UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): April 30, 2012

Global Telecom & Technology, Inc.
(Exact Name of Registrant as Specified in its Charter)


Delaware
000-51211
20-2096338
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
   
8484 Westpark Drive
Suite 720
McLean, VA 22102
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (703) 442-5500
   
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (See General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 


 
 
 

 

Item 1.01. Entry into a Material Definitive Agreement.
 
On April 30, 2012, Global Telecom & Technology Americas, Inc. (“GTTA”), a wholly-owned subsidiary of Global Telecom & Technology, Inc. (the “Company”), entered into an agreement (the “Acquisition Agreement”) to acquire nLayer Communications, Inc. (“nLayer”) through the acquisition of all of the equity interests in nLayer from Jordan Lowe and Daniel Brosk Trust dated December 22, 2006, who were the sole owners of nLayer prior to the acquisition.  The closing of the acquisition occurred simultaneously with the signing of the Acquisition Agreement.
 
In consideration for the equity interests in nLayer, GTTA paid the sellers an aggregate purchase price of $18.0 million, in cash, subject to:
 
·
a working capital adjustment; and
   
·
a reduction if nLayer’s revenue is lower than specified target levels during the two year period after the closing of the acquisition.

At the closing, GTTA paid $12.0 million of the purchase price, and the remaining $6.0 million of the purchase price, subject to adjustment, will be paid over the two-year period after the closing.  The sellers may elect to receive up to one-half of the post-closing payments to which they become entitled in the form of common stock of the Company, valued for this purpose at $2.45 per share.  In connection with this covenant, at the closing of the acquisition the Company and the sellers entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company is obligated to file up to three registration statements under the Securities Act of 1933, as amended, with respect to the resale by the sellers of any of the common stock that they elect to receive in lieu of cash payments under the Acquisition Agreement.
 
The Acquisition Agreement contains representations, warranties, covenants, limitations on liability and indemnification, in each case on terms which are common for transactions of this nature.  The Acquisition Agreement also includes restrictive covenants binding up the sellers and certain of their affiliates regarding confidentiality, non-competition, non-solicitation of customers, vendors and employees and non-disparagement, in each case which are common for transactions of this nature.
 
In connection with the Acquisition Agreement, the Company entered into new financing arrangements, which are described in Item 2.03 and incorporated by reference into this Section 1.01.
 
The foregoing description of the Acquisition Agreement and related documents does not purport to be complete and is qualified in its entirety by reference to the full text of the Acquisition Agreement and the Registration Rights Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, to this Form 8-K and are incorporated herein by reference.

Item 2.01.      Completion of Acquisition or Disposition of Assets.

As described in Item 1.01, on April 30, 2012, GTTA acquired all of the equity interests in nLayer.  Accordingly, nLayer is now a wholly-owned subsidiary of GTTA, which, in turn, is a wholly-owned subsidiary of the Company.

Item 2.03. Creation of a Direct Financial Obligation.

To fund the Company’s acquisition of nLayer, as described in Item 1.01, the Company arranged financing with its existing senior lender, Silicon Valley Bank, a California corporation (the “Bank”), in the form of modifications to the Company’s existing loan and security agreements with the Bank that, among other matters, expands the amount of borrowing under the Company’s United States term loan facility.  In addition, the Company arranged financing through an increase in the Company’s existing mezzanine financing arrangement, in the form of a modification to its existing note purchase agreement with BIA Digital Partners SBIC II LP, a Delaware limited
 

 
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partnership (“BIA”), that expands the amount of borrowing under the note purchase agreement and adds Plexus Fund II, L.P. (“Plexus”) as a new note purchaser and lender thereunder.  

Joinder and Second Loan Modifications to U.S. Senior Credit Facility
 
On April 30, 2012, in connection with the nLayer acquisition, the Company and its United States subsidiaries, GTTA, WBS Connect LLC (“WBS”), PacketExchange (USA), Inc. (“PEUSA”) and PacketExchange, Inc. (“PEINC”, and together with the Company, GTTA, WBS and PEUSA, collectively, the “Existing Borrower”), and nLayer (nLayer and the Existing Borrower together are the “Borrower”) entered into a Joinder and Second Loan Modification Agreement (the “Modification Agreement”) with the Bank, which amends that certain Loan and Security Agreement (the “Loan Agreement”), dated June 29, 2011, as amended, by and among the Bank and the Existing Borrower.
 
The Modification Agreement increases the amount of the U.S. term loan facility from $13 million to $18,333,333 (the “Term Loan”), while the amount of the U.S. revolving line of credit facility (the “Line of Credit”) remains unchanged. The Modification Agreement contains customary representations, warranties and covenants of the Borrower and customary and events of default. The obligations of the Borrower under the Modification Agreement are secured by substantially all of the Borrower’s tangible and intangible assets pursuant to the Loan Agreement.
 
The Term Loan matures on May 1, 2016. The Borrower will repay the Term Loan in sixteen (16) equal quarterly installments of principal, with each payment of principal being accompanied by a payment of accrued interest.  Interest accrues on the outstanding balance of the Term Loan at a floating per annum rate equal to the Bank’s prime rate plus 3.75%, unless the Borrower achieves certain performance criteria, in which case the interest rate will be equal to the Bank’s prime rate plus 2.75%.
 
The Line of Credit will mature on April 30, 2016, and the principal amount outstanding under the Line of Credit accrues interest at a floating per annum rate equal to the Bank’s prime rate plus 2.75%, unless the Borrower achieves certain performance criteria, in which case the interest rate will be equal to the Bank’s prime rate plus 1.75%.
 
In connection with the Modification Agreement, nLayer was added as a guarantor of the obligations of the Borrower under the Loan Agreement pursuant to an unconditional guaranty executed by nLayer in favor of the Bank.  This guaranty is secured by nLayer’s tangible and intangible assets pursuant to a security agreement containing representations, warranties and covenants substantially similar to those made under the Loan Agreement with respect to the Borrower.
 
Concurrent with entering into the Modification Agreement, the Bank, BIA, in its capacities as agent and as a note holder and Plexus entered into a Second Amended and Restated Intercreditor and Subordination Agreement which governs, among other things, ranking and collateral access for the respective lenders.
 
The foregoing description of the Modification Agreement and related documents does not purport to be complete and is qualified in its entirety by reference to the full text of the Modification Agreement, which is filed as Exhibits 10.3 to this Form 8-K and is incorporated herein by reference.
 
Second Loan Modifications to European Senior Credit Facility
 
On April 30, 2012, in connection with the acquisition of nLayer, the Company’s international subsidiaries, GTT-EMEA, Ltd, PacketExchange (Ireland) Limited and PacketExchange (Europe) Limited (collectively, the “European Borrower”), entered into a Second Loan Modification Agreement (the “European Modification
 

 
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Agreement”) with the Bank, which amends that certain Amended and Restated Loan and Security Agreement (the “European Loan Agreement”), dated June 29, 2011, as amended, by and among the Bank and the European Borrower.

The European Modification Agreement did not adjust the authorized amount of the term loan facility (the “Non-U.S. Term Loan”) or the amount of the revolving line of credit facility (the “Non-U.S. Line of Credit”).  The European Modification Agreement contains customary representations, warranties and covenants of the European Borrower and customary events of default.  The obligations of the European Borrower under the European Modification Agreement are secured by substantially all of the European Borrower’s tangible and intangible assets pursuant to the European Loan Agreement.
 
The Non-U.S. Term Loan matures on May 1, 2016.  The European Borrower will repay the Non-U.S. Term Loan in sixteen (16) equal quarterly installments of principal, with each payment of principal being accompanied by a payment of accrued interest.  Interest accrues on the outstanding balance of the Non-U.S. Term Loan at a floating per annum rate equal to the Bank’s prime rate plus 3.75%, unless the European Borrower achieves certain performance criteria, in which case the interest rate will be equal to the Bank’s prime rate plus 2.75%.
 
The Non-U.S. Line of Credit will mature on April 30, 2016, and the principal amount outstanding under the Non-U.S. Line of Credit accrues interest at a floating per annum rate equal to the Bank’s prime rate plus 2.75%, unless the European Borrower achieves certain performance criteria, in which case the interest rate will be equal to the Bank’s prime rate plus 1.75%.
 
The foregoing description of the European Modification Agreement and related documents does not purport to be complete and is qualified in its entirety by reference to the full text of the European Modification Agreement, which is filed as Exhibit 10.4 to this Form 8-K and is incorporated herein by reference.
 
Note Purchase Agreement for Second Lien Credit Facility
 
Concurrent with the nLayer acquisition, on April 30, 2012, the Company and its subsidiaries GTTA, WBS, PEUSA and PEINC (collectively, the “Note Borrower”) entered into an Amended and Restated Note Purchase Agreement (the “Amended Note Purchase Agreement”) with BIA and Plexus (together with BIA and any future holders of notes issues under the Amended Note Purchase Agreement, the “Note Holders”).  The Amended Note Purchase Agreement provides for an increase in the total financing commitment by $8.0 million, of which $6.0 million was immediately funded.  The remaining $2.0 million of the committed financing may be called by the Note Borrower, subject to certain conditions, on or before December 31, 2012, which dated may be extended at the sole option of the Note Holders.  The Amended Note Purchase Agreement contains customary representations, warranties and covenants of the Note Borrower and customary events of default. The obligations of the Note Borrower under the Amended Note Purchase Agreement are secured by substantially all of the Note Borrower’s tangible and intangible assets pursuant to the Amended Note Purchase Agreement.  In addition to the promissory note issued to Plexus, in connection with the Amended Note Purchase Agreement the Note Borrower issued an amended and restated promissory note to BIA, which note is on substantially the same terms as the note previously issued to BIA.
 
The Notes mature on June 6, 2016.  The obligations evidenced by the Notes will bear interest at a rate of 13.5% per annum, of which (i) at least 11.5% per annum is payable, in cash, monthly in arrears on the last calendar day of each month (“Interest Payment Date”) in each year (“Cash Interest Portion”) and (ii) 2.0% per annum is, at the Note Borrower’s option, payable in cash (upon not less than three business days notice prior to such Interest Payment Date) or payable in-kind. If the Note Borrower achieves certain performance criteria, the obligations evidenced by the Notes will bear interest at a rate of 12.0% per annum, with a Cash Interest Portion of at least 11.0% per annum payable in arrears on each Interest Payment Date of each year.
 

 
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In connection with the Amended Note Purchase Agreement, nLayer was added as a guarantor of the obligations of the Note Borrower under the Amended Note Purchase Agreement pursuant to an unconditional guaranty executed by nLayer in favor of the Note Holders.  This guaranty is secured by a second lien on nLayer’s tangible and intangible assets pursuant to a security agreement containing representations, warranties and covenants substantially similar to those made in the Amended Note Purchase Agreement with respect to the Note Borrower.  In addition, the equity interests in nLayer were pledged as additional security for the obligations of the Note Borrower under the Amended Note Purchase Agreement.
 
As described above, concurrent with entering into the Note Purchase Agreement, the Bank, BIA, in its capacities as agent and as a Note Holder and Plexus entered into a Second Amended and Restated Intercreditor and Subordination Agreement which governs, among other things, ranking and collateral access for the respective lenders.
 
The foregoing description of the Amended Note Purchase Agreement and related documents does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended Note Purchase Agreement and such related documents. The Purchase Agreement, the related Note issued to Plexus and the Amended and Restated Note issued to BIA are filed as Exhibits 10.5, 10.6 and 10.7, respectively, to this Form 8-K and are incorporated herein by reference.
 
Warrant
 
On April 30, 2012, pursuant to the Amended Note Purchase Agreement, the Company issued to Plexus a Warrant (the “Warrant”) to purchase from the Company 535,135 shares of the Company’s common stock at an exercise price equal to $2.208 per share (as adjusted from time to time as provided in the Warrant).  Upon a change of control (as defined in the Amended Note Purchase Agreement), the repayment of the Notes prior to the maturity date of the Notes, the occurrence of an event of default under the Notes or the maturity date of the Notes, the holder of the Warrant shall have the option to require the Company to repurchase from the holder the Warrant and any shares received upon exercise of the Warrant and then held by the holder, which repurchase would be at a price equal to the greater of the closing price of the Company’s common stock on such date or a price determined by reference to the Company’s adjusted enterprise value on such date, in each case, with respect to any Warrant, less the exercise price per share.  The Warrant contains customary representations, warranties and covenants.  The Warrant was issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
 
The foregoing description of the Warrant does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant, which is filed as Exhibit 4.1 to this Form 8-K and is incorporated herein by reference.
 
Item 3.02 Unregistered Sale of Equity Securities

The information disclosed under Item 2.03 of this Form 8-K related to the issuance of the Warrant is incorporated herein by reference. The Warrant was issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
 
Item 8.01 Other Events
 
On May 1, 2012, the company issued a press release announcing the transactions contemplated by the Agreement.  A copy of such press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
 

 
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Item 9.01 Financial Statements and Exhibits
 
(a) Financial Statements

The financial statements required by this Item 9.01(a) with respect to the Registrant’s acquisition described in this Current Report on Form 8-K will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed with the Securities and Exchange Commission.
 
(b) Pro Forma Financial Information

The pro forma financial information required by this Item 9.01(b) with respect to the Registrant’s acquisition described in this Current Report on Form 8-K will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed with the Securities and Exchange Commission.
 
(d) Exhibits

4.1
Warrant, dated April 30, 2012, issued by Global Telecom & Technology, Inc. to Plexus Fund II, L.P.
 
10.1
Stock Purchase Agreement, dated as of April 30, 2012, by and among nLayer Communications, Inc., Jordan Lowe, Daniel Brosk Trust dated December 22, 2006, Global Telecom & Technology Americas, Inc. and Global Telecom and Technology
 
10.2
Registration Rights Agreement, dated as of April 30, 2012, by and among Global Telecom & Technology, Inc., Jordan Lowe and Daniel Brosk Trust dated December 22, 2006
 
10.3
Joinder and Second Loan Modification Agreement, dated April 30, 2012, by and between (i) Silicon Valley Bank, (ii) Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., PacketExchange (USA), Inc., PacketExchange, Inc., WBS Connect LLC and (iii) nLayer Communications, Inc.
 
10.4
Second Loan Modification Agreement, dated April 30, 2012, by and between (i) Silicon Valley Bank and (ii) GTT-EMEA, Ltd., PacketExchange (Ireland) Limited and PacketExchange (Europe) Limited
 
10.5
Amended and Restated Note Purchase Agreement, dated April 30, 2012, by and between (i) Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange, Inc., PacketExchange (USA), Inc., nLayer Communications, Inc., (ii) BIA Digital Partners SBIC II LP, as agent for the Purchasers, and (iii) the Purchasers party thereto
 
10.6
Note, dated April 30, 2012, issued by Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.
 
10.7
Amended and Restated Note, dated April 30, 2012, issued by Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.
 
99.1
Press Release dated May 1, 2012

 
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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Date:  May 4, 2012
GLOBAL TELECOM & TECHNOLOGY, INC.
   
   
   /s/ Chris McKee
 
 
Chris McKee
Secretary and General Counsel



 
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EXHIBIT INDEX
 
Exhibit No.
 
Description
4.1
 
Warrant, dated April 30, 2012, issued by Global Telecom & Technology, Inc. to Plexus Fund II, L.P.
 
10.1
 
Stock Purchase Agreement, dated as of April 30, 2012, by and among nLayer Communications, Inc., Jordan Lowe, Daniel Brosk Trust dated December 22, 2006, Global Telecom & Technology Americas, Inc. and Global Telecom and Technology
 
10.2
 
Registration Rights Agreement, dated as of April 30, 2012, by and among Global Telecom & Technology, Inc., Jordan Lowe and Daniel Brosk Trust dated December 22, 2006
 
10.3
 
Joinder and Second Loan Modification Agreement, dated April 30, 2012, by and between (i) Silicon Valley Bank, (ii) Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., PacketExchange (USA), Inc., PacketExchange, Inc., WBS Connect LLC and (iii) nLayer Communications, Inc.
 
10.4
 
Second Loan Modification Agreement, dated April 30, 2012, by and between (i) Silicon Valley Bank and (ii) GTT-EMEA, Ltd., PacketExchange (Ireland) Limited and PacketExchange (Europe) Limited
 
10.5
 
Amended and Restated Note Purchase Agreement, dated April 30, 2012, by and between (i) Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange, Inc., PacketExchange (USA), Inc., nLayer Communications, Inc., (ii) BIA Digital Partners SBIC II LP, as agent for the Purchasers, and (iii) the Purchasers party thereto
 
10.6
 
Note, dated April 30, 2012, issued by Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.
 
10.7
 
Amended and Restated Note, dated April 30, 2012, issued by Global Telecom & Technology, Inc., Global Telecom & Technology (Americas), Inc., WBS Connect, LLC, PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.
 
99.1
 
Press Release dated May 1, 2012
 
 
 
 
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EXHIBIT 4.1
 
EXECUTION COPY

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
 

 
GLOBAL TELECOM AND TECHNOLOGY, INC.
 
WARRANT
 
Warrant No. 2012-1   Dated: April 30, 2012
   
Global Telecom and Technology, Inc., a Delaware corporation (the “ Company ”), hereby certifies that, for value received, Plexus Fund II, L.P., a Delaware limited partnership, or its registered assigns (the “ Holder ”), is entitled to purchase from the Company up to a total of 535,135 shares of common stock, $0.001 par value per share (the “ Common Stock ”), of the Company (each such share, a “ Warrant Share ” and all such shares, the “ Warrant Shares ”) at an exercise price equal to $ 2.208 per share (as adjusted from time to time as provided in Section 9 , the “ Exercise Price ”), at any time and from time to time from and after the date hereof and through and including the tenth anniversary of the date hereof (the “ Expiration Date ”), and subject to the following terms and conditions.  This Warrant has been issued pursuant to the terms of the Purchase Agreement.
 
1.            Definitions .  In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in Exhibit A attached hereto.
 
2.            Registration of Warrant .  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual written notice to the contrary.
 
3.            Registration of Transfers .  This Warrant, or any portion of this Warrant, may not be transferred, pledged or otherwise assigned without the prior written consent of the Company, not to be unreasonably withheld.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment, attached hereto as Exhibit C , duly completed and signed, to American Stock Transfer & Trust Company, LLC (the “ Transfer Agent ”) or the Company at its address specified herein.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “ New Warrant ”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.
 
4.            Exercise and Duration of Warrant .
 

 
 
 

 

(a)           This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the date hereof to and including the Expiration Date.  At 5:00 p.m. New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value; provided that, if the Closing Price on the Expiration Date exceeds the Exercise Price on the Expiration Date, then this Warrant shall be deemed to have been exercised in full (to the extent not previously exercised) on a “cashless exercise” basis at 5:00 p.m. New York City time on the Expiration Date; provided further that, Company shall have no liability to Holder for any losses resulting from any such deemed exercise.
 
(b)           A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto as Exhibit B (the “ Exercise Notice ”), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice and if a “cashless exercise” may occur at such time pursuant to Section 10 below), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “ Exercise Date .”  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.
 
5.            Delivery of Warrant Shares .
 
(a)           Upon exercise of this Warrant, the Company shall promptly (but in no event later than the second Trading Day after the Exercise Date) issue or cause to be issued and cause to be delivered to, or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends unless a registration statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder thereunder is not then effective and the Warrant Shares are not freely transferable without volume restrictions pursuant to Rule 144 under the Securities Act.  The Holder, or, subject to Section 6 , any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become holder of record of such Warrant Shares as of the Exercise Date.  The Company shall, upon request of the Holder, use its commercially reasonable efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions.
 
(b)           This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares.  Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.
 
(c)           In addition to any other rights available to a Holder, if the Company fails to deliver to the Holder a certificate representing Warrant Shares on the date on which delivery of such certificate is required by this Warrant, such Holder may notify the Company via facsimile, mail or any other means, of its failure to deliver the certificate (a “ Delivery Failure Notice ”).  If the Company fails to deliver to the Holder a certificate representing Warrant Shares by the second Trading Day after delivery of the Delivery Failure Notice by the Holder and if after such second Trading Day after the delivery of the Delivery Failure Notice, but no later than the fifth Trading Day after the delivery of the Delivery Failure Notice, or if earlier, the delivery of the certificate, the Holder purchases (in an open market transaction) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares that the Holder anticipated receiving from the Company (a “Buy-In” ), then in the Holder’s sole discretion, the Company shall within two Trading Days after the Holder’s request delivered within five days of such
 

 
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purchase, pay cash to the Holder in an amount equal to the Holder’s total purchase price (including reasonable brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price” ), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate.
 
(d)           The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.
 
6.            Charges, Taxes and Expenses .  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an Affiliate thereof and the Company shall not be required to deliver any Warrant Shares unless such payment, if any, has been made.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.
 
7.            Replacement of Warrant .  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.
 
8.            Reservation of Warrant Shares .  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9 ).  The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.  The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.
 
9.            Certain Adjustments .  The Exercise Price and number of Warrant Shares issuable upon
 

 
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exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9 .
 
(a)            Stock Dividends and Splits .  If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.
 
(b)            Pro Rata Distributions .  If the Company, at any time while this Warrant is outstanding, distributes to holders of Common Stock (i) evidence of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, “ Distributed Property ”), then in each such case the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution shall be adjusted (effective on such record date) to equal the product of such Exercise Price times a fraction of which the denominator shall be the average of the Closing Prices for the five Trading Days immediately prior to (but not including) such record date and of which the numerator shall be such average less the then fair market value of the Distributed Property distributed in respect of one outstanding share of Common Stock, as determined by a regionally or nationally recognized appraisal firm, designated by the Company’s board of directors and reasonably acceptable to the Holder (an “ Appraiser ”).  As an alternative to the foregoing adjustment to the Exercise Price, at the request of the Holder delivered within five days of receipt of notice of its right to such Distributed Property, the Company will deliver to such Holder, within five Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed Property that such Holder would have been entitled to receive in respect of the Warrant Shares for which this Warrant could have been exercised immediately prior to such record date.  If such Distributed Property is not delivered to a Holder pursuant to the preceding sentence, then upon expiration of or any exercise of this Warrant that occurs after such record date, such Holder shall remain entitled to receive, in addition to the Warrant Shares otherwise issuable upon such exercise (if applicable), such Distributed Property, or, at the Company’s reasonable discretion, cash equal to the fair market value of such Distributed Property at the time of such original distribution.
 
