0 million; provided, that for the purposes of
determining the value of shares of Fusion common stock, such shares
will not be deemed to have a value of less than $3.00 per share,
regardless of the then-current market price for such shares.
Amounts owed by Holdings under this indemnity shall be settled
within ten (10) days of the liability being
incurred.
This
letter agreement shall be governed by, and construed and enforced
in accordance with, the internal Laws of the State of Delaware,
without regard to any applicable conflict of laws principles
(whether of the State of Delaware or any other jurisdiction). This
letter agreement may be executed in two or more counterparts, each
of which will be considered one and the same agreement and will
become effective when counterparts have been signed by each of the
parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
[Signatures
are on the following page]
If you
agree with the foregoing, please sign and return a copy of this
letter agreement, which will constitute our agreement with respect
to the subject matter hereof.
Very
truly yours,
BCHI
HOLDINGS, LLC
By:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
Jr.
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title:
Manager
ACKNOWLEDGED AND
AGREED to
as of
this 4th
day of May, 2018:
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇.
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title:
Executive Vice President and General Counsel
[Signature Page to Side Letter]