(c)            Fundamental Transactions .  If, at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a “ Fundamental Transaction ”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “ Alternate Consideration ”).  The aggregate Exercise Price for this Warrant will not be
 

 
4

 

affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction (at the time of such Fundamental Transaction).  At the Holder’s request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof.  The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
(d)            Subsequent Equity Sales .
 
(i)           If, at any time while this Warrant is outstanding, the Company or any Subsidiary issues additional shares of Common Stock or rights, warrants, options or other securities or debt convertible, exercisable or exchangeable for shares of Common Stock or otherwise entitling any Person to acquire shares of Common Stock (collectively, “ Common Stock Equivalents ”) at an effective net price to the Company per share of Common Stock (the “ Effective Price ”) less than the VWAP for the five Trading Days prior to such issuance (the “ Adjustment Price ”), then the Exercise Price shall be reduced to equal the product of (A) the Exercise Price in effect immediately prior to such issuance of Common Stock or Common Stock Equivalents times (B) a fraction, the numerator of which is the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issuance, plus (2) the number of shares of Common Stock which the aggregate Effective Price of the Common Stock issued (or deemed to be issued) would purchase at the Adjustment Price, and the denominator of which is the aggregate number of shares of Common Stock outstanding or deemed to be outstanding immediately after such issuance.  For purposes of this paragraph, in connection with any issuance of any Common Stock Equivalents, (A) the maximum number of shares of Common Stock potentially issuable at any time upon conversion, exercise or exchange of such Common Stock Equivalents (the “ Deemed Number ”) shall be deemed to be outstanding upon issuance of such Common Stock Equivalents, (B) the Effective Price applicable to such Common Stock shall equal the minimum dollar value of consideration payable to the Company to purchase such Common Stock Equivalents and to convert, exercise or exchange them into Common Stock (net of any discounts, fees, commissions and other expenses), divided by the Deemed Number, and (C) no further adjustment shall be made to the Exercise Price upon the actual issuance of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents.
 
(ii)           If, at any time while this Warrant is outstanding, the Company or any Subsidiary issues Common Stock Equivalents with an Effective Price or a number of underlying shares that floats or resets or otherwise varies or is subject to adjustment based directly on market prices of the Common Stock (a “ Floating Price Security ”), then for purposes of applying the preceding paragraph in connection with any subsequent exercise, the Effective Price will be determined separately on each Exercise Date and will be deemed to equal the lowest Effective Price at which any holder of such Floating Price Security is entitled to acquire Common Stock on such Exercise Date (regardless of whether any such holder actually acquires any shares on such date).
 
(iii)           Notwithstanding the foregoing, no adjustment will be made under this
 

 
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paragraph (d) in respect of any Excluded Stock.
 
(e)            Number of Warrant Shares .  Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
 
(f)            Calculations .  All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
 
(g)            Notice of Adjustments .  Upon the occurrence of each adjustment pursuant to this Section 9 , the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.
 
(h)            Notice of Corporate Events .  If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 20 days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
 
10.            Payment of Exercise Price .  In its sole discretion, the Holder shall pay the Exercise Price in immediately available funds or through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:
 
 
X = Y [(A-B)/A]
where:
 
 
X = the number of Warrant Shares to be issued to the Holder.
   
 
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
   
 
A = the VWAP for the five Trading Days immediately prior to the Exercise Date.
   
 
B = the Exercise Price.


 
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For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued in connection with the transactions contemplated by that certain Amended and Restated Note Purchase Agreement, dated as of April 30, 2012, by and among the Company, the Holder and the other parties named therein (the “ Purchase Agreement ”).
 
11.            Limitation on Exercise .  Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the “ Maximum Percentage ”) of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph.  The Company’s obligation to issue shares of Common Stock in excess of the limitation referred to in this Section shall be suspended (and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation (but not beyond the Expiration Date).  By written notice to the Company, the Holder may waive the provisions of this Section 11 or increase or decrease the Maximum Percentage to any other percentage specified in such notice, but any such waiver or increase will not be effective until the 61st day after such notice is delivered to the Company.
 
12.            Put Rights .
 
(a)            In addition and not in limitation of the Holder’s rights pursuant to Section 9(c) , at any time upon or following the earlier of (w) the occurrence of a Change of Control (as defined in the Purchase Agreement), (x) the repayment of the outstanding Notes in full prior to the Maturity Date, (y) the occurrence of an Event of Default and such Event of Default is continuing and has not been cured, provided that any portion of the Notes is then outstanding, or (z) the Maturity Date (each of (w)-(z), a “ Put Trigger Event ” and the date of the occurrence of a Put Trigger Event, the “ Put Trigger Date ”), the Holder shall have the right, but not the obligation, upon five (5) Trading Days’ prior written notice to the Company, to require the Company to purchase this Warrant or the Holder’s Warrant Shares for a purchase price in cash equal to the product of (i) the greater of (A) the Closing Price on the Put Trigger Date and (B) the Common Equity Value Per Share on the Put Trigger Date, less in each instance the Exercise Price in the case of a purchase of all or any unexercised portion of this Warrant (the amount determined by the foregoing (i), the “ Per-Share Target Price ”); multiplied by (ii) the number of Warrant Shares covered by the unexercised portion hereof or to be sold hereunder (such product, the “ Target Price ”); provided , however , that the rights provided to the Holder shall not be exercisable in the event that (x) the Closing Price is greater than the Per-Share Target Price on each of the forty-five (45) Trading Days prior to the Put Trigger Date, and (y) the Common Stock is listed on an Eligible Market from and after the Put Trigger Date and the nature of the Put Triggering Event does not foreclose the continued listing of the Company’s Shares.  The Per-Share Target Price and Target Price shall in all cases be determined without giving effect to any deductions for (x) liquidity considerations, (y) minority shareholder status, or (z) any liquidation or other preference or any right of redemption in favor of any other equity securities of the Company.
 

 
7

 

(b)           In the event a Put Triggering Event occurs and the Company is unable to purchase this Warrant or Warrant Shares in cash pursuant to the terms of Section 12(a) (including without limitation a failure of the Company to obtain any necessary waivers pursuant to the terms of any Indebtedness), the Company shall issue a note, in the form attached hereto as Exhibit D (a “ Put Note ”), with a principal face amount equal to the Target Price.
 
13.            Fractional Shares .  The Company shall not be required to issue or cause to be issued fractional Warrant Shares upon the exercise of this Warrant.  If any fraction of a Warrant Share would, except for the provisions of this Section 13 , be issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.
 
14.            Notices .  Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number, as applicable, specified in this Section prior to 5:00 p.m. New York City time on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m. New York City time on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  The addresses for such notices or communications shall be as set forth on the signature pages hereto.
 
15.            Warrant Agent .  The Company shall serve as warrant agent under this Warrant.  Upon 30 days’ notice to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register.
 
16.            Certain Representations .  The Company has all requisite power and authority to execute, deliver and perform this Warrant, and to consummate the transactions contemplated hereby.  The execution, delivery and performance of this Warrant and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of the Company, its board of directors and stockholders.  This Warrant, upon execution and delivery, are the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforceability of creditors’ rights in general or by general principles of equity.
 
17.            Miscellaneous .
 
(a)           Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder.  This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction, subject to the provisions of Section 9(c) .  This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the
 

 
8

 

Holder and their successors and assigns.
 
(b)           The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.  Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its shareholder books or records in any manner which interferes with the timely exercise of this Warrant.
 
(c)            Governing Law; Venue; Waiver Of Jury Trial .  the corporate laws of the state of Delaware shall govern all issues concerning the relative rights of the company and its stockholders.  all questions concerning the construction, validity, enforcement and interpretation of this warrant 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 laws principles which would require the application of the laws of any other jurisdiction.  each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of New York, State of New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper.  each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  the company and holder hereby waive all rights to a trial by jury.
 
(d)           The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.
 
(e)           In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
 
(f)           Notwithstanding anything herein to the contrary, the rights and benefits conferred on the Holder in respect of its Warrant Shares pursuant to the provisions hereof (including Section 12 ) shall continue to inure to the benefit of, and shall be enforceable by, the Holder, notwithstanding the surrender of this Warrant to, and its cancellation by, the Company upon the full or partial exercise hereof.  The Holder shall be entitled to retain a copy of this Warrant as evidence of the continued effect of the provisions hereof.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
 

 
9

 

SIGNATURE PAGE FOLLOWS]
 

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.
 
   
 
GLOBAL TELECOM AND TECHNOLOGIES, INC.
   
   
 
By: /s/ Richard D. Calder, Jr.
 
Name: Richard D. Calder, Jr.
 
Title: President and Chief Executive Officer
 
 
 
 

 
11

 
 
EXECUTION COPY

EXHIBIT A

Defined Terms

Adjusted EBITDA ” shall have the meaning set forth in the Purchase Agreement.

Closing Price ” shall mean, for any Trading Day with respect to a share of Common Stock, (a) the VWAP for all shares of Common Stock traded for such day on the principal national securities exchange on which the Common Stock is listed or admitted to trading or if no such reported sales take place on any such day, the average of the closing bid and asked prices thereon, as reported in The Wall Street Journal , or (b) if such Common Stock shall not be listed or admitted to trading on a national securities exchange, then the VWAP for each sale of Common Stock for such day, or if no such reported sales take place on any such day, the average of the closing bid and asked prices, as reported by The Wall Street Journal for the over-the-counter market; provided that if clauses (a) or (b) applies and no price is reported in The Wall Street Journal for any Trading Day, then the VWAP for the most recent prior Trading Day shall be deemed to be the  price reported for such Trading Day.

“Common Equity Value Per Share” shall mean, as of any date, an amount equal to (a) the Enterprise Value as of such date plus the amount of any cash and cash equivalents of the Company and minus the outstanding Indebtedness of the Company as of such date; divided by (b) the number of Fully Diluted Shares outstanding as of such date.

“Eligible Market” shall mean any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, or the NASDAQ Capital Market.

“Enterprise Value” shall mean, as of any date, an amount equal to the sum of (i) seven (7) multiplied by (ii) the Adjusted EBITDA of the Company for the twelve full calendar months immediately preceding such date.

“Event of Default” shall have the meaning set forth in the Purchase Agreement.

“Excluded Stock” shall mean shares of Common Stock (i) reserved for issuance to employees, officers, directors, consultants or advisers pursuant to an equity incentive plan approved by the Board of Directors of the Company; (ii) subject to convertible securities outstanding as of the date of the Purchase Agreement; (iii) issued or deemed to be issued upon the payment of any dividend in respect of any convertible securities of the Company, (iv) issued in connection with mergers, acquisitions, and other similar transactions, (v) issued in financing transactions (excluding any sale or issuance solely to officers, directors, employees or other affiliates) at a discount to the VWAP for the five Trading Days prior to the date of such issuance not exceeding 10% (provided that if such discount exceeds 10%, only the share equivalent of such excess discount shall not be treated as Excluded Stock), up to a maximum of 20% of the number of shares of Common Stock then outstanding, or (vi) issued solely in respect of anti-dilution rights of any other security of the Company.

“Fully Diluted Shares” shall mean, as of a particular date, the sum of: (i) all shares of Common Stock outstanding on such date; and (ii) the number of shares of Common Stock into which all securities convertible into or exercisable or exchangeable for shares of Common Stock outstanding on such date, as if converted, exercised and exchanged to the fullest extent possible.

“Indebtedness” shall have the meaning set forth in the Purchase Agreement

 
 

 

“Maturity Date” shall mean June 6, 2016.

“Notes” shall mean promissory notes to be executed by Company in favor of Holder in the form attached as Exhibit C to the Purchase Agreement, which shall be in the amount purchased by Holder at each respective Takedown (as defined in the Purchase Agreement).

“Primary Market” means, as of any day, the primary market on which the shares of Common Stock are then traded.

“Subsidiary” shall mean, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

“Trading Day” shall mean (i) a day on which the Common Stock is traded on a Eligible Market, or (ii) if the Common Stock is not listed or quoted on a Eligible Market, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted on any Eligible Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices).

VWAP ” means, for any security as of any date, the dollar volume-weighted average price for such security on the Primary Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Primary Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as the Primary Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the VWAP cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved by an Appraiser.  All such determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.


 
 

 

EXHIBIT B

Form of Exercise Notice


(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To:  Global Telecom and Technologies, Inc.
 
The undersigned is the Holder of Warrant No. _______ (the “ Warrant ”) issued by Global Telecom and Technologies, Inc., a Delaware corporation (the “ Company ”).  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.
 
1.
The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.
 
2.
The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.
 
3.
The Holder intends that payment of the Exercise Price shall be made as (check one):
 
____           “Cash Exercise”
 
____           “Cashless Exercise”
 
4.
If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.
 
5.
Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.
 
6.
Following this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares.
 
     
     
Dated: ________________, ________
 
Name of Holder:
     
   
(Print) ________________________________
     
   
By:___________________________________                                                             
   
Name:_________________________________                                                             
   
Title:__________________________________                                                             
     
   
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)


 
 

 

EXHIBIT C

Form of Assignment
 

[To be completed and signed only upon transfer of Warrant]
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase  ____________ shares of Common Stock of Global Telecom and Technology, Inc. to which the within Warrant relates and appoints ________________ attorney to transfer said right on the books of Global Telecom and Technology, Inc. with full power of substitution in the premises.
 
   
   
Dated: ________________, ________
 
   
  ______________________________________________________ 
 
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
   
 
 
_______________________________________________ 
 
Address of Transferee
   
   
  _______________________________________________ 
   
  _______________________________________________ 
   
In the presence of:
 
   
_______________________________   
   

 

 
 

 

EXHIBIT D
Form of Put Note

PUT NOTE

 
$[__________] 1 [______] [__], 201[_]
   

FOR VALUE RECEIVED, the undersigned, GLOBAL TELECOM & TECHNOLOGY, INC ., a Delaware corporation (“ GTTI ”), GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC. , a Virginia corporation (“ GTTA ”), each with offices located at 8484 Westpark Drive, Suite 720, McLean, Virginia 22102, WBS CONNECT, LLC, a Colorado limited liability company with offices located at 8400 E. Crescent Parkway, Suite 600, Greenwood Village, Colorado 80111 (“ WBS ”), PACKETEXCHANGE (USA), INC. , a Delaware corporation (“ PEUSA ”), and PACKETEXCHANGE, INC. , a Delaware corporation (“ PEINC ”, and together with GTTI, GTTA, WBS, and PEUSA, individually and collectively, jointly and severally, the “ Borrower ”), jointly and severally hereby promise, subject to the terms and conditions hereof including Section 5 , to pay to the order of PLEXUS FUND II, L.P. , a Delaware limited partnership with an office located at 4601 Six Forks Road, Raleigh, North Carolina 27609 (together with any permitted successors and/or assigns, the “ Holder ”), in lawful money of the United States and in immediately available funds, the principal amount of [_____________] and [__]/100 DOLLARS ($[_____________]) (the “ Initial Principal Amount ”), plus any PIK Interest (as defined below) together with any accrued interest thereon that has not been capitalized, on [_______] [__], 201[_] 2 , as such date may be accelerated as provided herein (the “ Maturity Date ”).  This Note is the Put Note referred to in that certain Warrant, dated April 30, 2012, issued by GTTI in favor of the Holder (the “ Warrant ”).  Capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Warrant.

1.            Interest .
 
(a)           Interest shall be calculated based upon a 360-day year.  Interest on this Promissory Note (as amended, restated, supplemented, or otherwise modified from time to time, this “ Note ”) shall bear interest at a rate of thirteen and one half percent (13.5%) per annum, of which ( i ) at least eleven and one half percent (11.5%) per annum shall be payable in cash monthly in arrears on each Interest Payment Date in each year (the “ Cash Interest Portion ”), commencing with the first Interest Payment Date following the date hereof and ( ii ) two percent (2.0%) per annum shall be paid-in-kind (the “ PIK Interest ”); provided , however , that as long as this Note remains outstanding, interest (including the Cash Interest Portion) on this Note shall increase by two percent (2%) per annum on each anniversary of the date hereof, up to a maximum of 19.5%.  The PIK Interest, when made, shall be treated as principal for all purposes hereunder, including calculation of future Principal Increases.
 
2.            Payments .
 
(a)            Interest Payments .  Unless otherwise provided, interest is payable monthly in arrears on the last calendar day of each month (each such date, an “ Interest Payment Date ”).  In computing interest
 


 
1 Amount equal to equal to the Target Price (as defined in the Warrant).
 
2 Date which is three (3) years following put.

 
 

 

on the Note, all Payments received after 3:00 p.m. Eastern time on any day shall be deemed received on the next Business Day.  All such payments of interest shall be made by way of automatic bank draft.
 
(b)            Principal Payments .  The principal of this Note shall be repaid on the following dates and in the following amounts:
 

Date
 
Installment Amount
 
[________] [__], 201[_] 3 , and the
last day of each fiscal quarter
thereafter
 
 
$[________] 4

 
 
3.            Prepayment .  This Note may be prepaid, in whole or in part prior to the Maturity Date by Borrower, effective three (3) Business Days after written notice of such prepayment is given to Holder, by payment of the principal amount of the Note to be redeemed, plus accrued and unpaid interest and fees thereon through the date of such redemption.
 
4.            Method of Payment .  All payments hereunder shall be made for the account of the Holder at its office located at 4601 Six Forks Road, Raleigh, North Carolina 27609, or to such other address as the Holder may designate in writing to the Borrowers.
 
(a)            Covenants .  The Borrower covenant and agree that, until the payment in full of the obligations under this Note, Borrower shall abide by all covenants contained in the Purchase Agreement.
 
5.            Events of Default .
 
(a)           An “ Event of Default ” occurs if:
 
(i)           any Borrower defaults in the payment of (1) the principal of, or interest on, this Note when the same becomes due and payable at maturity, upon acceleration, or otherwise, or (2) all or any portion of the obligations under this Note consisting of fees or charges due to the Holder, reimbursement of expenses or other amounts in accordance with the terms hereof, and any such failure continues for a period of 5 business days; and
 
(ii)           any “Event of Default” (as such term is defined in the Purchase Agreement) occurs.
 
(b)            Acceleration .  If an Event of Default occurs and is continuing, the Holder, by written notice to the Borrowers (as provided in Section 11 )), may declare the unpaid principal of and accrued interest on this Note to be immediately due and payable.  Notwithstanding the foregoing, if an Event of Default specified in Section 8.5 of the Purchase Agreement occurs, all principal of and interest on this Note outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Holder.  The Holder by written notice to the Borrowers may rescind an
 


 
3 Last day of the first fiscal quarter after the quarter in which the put occurs.
 
4 Quarterly amortizing principal payments over the three (3) year maturity of the Note.

 
 

 

acceleration and its consequences if (1) all existing Events of Default, other than the nonpayment of principal of or interest on this Note which has become due solely because of the acceleration, have been cured or waived, and (2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
 
(c)            Default Rate .  Any payment of principal or interest under this Note shall begin to bear interest at a penalty rate of two percent (2%) above the-then applicable interest rate per annum upon the occurrence and during the continuance of an Event of Default under this Note.
 
(d)            Remedies Cumulative .  A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All remedies are cumulative to the extent permitted by law.
 
6.            Amendment and Waiver .
 
(a)            Consent Required .  Any term, covenant, agreement or condition of this Note may be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively) by an agreement in writing signed by the Borrower and the Holder.
 
(b)            Effect of Amendment or Waiver .  Any amendment or waiver shall be binding upon the Holder, upon each future holder of any Note and upon the Borrower, whether or not such Note shall have been marked to indicate such amendment or waiver.  No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon.
 
7.            Replacement Notes .  If a mutilated Note is surrendered to the Borrower or if the Holder presents evidence to the reasonable satisfaction of the Borrower that this Note has been lost, destroyed or wrongfully taken, the Borrower shall issue a replacement note of like tenor to the Holder.
 
8.            No Recourse Against Others .  No director, officer, employee or stockholder, as such, of the Borrower shall have any liability for any obligations of the Borrower under this Note or for any claim based on, in respect or by reason of, such obligations or their creation.  The Holder by accepting this Note waives and releases all such liability.  This waiver and release are part of the consideration for the issue of this Note.
 
9.            Successors, Assignment, etc .  This Note shall be binding upon and shall inure to the benefit of the Holder and the Borrower and their respective successors and permitted assigns.  The Borrower may not assign its obligations or interests under this Note without the prior written consent of the Holder.  The Holder may freely assign their obligations or interests under this Note.
 
10.            Severability .  If any provision of this Note is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect.
 
11.            Governing Law .  This Note shall be deemed a contract under, and shall be governed by and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State, without regard to conflict of laws principles which would require the application of the laws of any other jurisdiction.  The parties hereto irrevocably submit to the jurisdiction of the courts of the County of New York, located in the State of New York in connection with
 

 
 

 

all disputes and other matters arising from this Note, and irrevocably waive any objection to such courts on the grounds of inconvenient forum or otherwise.
 
[Signature page follows]
 

 

 
 

 

IN WITNESS WHEREOF, each Borrower has caused this Note to be duly executed, and the Holder has caused this Note to be duly acknowledged, as of the date set forth below.
 

GLOBAL TELECOM & TECHNOLOGY, INC .
 
By:                
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
By:                                                
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
PACKETEXCHANGE, INC.
 
By:                                                                     
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
WBS CONNECT, LLC
 
By:                                                  
Name:  Richard D. Calder, Jr.
Title:  CEO and President of the Sole Managing Member
 
PACKETEXCHANGE (USA), INC.
 
By:                                                 
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
NLAYER COMMINICATIONS, INC.
 
By:                                                  
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer










Signature Page of Put Note



 
 

 

ACKNOWLEDGED BY THE HOLDER
THIS ____ DAY OF  ________, 20_:


PLEXUS FUND II, L.P.

By: _________________________________
Name: Robert R Anders, Jr.
Title: Manager








Signature Page of Put Note

EXHIBIT 10.1
Execution Version

 


 

 
STOCK PURCHASE AGREEMENT
 
DATED AS OF APRIL 30, 2012
 
BY AND AMONG
 
NLAYER COMMUNICATIONS, INC.,
 
JORDAN LOWE,
 
DANIEL BROSK TRUST DATED DECEMBER 22, 2006
 
 
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
AND
 
GLOBAL TELECOM & TECHNOLOGY, INC.
(solely with respect to ARTICLE VIII)
 
 
 
 

 

 

 


 
 

 
TABLE OF CONTENTS
Page
 
Article I Purchase and Sale of Shares; Closing
 1
 
 
Section 1.1
Purchase and Sale of Shares 
1
 
Section 1.2
Purchase Price 
2
 
Section 1.3
Manner of Payment of Purchase Price 
3
 
Section 1.4
The Closing 
3
 
Section 1.5
Closing Deliveries 
3
 
Section 1.6
Purchase Price Adjustment 
6
 
Section 1.7
Procedures and Restrictions Applicable to Determination of Deferred Payment 
8
 
Section 1.8
Shares in Payment of Deferred Payment 
11
 
Article II Representations and Warranties of Purchaser 
12
 
 
Section 2.1
Organization and Standing 
12
 
Section 2.2
Authority; Enforceability 
12
 
Section 2.3
Consents 
13
 
Section 2.4
Legal Matters 
13
 
Section 2.5
No Violation 
13
 
Section 2.6
Accredited Investor 
13
 
Section 2.7
Brokers’ and Finders’ Fees 
13
 
Section 2.8
Issuance of Deferred Payment Shares 
14
 
Section 2.9
Financial Ability; No Restrictions 
14
 
Section 2.10
SEC Reports; Financial Statements 
14
 
Article III Representations And Warranties Regarding The Company
15
 
 
Section 3.1
Organization, Existence and Good Standing 
15
 
Section 3.2
Authority; Enforceability 
15
 
Section 3.3
Subsidiaries 
16
 
Section 3.4
Capitalization 
16
 
Section 3.5
Consents 
17
 
Section 3.6
No Violation 
17
 
Section 3.7
Certain Actions and Developments 
17
 
Section 3.8
Financial Statements 
19
 
Section 3.9
Absence of Undisclosed Liabilities 
20
 
Section 3.10
Personal Property; All Assets 
20
 
Section 3.11
Real Estate 
21
 
Section 3.13
Permits and Licenses 
21
 
Section 3.14
Compliance with Laws 
22
 
Section 3.15
Contracts 
22
 
Section 3.16
Intellectual Property 
24
 
Section 3.17
Taxes 
25
 
Section 3.18
Employment Matters 
27
 
Section 3.19
Legal Matters 
28
 
Section 3.20
Absence of Certain Practices 
28
 
Section 3.21
Affiliated Transactions 
28
 
Section 3.22
Customers, Sales Agents and Suppliers 
29
 
 
-i-

 
TABLE OF CONTENTS
(continued)
Page
 
 
Section 3.23
Warranties 
29
 
Section 3.25
Brokers’ and Finders’ Fees 
29
 
Article IV Representations And Warranties Of The Sellers 
29
 
 
Section 4.1
Organization and Standing 
30
 
Section 4.2
Authority; Enforceability 
30
 
Section 4.3
No Violation 
30
 
Section 4.4
Consents 
31
 
Section 4.5
Ownership 
31
 
Section 4.6
Legal Matters 
31
 
Section 4.7
Certain Relationships 
31
 
Section 4.8
Brokers’ and Finders’ Fees 
31
 
Article V Other Covenants And Agreements
32
 
 
Section 5.1
Further Assurances 
32
 
Section 5.2
Payments of Accounts Receivable 
32
 
Section 5.3
Third Party Claims 
32
 
Section 5.4
Confidentiality 
33
 
Section 5.5
Non-Competition for the Benefit of Purchaser 
33
 
Section 5.6
Non-Solicitation of Business Relations for the Benefit of Purchaser
34
 
Section 5.7
Non-Solicitation for Employment for the Benefit of Purchaser 
35
 
Section 5.8
Non-Disparagement for the Benefit of Purchaser 
35
 
Section 5.9
Non-Solicitation for Employment for the Benefit of the Sellers 
35
 
Section 5.10
Intention of Parties Regarding Restrictive Covenants; Remedies 
36
 
Article VI Tax Matters
37
 
 
Section 6.1
Payment of Taxes; Preparation and Filing of Tax Returns 
37
 
Section 6.2
Taxes Election 
39
 
Section 6.3
Tax Covenants 
41
 
Section 6.4
Cooperation on Tax Matters 
42
 
Article VII Survival; Indemnification
42
 
 
Section 7.1
Survival; Expiration of Indemnification Obligations 
42
 
Section 7.2
Indemnification of Purchaser 
43
 
Section 7.3
Indemnification of the Sellers 
44
 
Section 7.4
Limitation of Indemnification Obligations 
44
 
Section 7.5
Indemnification Claim Procedure 
45
 
Section 7.6
Procedures Relating to Indemnification for Third-Party Claims 
46
 
Section 7.7
Determination of Loss Amount; Reliance 
48
 
Section 7.8
Payment of Amounts Due 
49
 
Section 7.9
Exclusive Remedy 
50
 
-ii-

 
TABLE OF CONTENTS
(continued)
Page
 
Article VIII Miscellaneous 
50
 
 
Section 8.1
Expenses 
50
 
Section 8.2
Publicity 
51
 
Section 8.3
Notices 
51
 
Section 8.4
Assignment 
52
 
Section 8.5
Severability 
52
 
Section 8.6
Interpretation 
53
 
Section 8.7
Construction 
53
 
Section 8.8
Amendment and Waiver 
54
 
Section 8.9
Entire Agreement 
54
 
Section 8.10
Counterparts 
54
 
Section 8.11
Governing Law 
54
 
Section 8.12
Consent to Jurisdiction; Waiver of Jury Trial 
55
 
Section 8.13
No Third Party Beneficiaries 
56
 
Section 8.14
Remedies 
56
 
Section 8.15
Deliveries to Purchaser 
56
 
Section 8.16
Parent Guarantee 
56


 
 
-iii-

 

STOCK PURCHASE AGREEMENT
 
This STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made as of April 30, 2012, by and among nLayer Communications, Inc., an Illinois corporation (the “ Company ”), Jordan Lowe, an individual, Daniel Brosk Trust dated December 22, 2006 (the “ Trust ”), Global Telecom & Technology Americas, Inc., a Virginia corporation (“ Purchaser ”), and, solely with respect to Article VIII , Global Telecom & Technology, Inc., a Delaware corporation (“ Parent ”).  Jordon Lowe and the Trust are sometimes referred to in this Agreement individually as a “ Seller ” and collectively as the “ Sellers ,” and the Company, the Sellers, Purchaser and Parent are sometimes referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties . ”  Capitalized terms used in this Agreement without definition are defined in Annex I .
 
PRELIMINARY STATEMENTS
 
A.           The Sellers collectively, beneficially and of record, own all of the issued and outstanding shares of the Company’s common stock, no par value per share (the “ Shares ”).
 
B.           The Company is engaged in the business of providing Internet Protocol (IP)-based and data transport services to providers and end-users in North America and Europe (the “ nLayer Business ”).
 
C.           Purchaser desires to purchase all of the Shares from the Sellers, and each of the Sellers desires to sell the Shares owned by such Seller to Purchaser, on the terms and subject to the conditions herein contained (the “ Purchase ”).
 
D.           In connection with the consummation of the transactions contemplated hereby, and immediately prior to the consummation of the Closing, the Parties agree that the Company will distribute to its stockholders all cash of the Company.
 
AGREEMENT
 
In consideration of the mutual agreements and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
 
ARTICLE I
PURCHASE and SALE OF SHARES; CLOSING
 
Section 1.1          Purchase and Sale of Shares .  Upon the terms and subject to the conditions set forth in this Agreement, each Seller hereby sells, assigns, transfers and conveys to Purchaser, and Purchaser hereby purchases and acquires from such Seller, all right, title and interest in and to the Shares set forth across from the name of such Seller on Exhibit A in exchange for the payment by Purchaser of the amounts provided in Section 1.2 (the “ Purchase Price ”), which amount shall be subject to adjustment pursuant to Section 1.6 .
 

 
 

 

Section 1.2          Purchase Price .  The Purchase Price consists of:
 
(a)            an aggregate of Twelve Million Dollars ($12,000,000) that will be paid by Purchaser to the Sellers at the Closing (the “ Closing Date Payment ”); plus
 
(b)           an aggregate of Three Million Dollars ($3,000,000) that will be paid   by Purchaser to the Sellers on the earlier to occur of (i) April 30, 2013, and (ii) the occurrence of a Triggering Event; plus
 
(c)           an aggregate of One Million Five Hundred Thousand Dollars ($1,500,000) that will be paid   by Purchaser to the Sellers on the earlier to occur of (i) October 31, 2013, and (ii) the occurrence of a Triggering Event; plus
 
(d)           an aggregate of One Million Five Hundred Thousand Dollars ($1,500,000) that will be paid   by Purchaser to the Sellers on the earlier to occur of (i) April 30, 2014, and (ii) the occurrence of a Triggering Event   (such amount, together with the amounts referred to in the preceding clauses 1.2(b) and 1.2(c) , the “ Deferred Payments ”; each date on which a Deferred Payment is required to be paid pursuant to any of clauses 1.2(b) , 1.2(c) or 1.2(d) is referred to herein as a “ Deferred Payment Date ”).
 
(e)           A “ Triggering Event ” shall be deemed to have occurred at such time as any of the following events have occurred: (i) a sale of a capital stock of the Company to a Person who was not an Affiliate of the Company immediately prior to such transaction, which capital stock represents either a majority of the outstanding common stock or the outstanding voting power for the election of directors (for the avoidance of doubt, this would not apply to a sale of capital stock of Purchaser or Parent) or the sale of all or substantially all of the assets of the Company; (ii) the acceleration prior to maturity of the payment obligations under any senior secured indebtedness for borrowed money of Purchaser, Parent or any of its Subsidiaries from time to time outstanding, provided such obligations are in excess of Five Hundred Thousand Dollars ($500,000); (iii) Purchaser, Parent or the Company pursuant to or within the meaning of any bankruptcy Laws: (A) commences a Proceeding for protection from creditors under the United States Bankruptcy Code or the UK Insolvency Act 1986; (B) consents to the entry of an order for relief against it in a Proceeding under the United States Bankruptcy Code or the UK Insolvency Act 1986; (C) consents to the appointment of a Custodian (as defined below) of Purchaser, Parent or the Company for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; (iv) a court of competent jurisdiction enters an order or decree under any bankruptcy Law that (1) is for relief against Purchaser, Parent or the Company in an involuntary case; (2) appoints a Custodian of Purchaser, Parent or the Company for all or substantially all of its property; or (3) orders the liquidation of Purchaser, Parent or the Company, in each case which is   not dismissed or stayed within thirty (30) days; and (v) any default in payment, when and as due, by Purchaser of any amounts under Section 1.2 or 6.2(d) , which default in payment continues for twenty (20) or more consecutive calendar days (taking into account the resolution of any disputed payments under Section 1.7 or Section 6.2 , as applicable). The term “ Custodian ” means any receiver, trustee, assignee, liquidator or similar official under any bankruptcy Law.
 

 
2

 
 
Section 1.3          Manner of Payment of Purchase Price .
 
(a)            Allocation .  The Purchase Price shall be allocated between the Sellers in accordance with their respective Percentage Interests.
 
(b)            Payment of the Closing Date Payment .  Subject to the terms and conditions of this Agreement, at the Closing Purchaser shall pay the Closing Date Payment, by wire transfer of immediately available funds, as follows:
 
(i)           an aggregate of Two Million Seventy Seven Thousand Five Hundred Fifteen and 47/100 Dollars ($2,077,515.47) to each of the Persons, and in the amounts set forth next to such Person’s name, set forth on Schedule 1.3(b)(i) , on behalf of the Company, in full satisfaction of all Indebtedness of the Company as of the Closing;
 
(ii)           to the investment bankers, brokers, legal counsel, accountants and other professional advisors of the Sellers or the Company, as set forth in detail on Schedule 1.03(b)(ii) , in full satisfaction of all fees and expenses of such investment bankers, brokers, legal counsel, accountants and other professional advisors of the Sellers or the Company with respect to the transactions contemplated by this Agreement; and
 
(iii)           the balance to the Sellers, allocated in accordance with their respective Percentage Interests, to such accounts as they have designated in writing to Purchaser.
 
Section 1.4          The Closing .  The closing of the Purchase and the other transactions contemplated by this Agreement (the “ Closing ”) is taking place concurrently with the execution and delivery of this Agreement (the date of this Agreement being referred to herein as the “ Closing Date ”) at the offices of Kelley Drye & Warren LLP, 333 West Wacker Avenue, Chicago, Illinois 60606.
 
Section 1.5          Closing Deliveries .
 
(a)            Seller Deliveries to Purchaser .  At the Closing:
 
(i)           each Seller is assigning and transferring to Purchaser all of his or its right, title and interest in and to the Shares by delivering to Purchaser the certificates representing the Shares, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank;
 
(ii)           the Sellers are delivering to Purchaser pay-off letters with respect to the Indebtedness of the Company for borrowed money, if any, outstanding immediately prior to the Closing and evidence that all other Indebtedness of the Company has been, or upon delivery of the payment contemplated by Section 1.3(b)(i) , will be, satisfied in full;
 
(iii) the Sellers are delivering to Purchaser a certificate duly executed by an authorized officer of the Company, dated as of the Closing Date, that the transaction expenses to be paid by the Company have been, or upon delivery of the payment contemplated by Section 1.3(b)(ii) , will be, satisfied in full;
 

 
3

 
 
(iv)          the Sellers are delivering to Purchaser a Transition Services Agreement, in form and substance acceptable to Purchaser (the “ Transition Services Agreement ”), by and among Server Central, Inc., an Affiliate of the Sellers (“ Server Central ”), and the Company, duly executed by Server Central;
 
(v)           the Sellers are delivering to Purchaser Non-Competition and Confidentiality Agreements, each in a form satisfactory to Purchaser (collectively, the “ Non-Compete Agreements ”), duly executed by Daniel Brosk and Server Central;
 
(vi)          the Sellers are delivering to Purchaser a Release Agreement in a form satisfactory to Purchaser (collectively, the “ Releases ”), duly executed by each Seller, Daniel Brosk and Server Central;
 
(vii)          the Sellers are delivering to Purchaser the resignations of each director of the Company and of each of the officers of the Company, in each case effective as of the Closing;
 
(viii)         the Sellers are delivering to Purchaser the seal, minute book and equity interest transfer records of the Company, all original corporate records and documents of the Company and all tangible and intangible assets of the Company not currently in the possession of the Company but in the possession of the Sellers, Daniel Brosk or Server Central;
 
(ix)           the Sellers are delivering to Purchaser a secretary’s certificate, dated as of the Closing Date, duly executed by the Secretary of the Company, relating to: (A) the incumbent officers of the Company; (B) resolutions of the board of directors of the Company approving the transactions contemplated by this Agreement; (C) copies of the Organizational Documents of the Company, with the articles of incorporation thereof certified by the Secretary of State of the State of Illinois as of a date as near as reasonably practicable to the Closing Date;
 
(x)            the Sellers are delivering to Purchaser a good standing certificate for the Company for the State of Illinois, dated as of a date as near as reasonably practicable to the Closing Date;
 
(xi)           each Seller is delivering to Purchaser a certificate of such Seller, in form and substance satisfactory to Purchaser and as prescribed under Treasury Regulation section 1.1445-2(b)(2), dated as of the Closing Date and sworn under penalties of perjury, certifying that such Seller is not a “foreign person” for purposes of Code section 1445;
 
(xii)          the Sellers have delivered to Purchaser evidence, satisfactory to Purchaser, of the termination, as of the Closing, of all stockholders agreements to which any of the Sellers is a party and which affect any of the Shares;
 
(xiii)         the Sellers have delivered to Purchaser copies of all consents, authorizations, orders or approvals required to be listed in Section 3.5 of the Disclosure Schedule;

 
4

 
 
 
(xiv)           the Sellers have delivered to Purchaser UCC-1, UCC-2, federal and state tax lien, bankruptcy and five year judgment searches with respect to the Company for its state of incorporation and for each state and county in which its principal office or any of its material assets are located, all prepared by search companies reasonably satisfactory to Purchaser and dated not earlier than thirty (30) days prior to the Closing Date;
 
(xv)           the Sellers are delivering to Purchaser a Master Products and Services Agreement, in form and substance acceptable to Purchaser and the Sellers (the “ Server Central Services Agreement ”), by and between the Company and Server Central, duly executed by Server   Central;
 
(xvi)           the Sellers are delivering to Purchaser a Master Products and Services Agreement, in form and substance acceptable to Purchaser and the Sellers (the “ CacheNetworks Services Agreement ” and, together with the Server Central Services Agreement, the “ Services Agreements ”), by and between the Company and CacheNetworks, LLC, an Affiliate of the Sellers (“ CacheNetworks ”), duly executed by CacheNetworks; and
 
(xvii)           the Sellers are delivering to Purchaser a registration rights agreement, in form and substance acceptable to Purchaser and the Sellers (the “ Registration Rights Agreement ”), by and among Purchaser and the Sellers, duly executed by the Sellers.
 
(b)            Purchaser Deliveries to the Sellers .  At the Closing, Purchaser shall deliver or cause to be delivered:
 
(i)            to the Sellers (or, pursuant to Sections 1.3(b)(i) and 1.3(b)(ii) , to Persons on behalf of the Sellers) the payments referred in Section 1.3(b) ;
 
(ii)           the Transition Services Agreement, duly executed by  the Company;
 
(iii)          the Server Central Services Agreement, duly executed by the Company;
 
(iv)          the CacheNetworks Services Agreement, duly executed by the Company;
 
(v)           the Registration Rights Agreement, duly executed by Purchaser;
 
(vi)           a secretary’s certificate, dated as of the Closing Date, duly executed by the Secretary of Purchaser, certifying: (A) the Organizational Documents of Purchaser as in effect as of the Closing; (B) resolutions adopted by the board of directors of Purchaser approving the transactions contemplated by this Agreement, including the payment of the Closing Date Payment and the Deferred Payments; and (C) the incumbent officers of Purchaser executing this Agreement or any of the Transaction Documents as of the Closing;
 
(vii)     a secretary’s certificate, dated as of the Closing Date, duly executed by the Secretary of Parent, certifying: (A) the Organizational Documents of Parent as in effect as of the Closing; (B) resolutions adopted by the board of directors of Parent approving
 

 
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 the transactions contemplated by this Agreement; and (C) the incumbent officers of Parent executing this Agreement as of the Closing; and
 
(viii)           a good standing certificate for each of Purchaser and Parent for its jurisdiction of organization, dated as of a date as near as reasonably practicable to the Closing Date.
 
Section 1.6          Purchase Price Adjustment .
 
(a)            Post-Closing Determination of any Purchase Price Adjustment .  Within ninety (90) days after the Closing Date, Purchaser shall prepare and deliver to the Sellers a statement (the “ Post-Closing NWC Statement ”) setting forth (i) Purchaser’s calculation of the Net Working Capital of the Company as of immediately prior to the Closing (the “ Closing Net Working Capital ”), which shall be prepared in accordance with past practices of the Company, and (ii) reasonable support for such calculation.  By way of example, attached hereto as Exhibit B is a form of Post-Closing NWC Statement, based upon the Balance Sheet (as defined below), as if the transactions contemplated hereby were consummated on March 31, 2012.  During the thirty (30) day period after the Post-Closing NWC Statement has been provided to the Sellers by Purchaser (the “ NWC Review Period ”) either or both of the Sellers may, but shall not be obligated to, dispute any of the items in the Post-Closing NWC Statement by delivery of a written notice (the “ NWC Dispute Notice ”) to Purchaser, which shall provide reasonable detail concerning each item that the Sellers dispute in the Post-Closing NWC Statement, include reasonable support for each such position, and set forth such Seller’s or the Sellers’, as applicable, determination of the Closing Net Working Capital.  During the NWC Review Period and any subsequent time period during which the Post-Closing NWC Statement is being disputed as provided in this Section 1.6(a) , Purchaser shall provide (and cause the Company to provide) the Sellers and their representatives with reasonable access, upon reasonable notice and during times mutually and reasonably agreeable to Purchaser and the Sellers, to the books, records and working papers of Purchaser and the Company that are reasonably related to the Post-Closing NWC Statement.  If the Sellers do not deliver to Purchaser a NWC Dispute Notice prior to the expiration of the NWC Review Period, the Sellers shall be conclusively deemed to have waived any right to object to the Post-Closing NWC Statement delivered by Purchaser and the Post-Closing NWC Statement delivered by Purchaser shall be final and binding upon Purchaser, the Company and the Sellers.  If the Sellers deliver a NWC Dispute Notice to Purchaser prior to the expiration of the NWC Review Period, then for a period of thirty (30) days after receipt by Purchaser of such NWC Dispute Notice, Purchaser and the Sellers shall negotiate in good faith to resolve the items disputed by the Sellers in such NWC Dispute Notice.  If Purchaser and the Sellers resolve all of the disputed items in such NWC Dispute Notice during such thirty (30) day period, the Post-Closing NWC Statement shall be revised to reflect such resolution, and as so revised shall be final and binding upon Purchaser, the Company and the Sellers. If the Sellers deliver an NWC Dispute Notice to Purchaser prior to the expiration of the NWC Review Period and Purchaser and the Sellers do not resolve all of the disputed items in such NWC Dispute Notice within the period of thirty (30) days after receipt by Purchaser of such NWC Dispute Notice, Purchaser and the Sellers shall jointly engage McGladrey & Pullen, LLP or, if such firm is unwilling to serve in such capacity, another nationally-recognized independent accounting firm reasonably acceptable to both Purchaser and the Sellers (the “ Independent Accountants ”) (it being acknowledged that an objection to proposed Independent Accountants shall be
 

 
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reasonable if such accounting firm has previously provided services to Purchaser, the Company, any Seller or their respective Affiliates) and submit the disputed items to the Independent Accountants for resolution.  The Independent Accountants shall act as experts and not arbiters and shall determine only those items on the Post-Closing NWC Statement that continue to be disputed by Purchaser and the Sellers as of the time of engagement of the Independent Accountants.  Each of Purchaser and the Sellers shall furnish to the Independent Accountants such work papers, schedules and other documents and information relating to the unresolved disputed items as the Independent Accountants may reasonably request.  The Independent Accountants shall establish the procedures it shall follow (including procedures regarding the presentation of materials supporting each such Party's position) giving due regard to the mutual intention of Purchaser and the Sellers to resolve each of the disputed items and amounts as accurately, quickly, efficiently and inexpensively as possible; provided, that the Independent Accountants' determination of any amounts in dispute shall be based solely on presentations by Purchaser and the Sellers, and shall not involve the Independent Accountants' independent review.  The Independent Accountants shall not assign a dollar amount to any item in dispute greater than the greatest dollar amount for such item assigned by Purchaser, on the one hand, or the Sellers, on the other hand (as applicable), or lower than the lowest dollar amount for such item assigned by Purchaser, on the one hand, or the Sellers, on the other hand (as applicable).  Promptly, but no later than thirty (30) days after engagement, the Independent Accountants shall deliver a written report to Purchaser and the Sellers as to the treatment of the disputed items, and the Independent Accountants’ determinations shall be conclusive and binding upon Purchaser, the Company and the Sellers and the Post-Closing NWC Statement shall be revised to reflect such resolution.  The Post-Closing NWC Statement, as finally determined in accordance with this Section 1.6(a) , shall be conclusively deemed the “ Final Post-Closing NWC Statement ” and shall be final and binding upon Purchaser, the Company and the Sellers.  The Closing Net Working Capital set forth on the Final Post-Closing NWC Statement is referred to herein as the “ Final Closing Net Working Capital .”  The fees, costs and expenses of the Independent Accountants incurred in connection with the resolution of disputes pursuant to this Section 1.6(a) shall be paid by Purchaser, on the one hand, and by the Sellers (in accordance with their respective Percentage Interests), on the other hand, based upon the percentage that the amount not awarded to such Party bears to the amount actually contested by such Party.
 
(b)            Payment of Purchase Price Adjustment .  Upon the Final Closing Net Working Capital being determined pursuant to Section 1.6(a) , the Purchase Price shall be adjusted as follows.  The “ Final Adjustment Amount ” shall equal the amount, if any, by which the Final Closing Net Working Capital is either greater than or less than Zero Dollars ($0).  If the Final Adjustment Amount is a positive number, the Final Adjustment Amount shall be paid by Purchaser to the Sellers in accordance with their Percentage Interests by wire transfer of immediately available funds to an account or accounts designated in writing by Sellers and, if the Final Adjustment Amount is a negative number, each Seller shall pay to Purchaser an amount equal to the product of (i) the absolute value of the Final Adjustment Amount multiplied by (ii) such Seller’s Percentage Interest. Any payment under this Section 1.6(b) shall be made within five (5) business days after the determination of the Final Closing Net Working Capital pursuant to Section 1.6(a) . If any Party fails to pay any amount when due under this Section 1.6(b) , such unpaid amount shall thereafter bear simple interest at a rate equal to the prime rate in effect from time to time (as published in The Wall Street Journal ) plus two (2) percentage points, from the
 

 
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required date of payment until the date on which such amount is paid in full.  Any payment made pursuant to this Section 1. 6 shall be an adjustment to the Purchase Price for Tax purposes.
 
(c)            Clarification .  For the avoidance of doubt, the Parties hereby agree and acknowledge that any Net Working Capital adjustment pursuant to this Section 1.6 will not preclude Purchaser Indemnified Parties from recovering any indemnifiable Losses in accordance with Article VII arising out of any breach of Seller’s representations and warranties set forth in this Agreement; provided , that, notwithstanding the foregoing, no Party shall have any right to bring any claims, whether pursuant to Article VII or otherwise, with respect to any matter resolved or otherwise deemed final in the Final Closing Net Working Capital and the Final Post-Closing NWC Statement.
 
Section 1.7          Procedures and Restrictions Applicable to Determination of Deferred Payment .
 
(a)            Adjustment of Deferred Payment .  In the event that the Applicable Earn-Out Revenue for an Applicable Deferred Payment Period is less than Fifteen Million Dollars ($15,000,000), then there shall be an adjustment to the Deferred Payment payable on the corresponding Deferred Payment Date.  Such adjusted Deferred Payment shall be equal to the product of the full amount of such Deferred Payment, as set forth in Section 1.2(b) , Section 1.2(c) or Section 1.2(d) , as applicable, payable on a Deferred Payment Date multiplied by the fraction whose numerator is the Applicable Earn-Out Revenue for the Applicable Deferred Payment Period with respect to such Deferred Payment Date, and whose denominator is Fifteen Million Dollars ($15,000,000).  For purposes of this Agreement, “ Applicable Earn-Out Revenue ” means, with respect to any Applicable Deferred Payment Period, the sum of (i) the Company’s revenue from the Customers during such Deferred Payment Period, plus (ii) the revenue of Purchaser and its Affiliates during such Deferred Payment Period from the Customers who are not Existing Customers plus (iii) with respect to each Customer that is an Existing Customer, the amount of revenue of Purchaser and its Affiliates during such Deferred Payment Period derived from such Customer in excess of the Existing Customer Prior Revenue with respect to such Customer; “ Applicable Deferred Payment Period ” means, with respect to any Deferred Payment Date, the period of twelve (12) consecutive full calendar months ending with the month immediately preceding the month which includes such Deferred Payment Date; and “ Existing Customer Prior Revenue ” means, with respect to any Customer that is an Existing Customer, the amount of revenue of Purchaser and its Affiliates directly derived from such Customer during the twelve (12) consecutive full calendar months ending with the month immediately preceding the month which includes the Closing Date.
 
(b)     Procedure for Payment of Deferred Payment .
 
(i)      Pursuant to, and in accordance with, Sections 1.2(b) , 1.2(c) and 1.2(d) , Purchaser shall pay to the Sellers the applicable portion of the Deferred Payments, subject to adjustment as set forth in Section 1.7(a) , on each Deferred Payment Date, by wire transfer of immediately available funds to such accounts as Sellers have designated in writing to Purchaser.
 

 
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(ii)           On each Deferred Payment Date, Purchaser shall prepare and deliver to the Sellers a statement in writing (any such statement, a “ Deferred Payments Statement ”), setting forth (A) Purchaser’s calculation of the Applicable Earn-Out Revenue for the Applicable Deferred Payment Period, including the portion thereof attributable to each of the categories set forth in clauses (i), (ii) and (iii) in the definition of “Applicable Earn-Out Revenue,” and (B) with respect to each Customer that is an Existing Customer, the Existing Customer Prior Revenue.  Within forty-five (45) days after delivery of a Deferred Payments Statement to the Sellers, the Sellers shall notify Purchaser in writing of their agreement with the calculation of the portion of the Deferred Payment related to such Deferred Payments Statement or, if the Sellers disagree with the calculation of such portion of the Deferred Payment as shown on such Deferred Payments Statement, the Sellers shall deliver written notice to Purchaser of any objections, which notice shall describe the nature of any such objection in reasonable detail, identify the specific items involved and, to the extent practicable, the dollar amount of each such objection.  If the Sellers fail to deliver such a notice during such forty-five (45) day period, they will be deemed to have accepted the related Deferred Payments Statement.  The Sellers and Purchaser shall negotiate in good faith to resolve any such disagreements.  If Purchaser and the Sellers are unable to resolve all disagreements properly identified by the Sellers pursuant to this Section 1.7(b)(ii)  within thirty (30) days after delivery to Purchaser of the Sellers’ notice described above, then such disagreements shall be submitted for final and binding resolution to the Independent Accountants.  The resolution of such dispute shall be carried out, and all fees, expenses and costs thereof shall be allocated and paid in accordance with Section 1.6(a) .
 
(iii)           No later than five (5) business days following resolution of any disagreements in accordance with Section 1.7(b)(ii) , if the Deferred Payment actually paid by Purchaser to the Sellers on any Deferred Payment Date is less than the amount to which Sellers are entitled to be paid pursuant to Section 1.2(b) , Section 1.2(c) or Section 1.2(d) , as applicable, on such Deferred Payment Date, as determined in accordance with Section 1.7(b)(ii) hereof (any such difference, an “ Additional Deferred Payment Amount ”), then Purchaser shall pay to Sellers such Additional Deferred Payment Amount, together with all interest accrued thereon pursuant to Section 1.7(b)(iv) below, by wire transfer of immediately available funds, to such accounts as Sellers have designated in writing to Purchaser.
 
(iv)           If any Deferred Payment, or any portion thereof, is not paid by Purchaser to Sellers on the applicable Deferred Payment Date (including any portion of the Deferred Payment that was not paid on the applicable Deferred Payment Date, and to which Purchaser, Sellers and, if applicable, the Independent Accountants, determine, in accordance with Section 1.7(b)(ii) , the Sellers were entitled to receive on such Deferred Payment Date), then thereafter the unpaid amount shall bear interest from the applicable Deferred Payment Date to the actual date of payment at a rate equal to the prime rate in effect from time to time (as published in The Wall Street Journal ) plus two (2) percentage points; provided, however , that if Purchaser does not pay any Additional Deferred Payment Amount within ten (10) days following resolution of any disagreements with respect thereto in accordance with Section 1.7(b)(iii) , such interest shall be increased to be at the rate of seventeen and one-half percent (17.5%) per annum.
 
 
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(c)            Conduct of Business .  Purchaser acknowledges that the Sellers’ opportunity to receive the Deferred Payments in the manner set forth in this Agreement is an integral part of the transactions contemplated by this Agreement, and the Sellers would not have entered into this Agreement but for such opportunity.  Purchaser acknowledges and agrees that it has a duty of good faith and fair dealing with regard to the conduct of the nLayer Business during the period commencing with the date of this Agreement and ending on the second anniversary of the date of this Agreement (the “ Deferred Payments Period ”).  During the Deferred Payments Period, Purchaser covenants and agrees that it and its Affiliates, including the Company and any successors thereto, will:
 
(i)            operate the nLayer Business in good faith, in a commercially reasonable manner;
 
(ii)            cause the books and records of the Company to be maintained in the ordinary course of business consistent at least with past practices;
 
(iii)           in the event that Purchaser or any of its Affiliates, including the Company, (1) offers services of the nLayer Business to any Customers, which services are bundled or otherwise provided with other services offered by Purchaser or any of its Affiliates, and (2) the pricing for such bundled services is blended or otherwise combined, for purposes of calculating Applicable Earn-Out Revenue, include in such Applicable Earn-Out Revenue revenues from such sales of services of the nLayer Business as if such services were offered and sold (and at prices as if such services were offered and sold) on a stand-alone basis;
 
(iv)           except in the ordinary course of business, consistent with past practices, not, directly or indirectly, take any action that would reasonably be expected to result in the delay or deferral of any revenue, or the recognition thereof, by the Company, and
 
(v)            not take any action or omit to take any action if such action or inaction is designed or intended, in whole or in part, to avoid or reduce, or would be expected to have the effect of avoiding or reducing, Purchaser’s obligation to pay any of the Deferred Payments.
 
Any action or inaction taken by Purchaser, its Affiliates, including the Company and any successors thereto, shall not constitute a breach of any of the foregoing clauses (i) through (v) if either of the Sellers was advised orally or in writing by an officer of the Company (or any successor thereto) of the proposed action or inaction that is the basis of the alleged breach and such Seller did not orally or in writing advise the Company (or such successor thereto) of such Seller’s objection to such proposed action or inaction; it being acknowledged that Purchaser would bear the burden of proof to establish that either of the Sellers was so advised and the absence of such an objection thereto by either of the Sellers.  In addition, the sole remedy to the Sellers for any breach of the foregoing clauses (i) through (v) by Purchaser or any of its Affiliates, including the Company or any successors thereto, shall be specific enforcement or injunctive relief and to receive the amount of any Deferred Payment that is not paid but would have been paid to the Sellers if no breach of any of the foregoing clauses (i) through (v) had occurred, it being acknowledged that the Sellers would bear the burden of proof to establish a
 
 
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breach of the foregoing clauses (i) through (v) and the amount of additional Applicable Earn-Out Revenue that would have been obtained by the Company if such breach had not occurred.
 
(d)            Access to Information .  From the date hereof until the later of (i) the expiration of the Deferred Payments Period, and (ii) the final resolution of any disputes contemplated by Section 1.7(b)(ii) , Purchaser shall, and, following the Closing Date, shall cause the Company to:   (A) afford the Sellers and its Representatives reasonable access to and the right to inspect all of the books and records and other documents and data related to the Company or otherwise relating to the calculation of the Deferred Payments; (B) furnish the Sellers and their Representatives with such financial, operating and other data and information related to the Company or otherwise relating to the calculation of the Deferred Payments as Sellers or any of their Representatives may reasonably request; and (C) instruct the Representatives of Purchaser and the Company to cooperate with Sellers in their investigation hereunder; provided, however, that any such investigation shall be conducted during normal business hours upon reasonable advance notice to Purchaser, under the supervision of Purchaser’s personnel and in such a manner as not to interfere with the normal operations of Purchaser and the Company.  “ Representatives ” means, with respect to any Person, any and all directors, officers, employees, consultants, financial and other advisors, counsel, accountants and other agents of such Person.
 
Section 1.8     Shares in Payment of Deferred Payment .
 
(a)            General .  Each Seller shall have the right, upon delivery to the Company of an election in writing by such Seller in accordance with this Section 1.8(a) , to receive, in lieu of up to fifty percent (50%) of any Deferred Payment payable in cash to such Seller on an applicable Deferred Payment Date, shares of common stock of Parent (collectively, the “ Deferred Payment Shares ”).  If a Seller makes such an election pursuant to, and in accordance with, this Section 1.8(a) , such Seller shall be entitled to receive from the Company, and Purchaser hereby covenants and agrees to cause Parent to issue to such Seller, a number of shares of common stock of Parent equal to the quotient of (i) the amount of such Deferred Payment so elected to be received in shares of common stock of Parent by such Seller divided by (ii) the Deferred Payment Conversion Price for the applicable Deferred Payment Date on which such Deferred Payment is scheduled to be paid.  For purposes of this Section 1.8 , “ Deferred Payment Conversion Price ” means Two and 45/100 Dollars ($2.45); provided , however, that the Deferred Payment Conversion Price shall be subject to adjustment for stock splits, stock dividends, stock combinations and similar events.  Any such Seller may elect to receive Deferred Payment Shares pursuant to this Section 1.8(a) by delivering written notice to Purchaser not later than three (3) business days preceding the applicable Deferred Payment Date on which such Deferred Payment is scheduled to be paid, which notice shall set forth the amount of such Deferred Payment that such Seller is electing to be paid as Deferred Payment Shares, to the extent known by Seller, and/or a narrative description of the amount of such Deferred Payment ( e.g., a description of such amount as a percentage of such Deferred Payment) that such Seller is electing to be paid as Deferred Payment Shares (which amount shall be rounded to the nearest whole share).  The provisions of this Section 1.8(a) shall terminate upon the consummation of a merger, consolidation or other business combination in which all or substantially all of the common stock of Parent is exchanged for or converted into the right to receive cash for such shares.
 
 
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(b)            Issuance of Deferred Payment Shares .  Purchaser shall cause Parent to issue and deliver to each Seller electing to receive Deferred Payment Shares pursuant to this Section 1.8 such Deferred Payment Shares promptly, and in no event later than ten (10) business days, after the related Deferred Payment Date.  Notwithstanding the foregoing, no Seller shall be entitled to elect to receive any Deferred Payment Shares pursuant to Section 1.8(a) unless such Seller is an accredited investor, as that term is defined under the Securities Act of 1933, as amended (the “ 1933 Act ”), and such Seller provides to Purchaser customary representations, in customary form, regarding such Seller’s investment in such shares of common stock of Parent.
 
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
As a material inducement to the Sellers and the Company entering into this Agreement and consummating the transactions contemplated by this Agreement and the Transaction Documents, Purchaser represents and warrants to the Sellers as follows:
 
Section 2.1     Organization and Standing .  Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Virginia, and Purchaser is qualified to do business and in good standing in each other jurisdiction in which the failure to so qualify and be in good standing would materially and adversely affect Purchaser’s ability to perform its obligations under this Agreement and the Transaction Documents to which it is or will become a party or to consummate the transactions contemplated hereby and thereby.  Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and Parent is qualified to do business and in good standing in each other jurisdiction in which the failure to so qualify and be in good standing would materially and adversely affect Parent’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.  Purchaser and Parent each has all the requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted.

Section 2.2     Authority; Enforceability .  Purchaser and Parent each has the full legal right, power and authority to execute and deliver this Agreement and each Transaction Document to which it is or will become a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by Purchaser and Parent of this Agreement and each Transaction Document to which it is or will become a party and the consummation by Purchaser and Parent of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Purchaser and Parent.  This Agreement has been duly executed and delivered by Purchaser and Parent, and each Transaction Document to which Purchaser is or will become a party has been, or when executed shall be, duly executed and delivered by Purchaser.  This Agreement, assuming that this Agreement is a valid and binding obligation of the Company and each of the Sellers (as applicable), constitutes a valid and binding obligation of Purchaser and Parent enforceable against it in accordance with its terms, and each Transaction Document to which Purchaser is or will become a party, assuming that such Transaction Document is a valid and binding obligation of the other parties thereto, is, or when executed shall constitute, a valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, in each case except as enforceability may be limited by
 
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 bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity affecting the availability of specific performance and other equitable remedies.
 
Section 2.3     Consents .  No consent, approval, waiver, order, permit or authorization of, or registration, application, qualification, designation, declaration, filing or notification with or to, any Governmental Body or any other Person is required in connection with the execution, delivery and performance by Purchaser of this Agreement or any of the Transaction Documents to which Purchaser or Parent is or will become a party or the consummation by Purchaser and Parent of the transactions contemplated hereby or thereby.
 
Section 2.4     Legal Matters .  There are no Proceedings or Claims pending or, to the knowledge of Purchaser, threatened against Purchaser or Parent or any of their respective assets or properties, or any Orders outstanding against Purchaser or Parent, in each case that would adversely affect Purchaser’s or Parent’s ability to perform its obligations under this Agreement and the Transaction Documents to which it is or will become a party or to consummate the transactions contemplated hereby or thereby.
 
Section 2.5     No Violation .  The execution and delivery by Purchaser and Parent of this Agreement and each Transaction Document to which Purchaser is or will become a party and the consummation by Purchaser and Parent of the transactions contemplated hereby and thereby, including Purchaser’s and Parent’s compliance and performance of the terms, conditions and provisions thereof, do not and will not: (a) violate or conflict with any provision of the Organizational Documents of Purchaser or Parent, as applicable, (b) violate or conflict with any Law applicable to Purchaser or Parent or by which any of their respective assets or properties are bound or affected, (c) with or without the passage of time or the giving of notice, or both, violate, conflict with or result in a breach of the terms or conditions or provisions of, or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or result in or give rise to a right of termination, modification, acceleration or cancellation of any obligation under, any Contract to which Purchaser or Parent is a party or by which Purchaser or Parent or any of their respective assets or properties are bound or affected or (d) result in the creation or imposition of a Lien on any of Purchaser’s or Parent’s assets or properties.
 
Section 2.6     Accredited Investor .  Purchaser is an “accredited investor,” as that term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended.
 
Section 2.7     Brokers’ and Finders’ Fees .  No agent, broker, finder, or investment or commercial banker, or other Person engaged by or acting on behalf of Purchaser or any of its representatives or Affiliates (prior to the Closing) in connection with the negotiation, execution or performance of this Agreement or the Transaction Documents or the consummation of the transactions contemplated hereby or thereby, is or will be entitled to any brokerage or finder’s or similar fee or other commission from Purchaser or its Affiliates, the Company or the Sellers as a result of this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby.
 
 
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Section 2.8     Issuance of Deferred Payment Shares .  The 1,500,000 maximum number of Deferred Payment Shares, subject to adjustment for stock splits, stock dividends, stock combinations and similar events, that could be issued hereunder (the “ Maximum Deferred Payment Shares ”) are duly authorized and, upon issuance in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and free from taxes and Liens with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of shares of common stock of Parent.  Assuming the accuracy of the representations provided by any Seller pursuant to, and in accordance with, Section 1.8(b) , the offer, issuance and sale by Parent of the applicable Deferred Payment Shares to such Seller will be exempt from registration under the 1933 Act and any other applicable securities laws.  The Maximum Deferred Payment Shares are, and shall at all times hereafter be, reserved for issuance upon the exercise by the Sellers of their rights pursuant to Section 1.8(b) .
 
Section 2.9     Financial Ability; No Restrictions .  Purchaser has, and will have as of the Closing Date, the financial ability to perform its obligations under Section 1.3 , and Purchaser has no reason to believe that it will not have as of each Deferral Payment Date the financial ability to perform its obligations under Section 1.2 .  Purchaser is not, as of the date of this Agreement, party to or otherwise bound by, and shall not at any time during the Deferred Payments Period enter into or otherwise become bound by, any agreement or other arrangement which shall have the effect, either directly or indirectly, of restricting the ability of Purchaser from performing Purchaser’s obligations hereunder, including timely payment of (a) the Closing Date Payment in accordance with Section 1.3(b) , and (b) the Deferred Payments in cash in accordance with Section 1.7 ; provided, however, no representation or warranty is made with respect to the impact of a default or event of default under any such agreement or arrangement or the effect of financial and other covenants and conditions contained in indebtedness for borrowed money from time to time incurred by Purchaser or its Affiliates.
 
Section 2.10     SEC Reports; Financial Statements .
 
(a)           Since January 1, 2011 through the date this representation is made, Parent has filed all reports, schedules, forms, registration statements and other documents required to be filed by it with the SEC pursuant to the requirements of the 1934 Act (all of the foregoing, together with any other reports, schedules, forms, registration statements and other documents filed by Parent with the SEC since January 1, 2011 and prior to the date this representation is made (including in each case all exhibits included therewith and financial statements and schedules thereto and documents incorporated by reference therein) being referred to herein as the “ SEC Documents ” and Parent’s balance sheet as of December 31, 2011, as included in Parent’s annual report on Form 10-K for the period then ended, as filed with the SEC on March 27, 2012, being referred to herein as the “ Latest Balance Sheet ”).  None of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Parent has not received any written comments from the SEC staff with respect to the SEC Documents that have not been resolved to the satisfaction of the SEC staff.
 
(b)           As of their respective dates, the consolidated audited financial statements of Parent and its Subsidiaries included in the SEC Documents, including the notes thereto complied
 
 
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as to form in all material respects with applicable accounting requirements and the securities laws with respect thereto.  Such consolidated audited financial statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except as may be otherwise indicated in such financial statements or the notes thereto) and fairly present in all material respects the financial position of Parent and its Subsidiaries as of the dates thereof and the results of its or their operations and cash flows, as applicable, for the periods then ended.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
 
As a material inducement to Purchaser entering into this Agreement and consummating the transactions contemplated by this Agreement and the Transaction Documents, each of the Sellers jointly and severally, represents and warrants to Purchaser that, except as set forth on the Disclosure Schedule attached hereto, which exceptions shall be deemed to be part of the representations and warranties made hereunder to the extent provided in the following sentence, the following representations are true and complete as of the date hereof.  The Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections contained in this Article III , and the disclosures in any section of the Disclosure Schedule shall qualify only (a) the Sections and subsections of this Agreement corresponding to such numbered and lettered sections, (b) other Sections and subsections in this Article III to the extent incorporated by cross-reference in appropriately numbered and lettered sections of the Disclosure Schedule and (c) other Sections and subsections in this Article III to the extent it is reasonably apparent on its face from a reading of the disclosure that such disclosure is applicable to such other sections:
 
Section 3.1     Organization, Existence and Good Standing .  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, and the Company has all the requisite power and authority to own, lease and operate its properties and assets and to carry on its business as being conducted as of the date of this Agreement.  Except as set forth in Section 3.1 of the Disclosure Schedule, the Company has qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction where the nature of its business or the nature or location of its assets requires such qualification.  The Company has delivered to Purchaser a correct and complete copy of: (i) the certificate of incorporation of the Company and each amendment thereto and (ii) the by-laws of the Company and each amendment thereto.
 
Section 3.2     Authority; Enforceability .  The Company has the full legal right, power and authority to execute and deliver this Agreement and each Transaction Document to which the Company is or will become a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by the Company of this Agreement and each Transaction Document to which the Company is or will become a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company.  This Agreement has been duly executed and delivered by the Company, and each Transaction Document to which the Company is or will become a party has been, or when executed shall be, duly executed and delivered by the Company.  This Agreement, assuming that this Agreement is a valid and binding obligation of Purchaser and each of the
 
 
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Sellers (as applicable), constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, and each Transaction Document to which the Company is or will become a party, assuming that such Transaction Document is a valid and binding obligation of the other parties thereto, is, or when executed shall constitute, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, in each case except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity affecting the availability of specific performance and other equitable remedies.
 
Section 3.3     Subsidiaries .  The Company does not have, and it has never had, any Subsidiaries, and the Company is not, and has not been, a participant in any joint venture, partnership or similar arrangement.  The Company does not own, directly indirectly, any Person or any equity or other interests in any Person, and the Company never has owned, directly indirectly, any Person or any equity or other interests in any Person.  The Company is not a successor to any other Person, whether by merger, consolidation or other business combination, reorganization, acquisition of assets or otherwise.
 
Section 3.4     Capitalization .
 
(a)           The authorized capital stock of the Company consists of 1,000 shares of common stock, no par value, of which 100 shares (i.e., the Shares) are outstanding.  The Sellers are the sole equity holders of the Company.   Exhibit A sets forth a correct and complete list of the name of each Seller and the respective number of Shares held, beneficially and of record, by such Seller immediately prior to the Closing.  The Shares are duly authorized and validly issued, fully paid and non-assessable, and none of the Shares were issued in violation of any applicable federal or state securities Laws or any other applicable Law or in violation of any preemptive rights, rights of first offer, rights of first refusal or similar rights.
 
(b)           There are no outstanding: (i) subscriptions, options, warrants, purchase rights, subscription rights, preemptive rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other Contracts that required or obligated the Company, on a contingent basis or otherwise, to issue, sell or otherwise cause to become outstanding, or to acquire, repurchase, retire or redeem, any equity interests in the Company or any interest therein or (ii) restricted stock, stock appreciation, phantom stock, profit participation or similar rights with respect to the Company.
 
(c)           There are no Contracts to which the Company or, to the Company’s Knowledge, any other Person, is a party with respect to: (i) the voting of any equity securities of the Company (including any proxy or director nomination rights); or (ii) the transfer of any equity interests in the Company (including any preemptive right, right of first offer, right of first refusal, participation right, “take along” right or similar right).
 
(d)           Neither the Company nor, to the Company’s Knowledge, any of the Sellers has any obligation, absolute or contingent, to any other Person to sell any equity interests in the Company, or any of the Company’s business or assets, or to effect any merger, consolidation,
 
 
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recapitalization or other reorganization of the Company, or to enter into any Contract with respect thereto.
 
Section 3.5     Consents .  Except as set forth in Section 3.5 of the Disclosure Schedule, no consent, waiver, approval, order, permit or authorization of, or registration, application, qualification, designation, declaration, filing or   notification   with or to, any Governmental Body or any other Person, including a party to a Contract to which the Company is a party or by which any of its assets or properties are bound or affected, is required in connection with the execution, delivery and performance by the Company of this Agreement or any of the Transaction Documents to which the Company is or will become a party or the consummation by the Company of the transactions contemplated hereby or thereby.
 
Section 3.6     No Violation .  The execution and delivery by the Company of this Agreement and each Transaction Document to which the Company is or will become a party and the consummation by the Company of the transactions contemplated hereby and thereby, including the Company’s compliance and performance of the terms and conditions thereof, do not and will not (i) violate or conflict with any provision of the Organizational Documents of the Company or any Law applicable to the Company or by which the Company or any of its assets or properties are bound or affected, (ii) except as set forth in Section 3.6 of the Disclosure Schedule, with or without the passage of time or the giving of notice, or both, violate, conflict with or result in a breach of the terms or conditions or provisions of, or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or result in or give rise to a right of termination, modification, acceleration or cancellation of any obligation under, any Contract to which the Company is a party or by which the Company or any of its assets or properties are bound or affected, (iii) except as set forth in Section 3.6 of the Disclosure Schedule, result in the creation or imposition of a Lien on any of the Company’s assets or properties, (iv) result in the termination, suspension, revocation, impairment, forfeiture, nonrenewal or other adverse modification of any Company Permit or (v) result in the vesting of, the payment of, or the creation of any obligation, whether absolute or contingent, to vest or pay, on behalf of the Company, any equity or equity-related grant, bonus, severance, termination, “golden parachute” or similar payment (including any “double-trigger” rights), whether pursuant to Contract or under applicable Law, with respect to any current or former employee, officer or director of the Company, other than, in the case of clause (ii) , any such violations, conflicts, breaches, defaults or rights under Contracts that (i) are not Material Contracts and (ii) would not, individually or in the aggregate, have a Material Adverse Effect.
 
Section 3.7     Certain Actions and Developments .  Since December 31, 2011, there has not been any Material Adverse Effect and there has not been any event, circumstance, state of affairs, condition or development that has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.  Since December 31, 2011, Company has carried on its business in all material respects in the ordinary course consistent with past practices, and the Company has used its commercially reasonable efforts to, in all material respects, (a) preserve intact the Company’s business organization and goodwill, (b) retain the services of the Company’s current officers and key employees (and those of Server Central providing services to the Company) and (c) preserve the Company’s relationships with customers, suppliers and others having business dealings with the Company.  Since December 31, 2011, except as set forth in Schedule 3. 7 of the Disclosure Schedule, the Company has not:
 
 
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(i)           issued any equity interests; granted any option, warrant or right to acquire any equity interests; issued any security convertible into or exchangeable for any equity interests; altered in any way any of its outstanding securities, whether by reason of a reclassification, recapitalization, combination, exchange, readjustment of its capital stock or other equity interests or otherwise; redeemed, retired, purchased or otherwise acquired, directly or indirectly, any of its equity interests; or declared, set aside or paid any dividends or other distributions in respect of its equity interests;
 
(ii)           amended its Organizational Documents;
 
(iii)           merged or consolidated with any Person, acquired any equity interest in any Person, entered into a business combination with any Person or entered into any Contract the purpose of which is or was to consummate any of the foregoing; or acquired or agreed to acquire any material assets, except for the purchase of inventory, supplies or other assets in the ordinary course of business;
 
(iv)           sold, leased, subleased, encumbered, assigned or otherwise disposed of, or entered into any Contract to sell, lease, encumber, assign or otherwise dispose of, any of its assets other than sales or returns of obsolete or surplus equipment in the ordinary course of business consistent with past practice and except for transfers of cash in payment of trade payables in the ordinary course of business consistent with past practice;
 
(v)           authorized or recommended the adoption of a plan of complete or partial liquidation or dissolution;
 
(vi)           except as required by Law or in the ordinary course of business, (A) paid or agreed to pay any pension, retirement allowance or other employee benefit to any director, officer, management employee or key employee of the Company, whether past or present; (B) entered into any new, or materially amended any existing, employment or severance or termination agreement with any director, officer, management employee or key employee of the Company; (C) became obligated under any new employee agreement that was not in existence on December 31, 2010 or amended any such employment agreement in existence on such date if such amendment would have the effect of materially enhancing any benefits thereunder; or (D) granted any material increase in compensation (including salary, bonus or other benefits) to employees of the Company;
 
(vii)           assumed or incurred any Indebtedness (except for (I) Indebtedness for borrowed money under the Company’s existing credit facility in the ordinary course of the Company’s business and (II) accounts payable in the ordinary course of business consistent with past practice); (B) assumed or incurred any other Liability in excess of $50,000; (C) guaranteed any Indebtedness of any other Person; or (D) created any Lien on the property or assets of the Company, except for Permitted Liens;
 
(viii)           made any loan or advance to, or guaranteed any Liabilities of, any Person (except for (A) advances to employees in the ordinary course of business in accordance
 
 
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with the Company’s policies and (B) trade debt incurred in the ordinary course of business consistent with past practice);
 
(ix)           except in the ordinary course of business, modified, rescinded, terminated, waived, released or otherwise amended in any material respect any of the material terms or provisions of any Material Contract;
 
(x)           made any material change in its accounting methods, practices, policies or principles, whether for general, financial reporting or Tax purposes (including its practices with respect to the collection of accounts receivable and the payment of accounts payable, and its methods for calculating depreciation or amortization or any bad debt, contingency or other reserve), other than such changes as are required by GAAP or applicable Law;
 
(xi)           made or changed any Tax Election, entered into any closing agreement or similar agreement with respect to Taxes, or settled any audit or other proceeding or any other claim with respect to Taxes;
 
(xii)           except as consistent with past practice and as would not result in penalties or late charges or materially and adversely affect the Company’s relationship with suppliers, delayed payment on or failed to pay when due the trade accounts payable or other recurring expenses of the Company;
 
(xiii)           modified the terms of, discounted, set off or accelerated the collection of, any accounts receivable, in each case other than in the ordinary course of business;
 
(xiv)           settled or released any material claim or litigation or waived any right thereto;
 
(xv)           incurred any material damage, destruction or loss, or made or filed any claim concerning any such material damage, destruction or loss (whether or not covered by insurance), or experienced any condemnation or other taking which materially and adversely affects the Company; or
 
(xvi)           entered into any Contract for the express purpose of taking any of the actions set forth in this Section 3.7 .
 
Section 3.8     Financial Statements .
 
(a)           Attached in Section 3.8(a) of the Disclosure Schedule are (i) the balance sheets of the Company at December 31, 2009, 2010 and 2011 and the related statements of operating results and retained earnings and statements of cash flows for the years then ended, accompanied by the review report of Hansen, Cochrane & Reed, Ltd. with respect thereto (collectively, the “ Annual Financial Statements ”) and (ii) the balance sheet of the Company at March 31, 2012 (the “ Balance Sheet ”) and the related statement of operating results and retained earnings and statement of cash flows for the three-month period then ended (the “ Interim Financial Statements ” and, together with the Annual Financial Statements, collectively, the “ Financial Statements ”).  Except as set forth in Section 3.8(b) of the Disclosure Schedule, the Financial
 
 
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Statements (A) fairly present, in all material respects, the financial condition, results of operations, cash flows and stockholders’ equity of the Company as of the respective dates thereof and for the respective periods covered thereby and (B) have been prepared from, and are in accordance with, the books and records of the Company.
 
(b)           The Company maintains books and records that fairly reflect, in all material respects, its assets and liabilities, and the transactions of the Company reflected therein.  To the Company’s Knowledge, the Company’s transactions are recorded in the Company’s books and records as necessary to permit preparation of the financial statements of the Company, which transactions reflected in the Company’s books and records have, to the Company’s Knowledge, been executed in accordance with management’s authorization.
 
(c)           Each of the Parties hereby acknowledges and agrees that no Seller is making any representations or warranties, or providing any assurances, that the Financial Statements are auditable or otherwise prepared or in a form necessary or appropriate (on a stand-alone basis or as consolidated with the financial statements of Purchaser) to satisfy any of Purchaser’s reporting obligations under the federal securities laws.
 
Section 3.9     Absence of Undisclosed Liabilities .  The Company has no Liabilities, except (a) liabilities reflected on the Balance Sheet, (b) liabilities or obligations incurred after March 31, 2012   in the ordinary course of business, none of which ordinary course liabilities or obligations involves any breach of Contract, breach of warranty, tort, infringement or violation of Law by the Company and none of which, either individually or in the aggregate, is material to the Company, and (c) the Liabilities disclosed in Section 3.9 of the Disclosure Schedule.  The Company has not guaranteed, and it is not otherwise primarily or secondarily liable in respect of, any obligation or liability of any other Person, except to the extent disclosed in the Financial Statements.
 
Section 3.10     Personal Property; All Assets .
 
(a)           The Company has good and marketable title, or holds valid and enforceable leases, to all the Personal Property held or used by it, free and clear of all Liens other than the Liens set forth in Section 3.10(a) of the Disclosure Schedule.  Each item of Personal Property is in good operating condition and repair (reasonable wear and tear excepted) and free of any material structural or engineering defects, is suitable for the purposes for which it is currently used, and has been operated in compliance, in all material respects, with applicable Law.  There are no pending or, to the Company’s Knowledge, threatened, condemnation or similar proceedings against the Company or any of the Personal Property.  The Personal Property, as a whole, is sufficient for the conduct of the business of the Company as now conducted.  The Company has delivered to Purchaser a correct and complete copy of each lease for any leased Personal Property, and all amendments, supplements or modifications thereto.
 
(b)           The assets, property, rights and privileges owned, leased or licensed by the Company (the “ Personal Property ”), together with the assets, property, rights and privileges owned, leased or licensed by Affiliates of the Company, including Server Central and CacheNetworks, constitute all of the assets, property, rights and privileges that are necessary to operate the business of the Company as heretofore conducted.  To the extent the Personal
 
 
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Property is not sufficient to operate the nLayer Business as heretofore conducted, or the operation of the nLayer Business as heretofore conducted requires the use of assets owned by Affiliates of the Company, the Parties intend that the Transition Services Agreement will provide for an orderly transition.  The Personal Property material to the operation of the Company’s business is located at the locations as set forth in Section 3.10(b) of the Disclosure Schedule.
 
Section 3.11     Real Estate .  The Company does not own, and has never owned, any real property.  The Company is not a party to any leases or subleases under which the Company uses or occupies or has the right to use or occupy any real property, other than data center leases and licenses entered into in the ordinary course of business as disclosed in Section 3.15(a) of the Disclosure Schedule.
 
Section 3.12     Insurance .   Section 3.12 of the Disclosure Schedule sets forth a list of all insurance policies, including self-insurance programs, maintained by the Company or which name the Company as an insured or loss payee (collectively, the “ Insurance Policies ”).  There is no claim by the Company pending under any of such Insurance Policies as to which the Company has received written notice that coverage has been denied or disputed by the underwriters of such Insurance Policies.  All premiums due and payable under all the Insurance Policies have been paid and are not subject to renegotiation or retroactive adjustment, and the Company is in compliance, in all material respects, with all other terms and conditions of the Insurance Policies.  All of the Insurance Policies are currently in full force and effect.  To the Company’s Knowledge, there is no threatened termination of, or premium increase with respect to, any Insurance Policies.  The Company has not received any notice of cancellation, termination, non-renewal or reduction in coverage under any of the Insurance Policies.  Correct and complete copies of all Insurance Policies have been made available to Purchaser.
 
Section 3.13     Permits and Licenses .  Except as set forth in Section 3.13(a) of the Disclosure Schedule, the Company is in possession of all franchises, authorizations, licenses, permits, certificates, approvals, clearances, consents, registrations, certificates of authority, Orders or similar rights issued, granted or obtained by or from any Governmental Body (collectively, “ Permits ”) that are necessary for the Company to own, lease and operate its assets and properties or to carry on its business as it is now conducted in compliance with applicable Law and any Orders applicable to it or any of its assets or properties (collectively, “ Company Permits ”).  All of the Company Permits are set forth in Section 3.13(b) of the Disclosure Schedule.  Each of the Company Permits is in full force and effect and the Company is not in default of, or violation in any material respect under, any of the Company Permits, except where such default or violation would not reasonably be expected to result in a material change in the conduct of the business of the Company as presently conducted.  No suspension, cancellation or modification is pending or, to the Company’s Knowledge, threatened, with respect to any of the Company Permits and the Company has not been notified that any of the Company Permits will not be renewed in the ordinary course of business without change of any of its material terms or conditions or the payment of any amount, other than routine filing fees.  There are no Proceedings pending or, to the Company’s  Knowledge, threatened that: (i) question or contest the validity of, or seek the revocation, nonrenewal or suspension of, any Company Permit; or (ii) seek the imposition of any condition, administrative sanction, modification or amendment with respect to any Company Permit. No Permit held by the Company within the last five (5) years has been revoked, or, to the Company’s Knowledge, is threatened to be revoked or otherwise
 
 
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terminated or adversely modified.  The validity and effectiveness of the Company Permits will not be affected by the consummation of the transactions contemplated by this Agreement. Correct and complete copies of each Company Permit have been made available to Purchaser.
 
Section 3.14     Compliance with Laws .  Except as set forth in Section 3.14 of the Disclosure Schedule, the Company is in compliance in all material respects with all applicable Laws and has in the past complied in all material respects with all applicable Laws, and no Proceeding or Claim has been filed or commenced against it or, to the Company’s Knowledge is threatened, alleging any failure or alleged failure so to comply.  The Company has not received any notice in writing from any Governmental Body to the effect that:  (a) the Company is not in compliance with, or has in the past not been in compliance with, in any material respect, any applicable Laws; or (b) any Governmental Body intends to initiate any Proceeding or Claim against the Company or any of its assets or properties.  None of the Company, its assets or properties, or, to the Company’s Knowledge, its directors, officers, employees or stockholders in their capacities as such, is a party to or bound or affected by any Order or similar restriction that materially restricts the conduct by the Company of its business or which would otherwise reasonably be expected to have a material adverse impact on the ability of the Company to conduct its business as presently conducted.
 
Section 3.15     Contracts .
 
(a)           Except as set forth in Section 3.15(a) of the Disclosure Schedule, the Company is not a party to, and its assets are not bound or affected by, any:
 
(i)            Contract with a customer;
 
(ii)           Contract with any Person restricting in any manner the right of such Person to compete with the Company or the ability of such Person to employ any of the Company’s employees;
 
(iii)          Contract that contains a covenant restricting the ability of the Company (or which, following the Closing, would reasonably be expected to restrict the ability of Purchaser or any of its subsidiaries or Affiliates) to compete with any Person, to solicit any Person, or to solicit or hire employees or other Persons, or to engage in any business or activity in any geographic area or pursuant to which any benefit is required to be given or lost as a result of such competing or engaging;
 
(iv)          data center leases and licenses;
 
(v)           Contract relating to Indebtedness or to mortgaging, pledging or otherwise placing a Lien on any of the Company’s assets or properties;
 
(vi)          Contract providing for the guaranty of any Liability of any Person other than the Company; or any Contract that includes any requirement that the Company provide indemnification to or otherwise support the business or Liabilities of any other Person;
 
 
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(vii)         Contract not fully performed for the purchase of any commodity, material, services, equipment or fixed assets, for a price in excess of $50,000 in the aggregate over a twelve-month period;
 
(viii)        Contract under which it is the lessor or lessee of, or holds or operates any Personal Property, for which the annual rental payments exceed $50,000;
 
(ix)           Contract providing for the license or other grant of the right to use any Intellectual Property Rights, other than software that (A) is commercially available without customization, (B) has general applicability to businesses, and (C) requires aggregate payments during any calendar year of any kind, including upfront or annual maintenance fees, of less than $10,000;
 
(x)            Contract providing for expenditures of the Company that are, individually or in the aggregate, in excess of $25,000;
 
(xi)           Contract providing for the acquisition or disposition of any Person or any business, operating division, business unit or product line thereof (whether by merger, consolidation or other business combination, recapitalization, acquisition of stock or assets, or otherwise), or any equity or debt investment by the Company in any other Person;
 
(xii)          Contract for the sale of any equipment or other assets, except for sales in the ordinary course of business;
 
(xiii)         Contract that obligates the Company to obtain all or substantially all of its requirements for any goods or services from, or, except for Contracts with customers, supply all or substantially all of the requirements for any goods or services of, any other Person;
 
(xiv)         Contract including any “most-favored pricing” provision for any customer of the Company;
 
(xv)          Contract for the employment or engagement of any director, officer, employee, independent contractor, consultant, freelancer or other service provider or other Person, including any severance, retention or similar payment or other compensation to any such Person;
 
(xvi)         Contract for the granting of any agency, representation, distribution or franchise which cannot be canceled by the Company without payment or penalty upon notice of thirty (30) days or less;
 
(xvii)        Contract of the type referred to in Section 3.21 ;

(xviii)       written instrument granting a power of attorney on behalf of the Company; or

 
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(xix)           other Contract material to the business, operations, financial condition or results of operations of the Company.
 
(b)           Each Contract required to be listed in Section 3.15(a) of the Disclosure Schedule (each, a “ Material Contract ” and, collectively, the “ Material Contracts ”) represents the valid, legal and binding obligation of the Company, in full force and effect and, to the Company’s Knowledge, each Material Contract is enforceable against the other parties thereto, in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity affecting the availability of specific performance and other equitable remedies.  Except as set forth in Section 3.15(b) of the Disclosure Schedule, the Company is not currently renegotiating any of the Material Contracts or paying liquidated damages in lieu of performance thereunder.  The Company is not in material breach or default under, or in receipt of any claim of material default or breach under, any Material Contract and, to the Company’s Knowledge, none of the counterparties to any Material Contract is in material breach of or default thereunder; no event has occurred which, with the passage of time or the giving of notice, or both, would result in a material default, breach or event of noncompliance by the Company or, to the Company’s Knowledge, any other party thereto, under any Material Contract; and the Company has no Knowledge of any event or circumstance that would reasonably be expected to result in a material breach by any of the other parties to any Material Contract.  Since December 31, 2010, the Company has not received any written notice of any termination, material modification, acceleration, cancellation, nonrenewal or material adverse price adjustment of any Material Contract.
 
(c)           The Company has provided to Purchaser correct and complete copies of all written Material Contracts, including all amendments, waivers, supplements or other changes thereto, along with summaries of each of the material terms of each of the oral Material Contracts.
 
Section 3.16     Intellectual Property .   Section 3.16(a)(i) of the Disclosure Schedule lists all of the material Intellectual Property Rights owned, leased or licensed by, or otherwise used by, the Company, and indicates, for each item, whether it is owned, leased or licensed.  Except as set forth in Section 3.16(a)(ii) of the Disclosure Schedule: (i) to the Knowledge of the Company, no Person, including any current or former employee, independent contractor, consultant, freelancer or other service provider of the Company, is infringing, misappropriating or otherwise violating the Intellectual Property Rights of the Company, (ii) the operations, products and processes of the Company do not infringe on, misappropriate or violate, and have not infringed on, misappropriated or violated, any of the rights of any third party with respect to any Intellectual Property Rights, (iii) there are no Claims pending or, to the Company’s Knowledge, threatened, against the Company with respect to any Intellectual Property Rights, and (iv) there is no Claim, pending or, to the Company’s Knowledge, threatened, that challenges the Company’s ownership rights or rights to use, or the validity, enforceability or effectiveness of, any Intellectual Property Rights used, owned, or licensed by, the Company.
 
 
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Section 3.17     Taxes .
 
(a)           All Tax Returns required to be filed with any Governmental Body by the Company or the Sellers (in relation to the Company or their interest therein) have been timely filed and were correct and complete in all material respects.  All Taxes due and payable by the Company, whether or not shown on any Tax Return, have been timely paid in full.  The Company is not currently the beneficiary of, or and has not applied for, any extension of time within which to file any Tax Return.
 
(b)           The Company has complied with all material requirements of Law in relation to the withholding and deposit of Taxes and has duly and timely withheld and paid over to the appropriate Governmental Body all material amounts required to be so withheld and paid under applicable Law, including any Taxes in connection with any amount paid or owing, or any income or gain allocated, to any current or former stockholder, employee, independent contractor, creditor or any other Person.  The Company has timely and properly completed and filed the Schedules K-1 (and comparable schedules under applicable state, local or foreign Tax Law), Forms W-2 and 1099, and other Tax Returns required with respect to such withholding and deposit of Taxes.
 
(c)           Charges, accruals and reserves for Taxes with respect to the Company for any pre-Closing tax period or for any tax period beginning before the Closing but ending after the Closing (a “ Straddle Period ”) (including any pre-Closing tax period or Straddle Period for which no Tax Return has yet been filed) have been estimated and reflected on the Financial Statements (in addition to any accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) and are adequate to cover such Taxes (without taking into account any accrual or reserve for deferred Taxes) as of the date of such Financial Statements, whether or not shown as due on any Tax Return.  Except for Taxes incurred in the ordinary course of business, the Company has no liability for unpaid Taxes accruing after the date of the Interim Financial Statements.
 
(d)           No claim, audit, examination, action, suit, proceeding or investigation in respect of any Tax matters (including by any Governmental Body or under any indemnification or Tax sharing agreement) is now being conducted, pending or, to the Knowledge of the Company, threatened against the Company or either Seller (in relation to the Company or such Seller’s interest therein).  Neither the Company nor either Seller (in relation to the Company or such Seller’s interest therein) has received from any Governmental Body (i) any written notice indicating an intent to open a Tax audit or other review, (ii) any request for information related to Tax matters, or (iii) any notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed against the Company or either Seller (in relation to the Company or such Seller’s interest therein), and neither the Company nor the Sellers expect any such notice or request to be issued.  Neither the Company nor either of the Sellers has filed any document or entered into any agreement with a Governmental Body waiving or extending the statute of limitations or the period of assessment or collection of any Taxes. Any deficiency or assessment relating to any amount of Taxes resulting from any completed audit or examination of the Company or of either Seller (in relation to the Company or such Seller’s interest therein) by any Governmental Body or any concluded litigation has been timely paid in full.
 
 
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(e)           Except as set forth in Section 3.17(e) of the Disclosure Schedule, the Company has not received or requested any written ruling of a Governmental Body relating to Taxes or executed or entered into with any Governmental Body a closing agreement pursuant to Code Section 7121 or any similar provision of state, local, foreign or other Tax law.
 
(f)           The Company has not agreed, and is not required, to include any adjustment in Taxable income for any Tax period pursuant to Code Section 481(a) or 263A or any comparable provisions under state, local or foreign Tax Laws.  No application is pending with any Governmental Body requesting permission for any change in any accounting method of the Company.
 
(g)           The Company is not and has not been a party to, or bound by, and the Company has no obligation to any other Person under, any Tax sharing, Tax allocation, Tax indemnity, or similar oral or written Contract (including any advance pricing agreement, closing agreement or gain recognition agreement relating to Taxes with any Governmental Body). The Company:  (i) has not been a member of an affiliated group of corporations filing a consolidated or combined Tax Return and (ii) has no liability for Taxes of any Person as a result of being a member of any affiliated, consolidated, combined, unitary or similar group under Treasury Regulation section 1.1502-6 (or any similar provision of state, local or foreign Law) or as a transferee, successor, surety or guarantor, or by contract, indemnification or otherwise.  The Company is not subject or a party to, or a partner or member of, any joint venture, partnership, limited liability company or other oral or written contract, agreement, understanding or arrangement that is treated as a partnership for federal income Tax purposes.
 
(h)           The Company is not a party to or bound by any oral or written Contract that, individually or collectively, has obligated it or could obligate it to make any payment that would not be deductible by the Company by reason of Code Section 280G or would be subject to Code Section 4999 (whether or not such payment is considered reasonable compensation for services rendered) or would not be deductible pursuant to Code Section 404.  The Company is not party to any Contract that is a “nonqualified deferred compensation plan” within the meaning of Code section 409A.
 
(i)           The Company has not participated in any “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4.
 
(j)           The Company is not a “United States real property holding corporation” within the meaning of Code Section 897, and neither the Company nor the Seller is a “foreign person” within the meaning of Code Section 1445(a).  No amount will be required to be withheld under Code Section 1445 in connection with any of the transactions contemplated by this Agreement.
 
(k)           The Company has been since its inception, and will continue to be at all times through the Closing, (i) a “small business corporation” within the meaning of Code Section 1361(b) for which a valid election under Code Section 1362(a) is in effect, and (ii) a validly electing S corporation, within the meaning of applicable state and local Law, for purposes of the income or franchise Tax Law of each state and local jurisdiction in which its income is or has been subject to Tax.
 

 
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(l)           The Company is not liable, and has no potential liability, for any Tax under Code Section 1374 or 1375 or any comparable provision of applicable state, local or foreign Law.
 
(m)           No claim has ever been made in writing with respect to the Company or either Seller (in relation to the Company or such Seller’s interest therein) by any Governmental Body in a jurisdiction:  (i) in which the Company or the Sellers do not file or has not filed Tax Returns that the Company or either Seller is, was or may be subject to taxation by that jurisdiction, or (ii) where the Company or the Sellers file or filed Tax Returns but does not or did not compute his or its Tax on the basis of his or its net income attributable to such jurisdiction, that it is, was or may be subject to Tax on the basis of his or its net income attributable to such jurisdiction.  The Company does not conduct business in, or derive income from, within or allocable to, any state, local or foreign Taxing jurisdiction (x) other than those for which all Tax Returns have been provided to Purchaser or (y) that could reasonably result in a requirement to file a Tax Return in that jurisdiction of a type that the Company, or the Sellers (in relation to the Company or their interest therein), have not filed previously, or to pay Taxes to that jurisdiction on a basis different from the basis, if any, on which the Company or the Sellers (in relation to the Company or their interest therein), previously paid Taxes to that jurisdiction.
 
(n)           The Company has not at any time engaged in a non-United States trade or business, had a permanent establishment outside the United States, or conducted activities in any foreign jurisdiction that have exposed it to such jurisdiction’s Tax jurisdiction.
 
(o)           The Company has not, in the past ten (10) years, acquired assets from another Person (or been treated or required to have been treated for Tax purposes as having acquired assets from another Person) in a transaction in which the federal income Tax basis of the acquired assets should have been determined, in whole or in part, by reference to the Tax basis of the acquired assets in the hands of such transferring Person.  The Company has not distributed the stock of another Person, or had its stock distributed by another Person, in a transaction intended or purported to be governed in whole or in part by Code Section 355 or Code Section 361.
 
(p)           The Company has not taken any action that would have the effect of deferring a measure of Tax from a period (or portion thereof) ending on or before the Closing Date to a period (or portion thereof) beginning after the Closing Date.  The Company will not be required to include any item of income in, or exclude any item of deduction from, Taxable income for any Taxable period (or portion thereof) ending after the Closing Date as a result of any intercompany transaction, installment sale or open transaction disposition made on or prior to the Closing Date or any prepaid amount received on or prior to the Closing Date.
 
(q)           Set forth in Section 3.17(q) of the Disclosure Schedule is a complete and accurate list of all the state, local and foreign jurisdictions in which the Company has filed (i) an income, franchise or gross receipts Tax Return or (ii) a sales and use Tax Return for any period for which the statute of limitations remains open under applicable Law.
 
Section 3.18     Employment Matters .  The Company does not have any employees and since January 1, 2008 has not had any employees.  The Company does not have any obligations or liabilities, fixed or contingent, arising out of or with respect to any the employment by the
 
 
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Company of any individual.  The Company does not maintain or contribute to any benefit plans or programs, and the Company does not have any obligations or liabilities, fixed or contingent, with respect to any current or former director, officer, employee (as applicable) or contractor of the Company or their dependents or beneficiaries.
 
Section 3.19     Legal Matters .  There are no Proceedings or Claims pending or, to the Company's Knowledge, threatened (i) against the Company or any of its assets or properties or (ii) to the Company’s Knowledge, against any of its directors, officers, employees or Affiliates, which, with respect to this clause (ii) are related to or affect the Company’s operations, the nLayer Business or the Company’s assets or the consummation of the transactions contemplated hereby.  Except as set forth in Section 3.19 of the Disclosure Schedule, the Company is not currently a plaintiff in any Proceeding and since January 1, 2009, the Company has not brought any Proceedings or Claims.  There are no Proceedings or Claims pending or, to the Company’s Knowledge, threatened, that question the validity of this Agreement or any of the Transaction Documents, or the right of the Company, the Sellers, Daniel Brosk or Server Central to enter into this Agreement or any of the Transaction Documents to which such Person is a party (as applicable) or to consummate the transactions contemplated hereby and thereby.  The Company is not subject to any Order in which it is named, and its assets are not subject to any Order in which such assets are specifically identified.
 
Section 3.20     Absence of Certain Practices .  Neither the Company, nor any director, officer, employee, stockholder or agent of the Company, nor any other Person acting on its or their behalf has, directly or indirectly, made, given or incurred or agreed to make, give or incur any contribution, payment, gift or entertainment or other expense or similar benefit to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the business or operations of the Company (or assist the Company in connection with any actual or proposed transaction relating to its business and operations), (a) that subjected or would be reasonably likely to subject the Company to any damage or penalty in any criminal or governmental Proceeding, (b) that subjected or would be reasonably likely to subject the Company to any material adverse consequences with any Governmental Body or regarding the ability of the Company to continue doing business in all material respects as it is currently doing business, or (c) that in case of a payment made directly or indirectly to an official or employee of any Governmental Body, constitutes an illegal bribe or kickback (or if made to an official or employee of a foreign government, is unlawful under the Foreign Corrupt Practices Act of 1977, as amended) or, in the case of a payment made directly or indirectly to a Person other than an official or employee of a government or Governmental Body, constitutes an illegal bribe or illegal kickback or other illegal payment under any Law of the United States or under the Law of any state or locality that could subject the payor to a criminal penalty or the loss of a license or privilege to engage in a trade or business.
 
Section 3.21     Affiliated Transactions .  Except as set forth in Section 3.21 of the Disclosure Schedule, no director, officer, employee or stockholder of the Company, nor any member of any such individual’s “immediate family” (as defined under Rule 16a-1(e) under the 1934 Act), or any Person which any such individual directly or indirectly controls, is a party to any Contract or transaction with the Company or has any material interest in any material property used by the Company.  Except as set forth in Section 3.21 of the Disclosure Schedule, none of such Persons has any direct or indirect ownership interest in any Person: (i)
 
 
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with which the Company is Affiliated, (ii) whose assets are used by the Company in the conduct by the Company of its business, (iii) with which the Company otherwise has a business relationship, or (iv) to the Company’s Knowledge, that competes with the Company (other than an ownership interest of less than one percent (1%) of the stock in publicly traded companies that may compete with the Company as long as such Person is a passive investor that does not have any active role in any such publicly traded company).
 
Section 3.22     Customers, Sales Agents and Suppliers .   Section 3.22(a) of the Disclosure Schedule lists the customers and sales agents of the Company and, measured by expense, the ten (10) largest suppliers (other than professional advisors such as attorneys and accountants) of the Company for the one (1) year period prior to the date of this Agreement.  The Company has not, during the two (2) year period prior to the date of this Agreement, been involved in any material dispute with any of its customers or sales agents.  Except as set forth in Section 3.22(b) of the Disclosure Schedule, during the one (1) year period prior to the date of this Agreement, none of the customers, sales agents or suppliers of the Company has canceled or otherwise terminated, or, to the Company’s Knowledge, expressly threatened in writing to cancel or otherwise terminate or not renew, its relationship with the Company.  The Company has not received any notice or other communication from any customer, sales agent or supplier of the Company stating that the transactions contemplated by this Agreement will materially and adversely affect the relations of the Company with any customer, sales agent or supplier.   Section 3.22(c) of the Disclosure Schedule sets forth customers of the Company which are also customers of Server Central.
 
Section 3.23     Warranties .  The Company has made no oral or written warranties with respect to the quality or absence of defects of the products or services which it has sold or performed which are in force as of the date hereof, except for those warranties which are described in Section 3.23 of the Disclosure Schedule.
 
Section 3.24     Bank Accounts; Powers of Attorney .   Section 3.24 of the Disclosure Schedule sets forth (a) the name of each bank, safe deposit company or other financial institution in which the Company has an account, lock box or safe deposit box and (b) the name of each Person authorized to draw thereon or to have access thereto and the names of each Person, if any, holding powers of attorney from the Company.
 
Section 3.25     Brokers’ and Finders’ Fees .  Except for Bank Street Group, LLC, no agent, broker, finder, or investment or commercial banker, or other Person engaged by or acting on behalf of the Company or any of its representatives or Affiliates in connection with the negotiation, execution or performance of this Agreement or the Transaction Documents or the consummation of the transactions contemplated hereby or thereby, is or will be entitled to any brokerage or finder’s or similar fee or other commission as a result of this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
 
As a material inducement to Purchaser entering into this Agreement and consummating the transactions contemplated by this Agreement and the Transaction Documents, each Seller
 
 
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hereby severally and not jointly represents and warrants to Purchaser as to such Seller (but not as to any other Seller) as follows:
 
Section 4.1     Organization and Standing .  If such Seller is an entity, such Seller is duly organized, validly existing and in good standing (to the extent such concepts are applicable to such Seller) under the laws of the state of its formation, and such Seller is qualified to do business and in good standing (to the extent such concepts are applicable to such Seller) in each other jurisdiction in which the failure to so qualify and be in good standing would materially and adversely affect such Seller’s ability to perform its obligations under this Agreement and the Transaction Documents to which it is or will become a party or to consummate the transactions contemplated hereby and thereby.  If such Seller is an entity, such Seller has all the requisite trust (or other) power and authority to own, lease and operate its properties and to carry on its business as now being conducted.
 
Section 4.2     Authority; Enforceability .  Such Seller has the full legal right, power and authority to execute and deliver this Agreement and each Transaction Document to which he or it is or will become a party, to perform his and its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  If such Seller is an entity, the execution, delivery and performance by such Seller of this Agreement and each Transaction Document to which it is or will become a party and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary trust (or other) action on the part of such Seller.  This Agreement has been duly executed and delivered by such Seller, and each Transaction Document to which such Seller is or will become a party has been, or when executed shall be, duly executed and delivered by such Seller.  This Agreement, assuming that this Agreement is a valid and binding obligation of Purchaser, the Company and the other Seller (as applicable), constitutes a valid and binding obligation of such Seller enforceable against such Seller in accordance with its terms, and each Transaction Document to which such Seller is or will become a party, assuming that such Transaction Document is a valid and binding obligation of the other parties thereto, is, or when executed shall constitute, a valid and binding obligation of such Seller enforceable against such Seller in accordance with its terms, in each case except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity affecting the availability of specific performance and other equitable remedies.
 
Section 4.3     No Violation .  The execution and delivery by such Seller of this Agreement and each Transaction Document to which such Seller is or will become a party and the consummation by such Seller of the transactions contemplated hereby and thereby, including the compliance and performance by such Seller of the terms, conditions and provisions thereof, do not and will not: (a) violate or conflict with any provision of the Organization Documents of such Seller (if such Seller is an entity), (b) violate or conflict with any Law applicable to such Seller or by which such Seller or any of his or its assets or properties are bound or affected, (c) with or without the passage of time or the giving of notice, or both, violate, conflict with or result in a breach of the terms or conditions or provisions of, or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or result in or give rise to a right of termination, modification, acceleration or cancellation of any obligation under, any Contract to which such Seller is a party or by which such Seller or any of
 
 
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his or its assets or properties are bound or affected or (d) result in the creation or imposition of a Lien on any of such Seller’s Shares or other assets or properties.
 
Section 4.4     Consents .  No consent, approval, waiver, order, permit or authorization of, or registration, application, qualification, designation, declaration, filing or notification with or to, any Governmental Body or any other Person, including a party to a Contract to which such Seller is a party or by which any of his or its assets or properties are bound or affected, is required in connection with the execution, delivery and performance by such Seller of this Agreement or any of the Transaction Documents to which such Seller is or will become a party or the consummation by such Seller of the transactions contemplated hereby or thereby.
 
Section 4.5     Ownership .  Immediately prior to the Closing, such Seller was the sole record and beneficial owner of the Shares set forth opposite such Seller’s name on Exhibit A and such Seller owned such Shares free and clear of any and all Liens.  At the Closing, assuming Purchaser has the requisite authority to be the lawful owner of the Shares, such Seller is transferring to Purchaser good, valid and enforceable title in and to such Seller’s Shares set forth across from such Seller’s name on Exhibit A , free and clear of any and all Liens, other than Liens created or incurred by Purchaser or its Affiliates and other than restrictions on transfer under applicable federal and state securities law.  Such Seller was not a party to any Contract with respect to: (a) the voting of any Shares; or (b) the transfer of any Shares (including any preemptive right, right of first offer, right of first refusal, participation right, “take along” right or similar right).
 
Section 4.6     Legal Matters .  There are no Proceedings or Claims pending or, to the knowledge of such Seller, threatened against such Seller or any of his or its assets or properties, or any Orders outstanding against such Seller, in each case that would adversely affect such Seller’s ability to perform such Seller’s obligations under this Agreement and the Transaction Documents to which such Seller is or will become a party or to consummate the transactions contemplated hereby or thereby.
 
Section 4.7     Certain Relationships .  Neither such Seller nor any member of such Seller’s “immediate family” (as defined under Rule 16a-1(e) under the 1934 Act) (nor, solely with respect to the representation made herein by the Trust, any member of the “immediate family” of any beneficiary of the Trust) has any direct or indirect ownership interest in any Person that competes with the Company (other than an ownership interest of less than one percent (1%) of the stock in publicly traded companies that may compete with the Company as long as such Person is a passive investor that does not have any active role in any such publicly traded company).
 
Section 4.8     Brokers’ and Finders’ Fees .  Except for the Bank Street Group, LLC, no agent, broker, finder, or investment or commercial banker, or other Person engaged by or acting on behalf of such Seller or any of such Seller’s representatives or Affiliates in connection with the negotiation, execution or performance of this Agreement or the Transaction Documents or the consummation of the transactions contemplated hereby or thereby, is or will be entitled to any brokerage or finder’s or similar fee or other commission as a result of this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby.
 
 
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ARTICLE V
OTHER COVENANTS AND AGREEMENTS
 
Section 5.1     Further Assurances .  From time to time, as and when requested by any Party, any other Party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting Party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement and the Transaction Documents.  Without limitation of the foregoing, to the extent the Personal Property is not sufficient to operate the nLayer Business as heretofore conducted, or the operation of the nLayer Business as heretofore conducted requires the use of assets owned by Affiliates of the Company, the Parties intend that the Transition Services Agreement will provide for an orderly transition.  In addition, the Sellers shall, and shall cause their Affiliates to, provide such cooperation and assistance (at Purchaser’s expense) in connection with Purchaser’s audit of the Company’s 2009, 2010 and 2011 annual financial statements as Purchaser may reasonably request.  Further, the Sellers agree to provide, if so requested by Purchaser or Purchaser's independent public accountants (the " Auditor "), to the Auditor a letter of representation (at no cost to the Sellers), in form and substance reasonably acceptable to the Sellers (the “ Representation Letter ”); provided that the matters covered by such letter shall be limited (i) in scope and substance to the representations of the Sellers expressly set forth in Section 3.8, and (ii) to other matters (A) that are reasonably acceptable to the Sellers, (B) which directly relate to the Company’s annual financial statements for the periods ended December 31, 2009, 2010 and 2011 and ( C) which, to the actual knowledge of the Sellers, are true and correct..  Notwithstanding the foregoing, (I) the foregoing obligations of the Sellers shall be limited to providing such information or documentation as may be in the possession of, or reasonably obtainable by, the Sellers or the Sellers’ Affiliates or accountants, at no cost to the Sellers, and in the format that the Sellers or the Sellers’ Affiliates or accountants have maintained such information; and (II) the Representation Letter will not expand, extend, supplement or increase any of the representations or warranties set forth in this Agreement or any Transaction Document in any manner or to expose the Sellers or any of their respective Affiliates to any risk of liability to Purchaser, any of Purchaser’s Affiliates or any other third parties, other than the Auditor as expressly set forth in the Representation Letter.  All matters under this Section 5.1 which are at Purchaser’s expense or at no cost to the Sellers, which shall include reasonable internal costs and expenses, shall be paid by Purchaser to the Sellers on demand.
 
Section 5.2     Payments of Accounts Receivable .  In the event either of the Sellers shall receive any instruments of payment of any of the accounts receivable of the Company, such Seller shall forthwith deliver such instruments to Purchaser, endorsed where necessary, without recourse, in favor of Purchaser.  In the event Purchaser, the Company or any of their respective Affiliates shall receive any instruments of payment properly payable to either Seller or any of their respective Affiliates, including Server Central and CacheNetworks, Purchaser shall deliver, or shall cause the Company or Purchaser’s or the Company’s respective Affiliates, as applicable, to deliver, such instruments to the Sellers or their Affiliate, as applicable, endorsed where necessary, without recourse, in favor of such Person.
 
Section 5.3     Third Party Claims .  The Parties shall cooperate with each other with respect to the defense of any Proceeding, pending or overtly threatened, asserted by a Person
 
 
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other than the Parties hereto, their successors and permitted assigns (and in the case of Purchaser, other than any such Proceeding asserted solely among the Sellers, Daniel Brosk and their respective Affiliates), against any Indemnified Party or to which any Indemnified Party is subject subsequent to the Closing Date which are not subject to the indemnification provisions contained in Article VII ; provided, however, that no Party shall be required to provide such cooperation unless it has received assurances reasonably acceptable to such Party that the Party requesting such cooperation shall reimburse such Party for his or its reasonable out-of-pocket costs and expenses of furnishing such cooperation.
 
Section 5.4     Confidentiality .
 
(a)            Purchaser Confidential Information .  In consideration of the benefits of this Agreement to the Sellers and in order to induce Purchaser to enter into this Agreement, each Seller hereby individually covenants and agrees such Seller is in the possession of certain Purchaser Confidential Information.  Such Seller agrees that such Seller shall not, and shall cause his or its Affiliates not to, in whole or in part, disclose or allow to be disclosed to any Person any Purchaser Confidential Information for any reason or purpose whatsoever, and such Seller shall use at least the same degree of care when dealing with such Purchaser Confidential Information that he or it employs with respect to its own confidential and proprietary information.
 
(b)            Seller Confidential Information .  In consideration of the benefits of this Agreement to Purchaser and its Affiliates and in order to induce each of the Sellers to enter into this Agreement, Purchaser hereby individually covenants and agrees that Purchaser is in the possession of certain Seller Confidential Information.  Purchaser agrees that it shall not, and shall cause its Affiliates not to, in whole or in part, disclose or allow to be disclosed to any Person any Seller Confidential Information for any reason or purpose whatsoever, and Purchaser shall use at least the same degree of care when dealing with such Seller Confidential Information that it employs with respect to its own confidential and proprietary information.
 
(c)           Notwithstanding the foregoing, the provisions of this Section 5.4 shall not prohibit disclosures that are required to be made by a Party (a “ Disclosing Party ”) under legal process by subpoena or other order issued by a court of competent jurisdiction or by any other Governmental Body; provided, however , that such Disclosing Party, unless prohibited by Law, provides to the other Parties prompt notice of any such subpoena or other order so that any such other Party may seek, at its sole option, election and expense, an appropriate protective order or other protective remedy, and such Disclosing Party shall furnish only that portion of the Purchaser Confidential Information or Seller Confidential Information, as applicable, that is legally required to be disclosed and shall cooperate in such manner as the other Parties may reasonably request to obtain assurance that confidential treatment shall be accorded to such Purchaser Confidential Information or Seller Confidential Information, as applicable.
 
Section 5.5     Non-Competition for the Benefit of Purchaser .  In consideration of the benefits of this Agreement to the Sellers and in order to induce Purchaser to enter into this Agreement, each Seller hereby individually covenants and agrees that, from and after the Closing and until the earlier of (a) the fourth (4 th ) anniversary of the Closing Date, and (b) the occurrence of a Triggering Event, other than a sale of the Company in which the Deferred Payments are paid in full in accordance with this Agreement   to the Sellers (the “ Restrictive Covenant Period ”),
 
 
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such Seller shall not, and shall cause his and its Affiliates not to, directly or indirectly, participate in, own, operate, manage, control, invest in, lend to, or otherwise have any interest (of record or beneficial) in, or be employed by, have any interest as a consultant in, advise, engage in services for or otherwise aid or assist in any manner, any Person or other business that engages, anywhere in the world, in a business that directly or indirectly engages in, or directly or indirectly competes with, the nLayer Business; provided, however, that this Section 5.5 shall not prohibit such Seller and his or its Affiliates from (A) providing services to the Company, (B) owning any equity in the Company or being a passive owner of not more than one percent (1%) of the outstanding capital stock of a Person which is publicly traded, as long as such Seller and his or its Affiliates have no active participation in such Person’s business, (C) becoming an employee of a Person engaged in the nLayer Business, and being a beneficial owner of equity securities of such entity, so long as (X) the revenue generated by such Person from the nLayer Business in any given fiscal year during the Restrictive Covenant Period does not represent more than ten percent (10%) of the total revenue of such Person in such fiscal year, and (Y) such Seller or Affiliate thereof does not directly participate in the nLayer Business, or (D) remaining an employee of Server Central, or becoming an employee of any successor in interest thereto (whether or not such Person engages in, or derives revenue from, the nLayer Business); provided that such Seller or Affiliate thereof does not, subject to the final sentence of this Section 5.5 , directly participate in the nLayer Business conducted by such successor in interest to Server Central.   Notwithstanding the foregoing, Server Central, including any successor in interest thereto, may continue to operate its business and provide services which may be deemed to compete, whether directly or indirectly, with the nLayer Business, so long as such services are bundled with other services of Server Central, or any successor in interest thereto, which are offered by Server Central, or any successor in interest thereto, in the ordinary course of business (collectively, the “ Permitted Activities ”), and Server Central’s, or any successor in interest thereto, engaging in any such Permitted Activities (and Seller’s involvement in the business of, or direct or indirect ownership of equity interests in, Server Central or any successor in interest thereto) shall not be deemed to be a breach or other violation of this Section 5.5 .
 
Section 5.6     Non-Solicitation of Business Relations for the Benefit of Purchaser .  In consideration of the benefits of this Agreement to the Sellers and in order to induce Purchaser to enter into this Agreement, each Seller hereby individually covenants and agrees that, during the Restrictive Covenant Period, such Seller shall not, and such Seller shall cause his or its Affiliates not to, directly or indirectly, except on behalf of or for the benefit of the Company, (a) solicit, sell to, provide services to, or assist the solicitation of, sale to, or providing to, or encourage, induce or entice any other Person to solicit, sell to or provide services to, any Person who is a customer of the Company at the time of such solicitation or other action or was a customer of the Company (or whom the Company is or was soliciting to become a customer of the Company) within the one (1) year period immediately preceding the Closing Date, for the purpose of (i) providing such Person with any product or service which directly or indirectly competes with the products or services provided by the Company to such Person or is in substitution for or in replacement of such products or services; (ii) altering, modifying or precluding the development of such customer’s business relationship with the Company; or (iii) reducing the volume of business that such customer transacts with the Company or (b) take any action that is intended, or could reasonably be expected, to discourage any Person who is presently (or was at any time during the one (1) year period immediately preceding the Closing Date) a lessor, licensor, supplier, licensee or other business associate or relation of the Company from entering into or
 
 
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maintaining, or to terminate, cease or otherwise adversely change, its relationship with the Company or in any other way deliberately interfere with the relationship between the Company and any such lessor, licensor, supplier, licensee or other business associate or relation.  Notwithstanding the foregoing, (X) Server Central and the Company have joint customers which are disclosed in Section 3.25(c) of the Disclosure Schedule, and such joint customers are expressly excluded from the provisions of this Section 5.6 , and (Y) nothing set forth herein shall be deemed to restrict or limit Server Central from engaging in any Permitted Activities, and Server Central’s engaging in any such Permitted Activities (and Seller’s involvement in the business of, or direct or indirect ownership of equity interests in, Server Central) shall not be deemed to be a breach or other violation of this Section 5.6 .
 
Section 5.7     Non-Solicitation for Employment for the Benefit of Purchaser .  In consideration of the benefits of this Agreement to the Sellers and in order to induce Purchaser to enter into this Agreement, each Seller hereby individually covenants and agrees that, during the Restrictive Covenant Period, such Seller shall not, and such Seller shall cause his or its Affiliates not to, directly or indirectly, (a) solicit or attempt to solicit for employment, hire or attempt to hire, engage or attempt to engage or in any other way induce or attempt to induce to leave the employ of or engagement by the Company, any Person who is, on the date of such solicitation or attempted solicitation, hiring or attempted hiring, or engagement or attempted engagement, or who was, during the twelve (12) month period preceding such solicitation or attempted solicitation, hiring or attempted hiring, or engagement or attempted engagement, a director, officer, employee or consultant to the Company or (b) induce or attempt to induce any Person who is a director, officer, employee or consultant of the Company to leave the employ of or terminate or breach their respective agreements with the Company, or in any other way deliberately interfere with the relationship between the Company and any such Person; provided, however , that general solicitations of employment published in a journal, newspaper or other publication of general circulation or listed on any internet job site and not targeted towards the Company’s directors, officers, employees or consultants shall not be deemed to be a solicitation of such individuals in violation of this Section 5.7 .
 
Section 5.8     Non-Disparagement for the Benefit of Purchaser .  In consideration of the benefits of this Agreement to the Sellers and in order to induce Purchaser to enter into this Agreement, each Seller hereby individually covenants and agrees that, during the Restrictive Covenant Period, such Seller shall not, and such Seller shall cause his or its Affiliates not to, directly or indirectly, make any written or oral statement concerning the Company, Purchaser or any of their respective Affiliates, the nLayer Business or any of the current or former directors, officers, managers or employees of the Company, Purchaser or of any of their respective Affiliates that is reasonably likely to be harmful to the Company, Purchaser or such Affiliate, the nLayer Business or the business or personal reputation of any such Person; provided, however , that the restriction set forth in this Section 5.8 shall not: (A) prohibit truthful testimony compelled by legal process; or (B) prevent such Seller from exercising his or its rights or remedies under this Agreement or any of the Transaction Documents.
 
Section 5.9     Non-Solicitation for Employment for the Benefit of the Sellers .  In consideration of the benefits of this Agreement to Purchaser and in order to induce the Sellers to enter into this Agreement, Purchaser hereby individually covenants and agrees that, from and after the Closing and until the fourth (4 th ) anniversary of the Closing Date, Purchaser shall not,
 
 
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and Purchaser shall cause its Affiliates not to, directly or indirectly, (a) solicit or attempt to solicit for employment, hire or attempt to hire, engage or attempt to engage or in any other way induce or attempt to induce to leave the employ of or engagement by Server Central or CacheNetworks, any Person who is, on the date of such solicitation or attempted solicitation, hiring or attempted hiring, or engagement or attempted engagement, or who was, during the twelve (12) month period preceding such solicitation or attempted solicitation, hiring or attempted hiring, or engagement or attempted engagement, a director, officer, employee or consultant to Server Central or CacheNetworks or (b) induce or attempt to induce any Person who is a director, officer, employee or consultant of Server Central or CacheNetworks to leave the employ of or terminate or breach their respective agreements with Server Central or CacheNetworks, or in any other way deliberately interfere with the relationship between Server Central or CacheNetwork sand any such Person; provided, however , that general solicitations of employment published in a journal, newspaper or other publication of general circulation or listed on any internet job site and not targeted  towards the directors, officers, employees or consultants of Server Central or CacheNetworks shall not be deemed to be a solicitation of such individuals in violation of this Section 5.9 .
 
Section 5.10    Intention of Parties Regarding Restrictive Covenants; Remedies .
 
(a)            Intended Enforcement .
 
(i)           It is understood and expressly agreed and acknowledged by each of the Sellers that the restrictive covenants of each Seller set forth in Sections 5.4 , 5.5 , 5.6 , 5.7 and 5.8 :  (i) are reasonable in geographic and temporal scope and in all other respects; (ii) have been made in order to induce Purchaser to enter into this Agreement and Purchaser would not have entered into this Agreement but for the restrictive covenants of such Seller contained in Sections 5.4 , 5.5 , 5.6 , 5.7 and 5.8 and this Section 5.10 ; and (iii) were made in connection with their sale of equity interests of the Company.  It is therefore the specific intention of the Company and the Sellers that the provisions of Sections 5.4 , 5.5 , 5.6 , 5.7 and 5.8 and this Section 5.10 shall be enforced as written and to the fullest extent possible.
 
(ii)           It is understood and expressly agreed and acknowledged by Purchaser that the restrictive covenants of Purchaser set forth in Sections 5.4 and 5.9 :  (i) are reasonable in geographic and temporal scope and in all other respects; (ii) have been made in order to induce the Sellers to enter into this Agreement and the Sellers would not have entered into this Agreement but for the restrictive covenants of Purchaser contained in Sections 5.4 and 5.9 and this Section 5.10 ; and (iii) were made in connection with their purchase of equity interests of the Company.  It is therefore the specific intention of Purchaser and the Sellers that the provisions of Sections 5.4 and 5.9 and this Section 5.10 shall be enforced as written and to the fullest extent possible.
 
(b)            Remedies .
 
(i)           If, at any time of enforcement of any of the provisions of Sections 5.4 , 5.5 , 5.6 , 5.7 or 5.8 , a court of competent jurisdiction determines that the duration or geographic scope restrictions stated in this Agreement are not enforceable under
 
 
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applicable Law, the Parties agree that the maximum duration or geographic scope (as applicable) permitted by applicable Law shall be substituted for the duration or geographic scope (as applicable) stated in this Agreement and the court shall be authorized to revise the restrictions contained in this Agreement to instead cover only such maximum duration or geographic scope (as applicable).  In the event of any conflict between the immediately preceding sentence of this Section 5.10(b)(i) , on the one hand, and Section 8.5 on the other hand, the immediately preceding sentence of this Section 5.10(b)(i) shall control and govern.
 
(ii)           If, at any time of enforcement of any of the provisions of Sections 5.4 or 5.9 , a court of competent jurisdiction determines that the duration or geographic scope restrictions stated in this Agreement are not enforceable under applicable Law, the Parties agree that the maximum duration or geographic scope (as applicable) permitted by applicable Law shall be substituted for the duration or geographic scope (as applicable) stated in this Agreement and the court shall be authorized to revise the restrictions contained in this Agreement to instead cover only such maximum duration or geographic scope (as applicable).  In the event of any conflict between the immediately preceding sentence of this Section 5.10(b)(ii) , on the one hand, and Section 8.5 on the other hand, the immediately preceding sentence of this Section 5.10(b)(ii) shall control and govern.
 
(c)            Other Obligations .
 
(i)           Each Seller agrees and acknowledges that his or its obligations set forth in Sections 5.4 , 5.5 , 5.6 , 5.7 and 5.8 are in addition to, and not in lieu of, any obligations such Seller has to the Company and its Affiliates (including Purchaser) pursuant to any other Contract between such Seller and the Company or its Affiliates, at common law or otherwise.
 
(ii)           Purchaser agrees and acknowledges that its obligations set forth in Sections 5.4 and 5.9 are in addition to, and not in lieu of, any obligations Purchaser has to the Sellers and their respective Affiliates pursuant to any other Contract between Purchaser and the Sellers or their respective Affiliates, at common law or otherwise.
 
(d)            References Include Subsidiaries .
 
(i)           All references in Sections 5.4 , 5.5 , 5.6 , 5.7 or 5.8 to the Company are inclusive of the Subsidiaries, if any, of the Company from time to time.
 
(ii)           All references in Sections 5.4 or 5.9 to the Sellers are inclusive of their respective Subsidiaries, if any, from time to time.
 
ARTICLE VI
TAX MATTERS
 
Section 6.1     Payment of Taxes; Preparation and Filing of Tax Returns .
 
(a)           The Sellers shall be responsible for payment of the following Taxes (or the non-payment thereof):
 
 
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(i)           All Taxes of the Company, or for which the Company is liable, for all Taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date of any Straddle Period; and
 
(ii)           all Taxes of the Sellers (in relation to the Company or the Sellers’ interest therein), including pursuant to Code Section 1366 or comparable provisions of state, local or foreign Tax Law, for all Taxable periods;
 
in each case including all Taxes of the Company or of the Sellers resulting from the transactions contemplated by this Agreement.  For the avoidance of doubt, nothing in this Section 6.1(a) shall be construed to imply that Purchaser is not responsible for the Gross-Up Payment pursuant to Section 6.2(d) on account of the 338(h)(10) Election.  In the case of Taxes that are payable with respect to a Straddle Period, the portion of any such Tax that is allocable to the portion of the Taxable period ending on the Closing Date shall be:
 
(A)           in the case of Taxes that are either (1) based upon or measured by income or receipts or (2) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), deemed equal to the amount which would be payable if the Taxable period ended on the Closing Date; for the avoidance of doubt, Taxes incurred by reason of the transactions contemplated by this Agreement, including the 338(h)(10) Election, if any, shall be allocated to the portion of the period ending on the Closing Date; and
 
(B)           in the case of other Taxes imposed on a periodic basis with respect to the Company or its assets, or otherwise not feasibly allocated to specific transactions or events, deemed to be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period.
 
In the event a 338(h)(10) Election is not made, the Sellers shall, at the request of Purchaser, promptly execute any required consent to an election pursuant to Code Section 1362(e)(3) to close the books of the Company in order to give effect to this Section 6.1(a) .
 
(b)           The Sellers shall prepare and file (or cause to be prepared and filed) all Tax Returns of the Company relating to Income Taxes for all periods ending on or prior to the Closing Date (“ Pre-Closing Tax Returns ”).  Purchaser shall prepare and file (or cause to be prepared and filed) all Tax Returns related to Non-Income Taxes for the Company that are filed after the Closing Date with respect to (i) Taxable periods ending on or before the Closing Date and (ii) all Tax Returns for Straddle Periods. With respect to any such Tax Return required to be filed with respect to the Company and as to which any responsibility for any portion of the Taxes shown thereon is allocable to the Sellers under Section 6.1(a) , Purchaser shall provide the Sellers with a copy of such completed Tax Return and a statement certifying the amount of Tax shown on such Tax Return for which the Sellers are responsible (to the extent not shown on the Tax Return, including on Schedule K-1) at least ten (10) days prior to the due date (including any extension thereof) for filing such Tax Return. For a period of ten (10) days following such delivery the Sellers shall have the right to review and approve such Tax Return and statement,
 
 
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which approval shall not be unreasonably withheld, conditioned or delayed.  The Sellers shall pay to Purchaser the amount of Taxes shown on such Tax Return for which the Sellers are responsible pursuant to Section 6.1(a)(i) , by wire transfer of immediately available funds to the account designated in writing by Purchaser, within three (3) days after the earlier of (x) the Sellers’ approval of such Tax Return and (y) expiration of such ten (10) day period.
 
(c)           Purchaser, on the one hand, and the Sellers on the other hand, shall each be liable for one-half (1/2) of any Transfer Taxes incurred in connection with the consummation of the Purchase.
 
Section 6.2     Tax Election .  At Purchaser’s election, the Sellers shall join with Purchaser in making, and shall take any and all action necessary to effect, a timely election under Code Section 338(h)(10) (and any corresponding election under applicable state, local or foreign Tax Law) with respect to the purchase by the Purchaser of the Shares (the “ 338(h)(10) Election ”).  The following provisions shall govern certain Tax matters relating to or resulting from the 338(h)(10) Election, notwithstanding anything to the contrary in Section 6.1 .
 
(a)           If Purchaser desires to make the 338(h)(10) Election, it shall deliver to the Sellers a notice to that effect, accompanied by a completed IRS Form 8023 (“ Form 8023 ”) and any corresponding state, local or foreign Tax forms (except for information thereon that must be provided by the Sellers).  Within fifteen (15) days after receiving from Purchaser the notice referred to in Section 6.2(a) , each Seller shall deliver to Purchaser the Form 8023 and any such corresponding state, local or foreign Tax forms duly executed by such Seller and completed with any information therein which must be provided by such Seller; provided, however , neither Seller shall be obligated to deliver to Purchaser the Form 8023 or any of such Tax forms unless such Seller is concurrently being paid Five Hundred Forty Nine Thousand Dollars ($549,000) in the case of Lowe and Three Hundred Sixty Six Thousand Dollars ($366,000) in the case of the Trust (such amount, the “ Estimated Gross Up Payment ”), which amount shall be subject to adjustment as provided in this Section 6.2 .
 
(b)           If Purchaser makes the 338(h)(10) Election, the portion of the Purchase Price allocated to the Shares, the liabilities of the Company and any other relevant items (the “ 338(h)(10) Consideration ”) shall be allocated among the assets of the Company (the “ Assets ”) in accordance with this Section 6.2(b) (the “ Allocation ”).  Promptly after making the Section 338(h)(10) Election, and in any event prior to September 30, 2012, Purchaser shall cause to be prepared and delivered to the Sellers a draft Allocation in accordance with Code Section 338(h)(10) and the Treasury Regulations thereunder (the “ Draft Allocation ”). If the Sellers do not deliver to Purchaser a written objection to the Draft Allocation, setting forth in reasonable detail the basis for any such objection, within thirty (30) days after their receipt of the Draft Allocation, then the Draft Allocation shall become final and binding upon the Parties (the “ Final Allocation ”). If the Sellers timely deliver such an objection to Purchaser, then the Sellers and Purchaser shall work in good faith to resolve any dispute, and if all items of dispute are so resolved, then the Draft Allocation shall be amended accordingly and shall become the Final Allocation. If any dispute with respect to the Draft Allocation remains unresolved for a period of twenty (20) days after Purchaser receives the Sellers’ objection notice, then Purchaser and the Sellers shall submit only the remaining disputed items to the Independent Accountants for determination. The Independent Accountants’ determination as to each such disputed item shall
 
 
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be binding on the Parties, and the Draft Allocation shall be amended in accordance with the Independent Accountants’ determination and shall become the Final Allocation.  Purchaser shall prepare IRS Form 8883 (and any similar form for purposes of state, local or foreign Tax Law) for each of “Old Target” and “New Target” (as defined for purposes of Treasury Regulation 1.338(h)(10)) consistent with the Final Allocation, and Purchaser, on behalf of the Company, shall timely file or cause to be filed such Forms 8883 and other forms with the appropriate Governmental Body.  If any adjustment is subsequently made to the 338(h)(10) Consideration pursuant to the terms of this Agreement, the Sellers agree to execute and deliver promptly to Purchaser such other Tax forms relating to the 338(h)(10) Election as Purchaser may reasonably request, and the Sellers hereby authorize Purchaser to file any and all forms with respect to the 338(h)(10) Election.  The Form 8883 and other forms shall be binding on the Sellers and the Company for all Tax purposes, and each such Person shall file all Tax Returns in a manner consistent with the Form 8883 and other forms; provided , however , that (i) the amount realized by the Sellers may differ from the amount allocated hereunder to reflect transaction costs that reduce the amount realized for Income Tax purposes and (ii) the Purchaser’s cost for the assets that it is deemed to acquire may differ from the amount allocated hereunder to reflect the inclusion in the total cost of items (for example, capitalized acquisition costs) not included in the amount so allocated.  None of the Sellers, the Company or Purchaser shall take any position on any Tax Return, before any Governmental Body or in any proceeding relating to Taxes that is in any way inconsistent with the Form 8883.
 
(c)           The Sellers shall include any income, gain, loss, deduction or other Tax item resulting from the 338(h)(10) Election on such Seller’s  Tax Returns to the extent and in the manner required by applicable Law, and shall timely file such Tax Returns and pay the Taxes reported on such Tax Returns.  The Sellers shall also be responsible for and shall pay any Tax imposed on the Company attributable to the making of the 338(h)(10) Election, including any Tax imposed under Code Section 1374 and any Tax imposed under Treasury Regulation Section 1.338(h)(10)-1(d)(2).
 
(d)           Notwithstanding anything to the contrary, as a condition to making the 338(h)(10) Election, Purchaser will make a payment to the Sellers in an amount sufficient to pay the sum of (i) the amount, if any, by which (A) the sum of the federal, state and local Taxes paid by the Company and the Sellers as a result of the 338(h)(10) Election, including any administrative or other charges or expenses, exceeds or will exceed (B) the sum of the federal, state and local Taxes that would have been paid by the Company and the Sellers had the sale of the Shares to Purchaser occurred pursuant to the terms of this Agreement but no 338(h)(10) Election had been made (taking into account all appropriate federal and state income Tax implications) (the “ Incremental Tax ”) and (ii) any additional federal, state and local Taxes incurred by the Company or any Seller attributable to the payment by Purchaser of the Incremental Tax and any Gross-Up to any Seller (which for the avoidance of doubt includes (i) any entity level Tax of the Company due to such payment of Incremental Tax and/or Gross-Up being treated as additional Purchase Price and as additional 338(h)(10) Consideration, and (ii) any additional federal, state and local Tax incurred by the Company or any seller attributable to the payment of a prior Gross-Up calculation amount , i.e., there is a Gross-Up on any Gross-Up amounts paid) (the “ Gross Up ”), and (iii) any interest or penalties assessed by the Internal Revenue Service and state taxing authority on the Company or any Seller which are related to the payment of the Incremental Tax or Gross Up (provided that the Sellers give written notice of such interest or penalties to
 
 
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Purchaser and provide a reasonable opportunity to contest such amounts), unless such interest or penalties are attributable to the negligent or wrongful act or omission of such Seller (the amounts in the foregoing clauses (i) , (ii) and (iii) being referred to collectively as the “ Gross-Up Payment ”).  If either Seller determines that the Estimated Gross-Up Payment is less than the Gross-Up Payment to which such Seller is entitled, such Seller may provide an initial calculation of the Gross-Up Payment to Purchaser for its review and approval within thirty (30) days after the later of completion of the Final Allocation or the date Purchaser delivers its notice of the 338(h)(10) Election to such Seller pursuant to Section 6.1(a) .  If (I) Purchaser does not object to a Seller’s calculation of the Gross-Up Payment within twenty (20) days after its receipt of the initial calculation from such Seller or (II) if such Seller does not provide an initial calculation of the Gross-Up Payment during such thirty (30) day period and Purchaser does not object to the Estimated Gross-Up Payment to such Seller as being the amount of the Gross-Up Payment within twenty (20) days after the end of such thirty (30) day period, which objection shall be made by delivering to the Sellers a notice of such objection within such twenty (20) day period, then such Gross-Up Payment shall become final and binding on the Parties.  If (x) Purchaser disputes a Seller’s calculation of the Gross-Up Payment in writing within twenty (20) days of its receipt of the initial calculation or (y) if such Seller does not provide an initial calculation of the Gross-Up Payment during such thirty (30) day period but Purchaser objects to the Estimated Gross-Up Payment to such Seller as being the amount of the Gross-Up Payment within twenty (20) days after the end of such thirty (30) day period, which objection shall be made by delivering to the Sellers a notice of such objection within such twenty (20) day period accompanied by Purchaser’s initial calculation of the Gross-Up Payment, then such Gross-Up Payment (after good faith attempt to resolve such disagreement) shall be determined in writing by the Independent Accountants within thirty (30) days after the delivery of the initial calculation to the Independent Accountants and such determination of the Gross-Up Payment by the Independent Accountants shall be final and binding on the Parties (the final determination of the Gross-Up Payment is referred to as the “ Final Gross-Up Payment ”).  Within ten (10) days after the determination of the Final Gross-Up Payment: (X) if the Final Gross-Up Payment exceeds the Estimated Gross-Up Payment, then the Purchasers shall pay such excess to the Sellers and (Y) if the Final Gross-Up Payment is less than the Estimated Gross-Up Payment, then the Sellers shall pay such deficit to Purchaser.  If any Party fails to pay any amount when due under this Section 6.2(d) , such unpaid amount shall thereafter bear simple interest at a rate equal to the prime rate in effect from time to time (as published in The Wall Street Journal ) plus two (2) percentage points, from the required date of payment until the date on which such amount is paid in full.  Any Gross-Up Payment shall be treated by the Sellers and Purchaser as an adjustment to the Purchase Price for United States federal income tax purposes.
 
Section 6.3     Tax Covenants .
 
(a)           After the Closing Date, Purchaser and/or the Company will not, without obtaining the written consent of the Sellers, agree to the waiver or any extension of the statute of limitations relating to any Taxes of the Company for any tax period ending on or before the Closing Date (“ Pre-Closing Tax Period ”)or any Straddle Period.
 
(b)           The Parties hereby agree and acknowledge that the Tax deductions associated with the transaction expenses paid pursuant to Section 1.3(b)(ii ) shall be for the sole benefit of the Sellers and shall be allocated to the applicable Pre-Closing Tax Periods ending on the
 
 
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Closing Date or portions of the applicable Straddle Periods ending on the Closing Date, in each case to the extent permitted by applicable Law and that notwithstanding anything to the contrary in this Agreement, the Sellers shall be entitled to the benefits of each such Tax deduction.
 
(c)           If Purchaser or any of its Affiliates, including the Company, makes or changes any Tax reporting position or any Tax election that would reasonably be expected to have the effect of increasing the Tax liability or reducing any Tax benefit of either of the Sellers or the Company for any Pre-Closing Tax Period, then no Purchaser Indemnitee shall be entitled to indemnification thereafter pursuant to Section 7.2(a) for any such Tax liability that results therefrom.
 
Section 6.4     Cooperation on Tax Matters .
 
(a)           Purchaser, the Company and the Sellers shall cooperate fully, as and to the extent reasonably requested by any of them, in connection with the filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the requesting Party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees (including in the case of the Seller’s, employees of Server Central) available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Purchaser, the Company and the Sellers agree (i) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Purchaser or either Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority and (ii) to give the other of such Parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if another of such Parties so requests, the Company or the Sellers, as the case may be, shall allow such Party to take possession of such books and records.
 
(b)           Purchaser and the Seller further agree, upon request, to provide each other with all information that either of them may be required to report pursuant to Code Section 6043, Section 6043A, or Treasury Regulations promulgated thereunder.
 
ARTICLE VII
SURVIVAL; INDEMNIFICATION
 
Section 7.1     Survival; Expiration of Indemnification Obligations .
 
(a)            Survival .  The representations and warranties contained in Article II , Article III and Article IV shall survive the Closing and shall terminate on April 30, 2013; provided, however , that (i) the representations and warranties set forth in Sections 2.8 , 3.17 , 3.18 , 3.21 , 3.28 and 4.8 shall each survive the Closing and shall terminate on the sixtieth (60th) day after the running of the applicable statute of limitations and (ii) the representation and warranties set forth in Sections 2.1 , 2.2 , 3.1 , 3.2 , 3.4 , 4.1 , 4.2 and 4.5 (collectively with the representations and warranties set forth in the preceding clause (i), the “ Fundamental Representations ”) shall each survive the Closing indefinitely.  The respective covenants and agreements of the Parties
 
 
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contained in this Agreement shall each survive the Closing and shall terminate on the sixtieth (60th) day after the running of the applicable statute of limitations.
 
(b)            Expiration of Indemnification Obligations .  No Notice of Claim (i) concerning a breach of or inaccuracy in a representation and warranty contained in this Agreement or a non-fulfillment or breach of any covenant or agreement made by or to be performed by a Party set forth in this Agreement may be delivered by a Person seeking indemnification after expiration of the representation and warranty or covenant and agreement with respect to which such indemnification claim is being made, as provided in Section 7.1(a) , or (ii) concerning any of the matters set forth in Section 7.2(a)(iii) , (iv) , (v) or (vi) may be delivered by a Person seeking indemnification after the sixtieth (60th) day after the running of the applicable statute of limitations; provided, however , in the case of each of the preceding clauses (i) and (ii), if a Notice of Claim concerning any of the foregoing matters has been delivered in accordance with Section 7.5 or Section 7.6 by a Person seeking indemnification prior to the expiration of the applicable period set forth in the preceding clauses (i) or (ii), as applicable, the right to indemnification with respect to the matter set forth in such Notice of Claim and any other claim(s) arising out of, resulting from or relating to the facts giving rise to such claim for indemnification shall survive until such later date as each such claim for indemnification has been fully and finally resolved in accordance with this Article VII .
 
Section 7.2     Indemnification of Purchaser .
 
(a)           From and after the Closing (but subject to the terms and conditions of this Article VII ), the Sellers shall severally (based on their respective Percentage Interests), and not jointly, indemnify, defend and hold harmless Purchaser, each of Purchaser’s Affiliates (including the Company) and each of its and their respective officers, directors, managers, members, partners, stockholders, equity holders, employees, representatives, agents, successors and assigns (collectively, the “ Purchaser Indemnitees ”) from and against any and all Losses suffered or incurred by any Purchaser Indemnitee arising out of, resulting from or relating to:  (i) any breach of or inaccuracy in any representation and warranty made by the Sellers in Article III , (ii) any non-fulfillment or breach of any covenant or agreement made by or to be performed by the Sellers set forth in this Agreement; (iii) any Claim or Proceeding instituted, on or after the Closing Date, by any Person (including any Seller) against any Purchaser Indemnitee relating to any action, misrepresentation or omission (including any breach of fiduciary duty), occurring on or prior to the Closing Date, by the Company or any director, officer, employee or stockholder of the Company; (iv) any Company Transaction Expenses that are outstanding after the Closing and not reflected in the Final Net Working Capital; (v) any Indebtedness outstanding immediately prior to the Closing that is not satisfied in full at the Closing; or (vi) any Taxes for a Pre-Closing Tax Period or a Straddle Period for which Sellers are responsible pursuant to Article VI .  Notwithstanding the foregoing, and for the avoidance of doubt, no Seller Indemnitee will be a Purchaser Indemnitee by reason of such Seller Indemnitee’s position with the Company or otherwise.
 
(b)           From and after the Closing (but subject to the terms and conditions of this Article VII ), each Seller (alone and not jointly with the other Seller) shall indemnify, defend and hold harmless each of the Purchaser Indemnitees from and against any and all Losses suffered or incurred by any Purchaser Indemnitee arising out of, resulting from or relating to: (i) any breach
 
 
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of or inaccuracy in any representation and warranty made by such Seller in Article IV or (ii) any non-fulfillment or breach of any covenant or agreement made by or to be performed by such Seller set forth in this Agreement.
 
Section 7.3     Indemnification of the Sellers .  From and after the Closing (but subject to the terms and conditions of this Article VII ), Purchaser shall indemnify, defend and hold harmless each of the Sellers, each of their respective Affiliates and each of their respective trustees, beneficiaries, representatives, agents, successors and assigns (collectively, the “ Seller Indemnitees ”) from and against any and all Losses suffered or incurred by any Seller Indemnitee arising out of, resulting from or relating to: (a) any breach of or inaccuracy in any representation and warranty made by Purchaser in Article II or (b) any non-fulfillment or breach of any covenant or agreement made by or to be performed by Purchaser set forth in this Agreement.
 
Section 7.4     Limitation of Indemnification Obligations .
 
(a)            Purchaser Threshold .  The Purchaser Indemnitees shall be entitled to indemnification under Section 7.2(a)(i) or Section 7.2(b)(i) only if the aggregate amount of all Losses incurred by the Purchaser Indemnitees with respect to any and all breaches of or inaccuracies in the representations and warranties of the Sellers contained in Article III or Article IV exceeds One Hundred Thousand Dollars ($100,000) (the “ Aggregate Threshold ”); provided, however, that if the aggregate amount of all such Losses exceeds the Aggregate Threshold, the Purchaser Indemnitees shall be entitled to indemnification for the full amount of all such Losses and not just the amount in excess of the Aggregate Threshold; and provided further, however , that notwithstanding the foregoing, the Aggregate Threshold shall not apply to the Fundamental Representations of the Sellers and, accordingly, any claims by a Purchaser Indemnitee in respect of a Fundamental Representation of the Sellers shall be indemnified hereunder from the first dollar of any applicable Losses.
 
(b)            Seller Threshold .  The Seller Indemnitees shall be entitled to indemnification under Section 7.3(a) only if the aggregate amount of all Losses incurred by the Seller Indemnitees with respect to any and all breaches of or inaccuracies in the representations and warranties of Purchaser contained in Article II exceeds the Aggregate Threshold; provided, however, that if the aggregate amount of all such Losses exceeds the Aggregate Threshold, the Seller Indemnitees shall be entitled to indemnification only for the amount of such Losses in excess of the Aggregate Threshold; provided, however , that notwithstanding the foregoing, the Aggregate Threshold shall not apply to the Fundamental Representations of Purchaser and, accordingly, any claims by a Seller Indemnitee in respect of a Fundamental Representation of Purchaser will be indemnified hereunder from the first dollar of any applicable Losses.
 
(c)            Purchaser Cap .  Subject to Section 7.4(e) , the maximum aggregate amount of Losses for which indemnification is required to be made by any Seller individually with respect to the matters referred to in Section 7.2(a)(i) or Section 7.2(b)(i) is an amount equal to the product of (x) One Million Dollars ($1,000,000) multiplied by (y) such Seller’s Percentage Interest (the “ General Indemnity Cap ”); provided, however , the General Indemnity Cap shall not apply to Losses suffered by the Purchaser Indemnitees as a result of inaccuracies in or breaches of the Fundamental Representations of the Company and the Sellers, which shall be excluded in calculating when the General Indemnity Cap is reached; provided further, however , that the
 
 
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maximum aggregate amount of Losses for which indemnification is required to be made by any Seller individually with respect to the matters referred to in Section 7.2(a)(i) , (iv) or (v) or Section 7.2(b)(i) is an amount equal to the product of (i) the Purchase Price, as adjusted pursuant to the terms of this Agreement, including pursuant to Sections 1.6 and 1.7 , multiplied by (ii) such Seller’s Percentage Interest.
 
(d)            Seller Cap .  Subject to Section 7.4(e) , the maximum aggregate amount of Losses for which indemnification is required to be made by Purchaser with respect to the matters referred to in Section 7.3(a) is the General Indemnity Cap; provided, however , the General Indemnity Cap shall not apply to Losses suffered by the Seller Indemnitees as a result of inaccuracies in or breaches of the Fundamental Representations of Purchaser, which are unlimited and which shall be excluded in calculating when the General Indemnity Cap is reached.
 
(e)            Fraud .  Notwithstanding anything in this Agreement to the contrary, the Parties acknowledge and agree that, in the event of fraud in connection with the representations and warranties, nothing in this Agreement shall limit (i) any Party’s rights or (ii) the amount of Losses recoverable by a Party against the Party committing such fraud.
 
Section 7.5     Indemnification Claim Procedure .
 
(a)           If any Purchaser Indemnified Party or Seller Indemnified Party, as applicable (in the capacity as a Person seeking indemnification under this Article VII , the “ Indemnified Party ”), obtains actual knowledge of any matter not involving a Third Party Claim that the Indemnified Party believes will entitle the Indemnified Party to indemnification from another Party under this Article VII (in the capacity as a Person against whom indemnification is sought under this Article VII , the “ Indemnifying Party ”), the Indemnified Party shall promptly thereafter deliver to the Indemnifying Party a notice thereof (a “ Notice of Claim ”) describing such matter in reasonable detail, the basis for the indemnification obligation and, to the extent reasonably estimable, the estimated Losses resulting therefrom; provided, however , that any failure to give such notification on a timely basis or to provide any particular details therein shall not relieve the Indemnifying Party of its obligation to indemnify any Indemnified Party hereunder except to the extent that such failure to provide, delay in providing or omission of any particular detail actually and materially prejudices the ability of the Indemnifying Party to defend against such matter.
 
(b)           The Indemnifying Party shall respond to the Indemnified Party (a “ Claim Response ”) within thirty (30) days following the date that the Notice of Claim is delivered to the Indemnifying Party (the “ Response Period ”).  Any Claim Response must specify whether or not the Indemnifying Party disputes the claim(s) described in the Notice of Claim and, if known, describe in reasonable detail the basis for each such dispute and include supporting materials.  If the Indemnifying Party fails to give a Claim Response within the Response Period, the Indemnifying Party shall be deemed not to dispute the claim(s) described in the related Notice of Claim.  If the Indemnifying Party gives a Claim Response with the Response Period but does not in such Claim Response dispute all of the claim(s) made in the related Notice of Claim, the Indemnifying Party shall be deemed not to dispute the undisputed claim(s) described in the related Notice of Claim.  If the Indemnifying Party elects not to dispute any claim described in a
 
 
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Notice of Claim, whether by failing to give a timely Claim Response or otherwise, then the amount of Losses alleged with respect to such undisputed claim(s) in such Notice of Claim shall, subject to the limitations set forth in this Article VII , be conclusively deemed to be an obligation of Purchaser (if Purchaser is the Indemnifying Party), the Sellers (if the Sellers are the Indemnifying Party), or the applicable Seller (if such Seller is the Indemnifying Party), and the Indemnified Party shall thereafter be paid the amount specified in the Notice of Claim with respect to such undisputed claim(s) as provided in Section 7.8 .  If the Indemnifying Party delivers a Claim Response within the Response Period indicating that it disputes one or more of the matters identified in the Notice of Claim, Purchaser and the Sellers shall promptly meet in good faith to resolve the dispute.  If Purchaser and the Sellers do not resolve a dispute regarding a claim within thirty (30) days following the date that the Notice of Claim is delivered to the Indemnifying Party, either the Indemnifying Party or the Indemnified Party may submit the dispute to a court of competent jurisdiction for resolution.  Upon final resolution of such dispute, whether by agreement among Purchaser and the Sellers or by a final, non-appealable determination by a court of competent jurisdiction, if it is determined that any indemnification payment is required pursuant to this Article VII , then such amount shall be paid to the Indemnified Party as provided in Section 7.8 .
 
Section 7.6     Procedures Relating to Indemnification for Third-Party Claims .

(a)           With respect to any matter for which an Indemnified Party is entitled to indemnification from an Indemnifying Party under this Article VII that relates to a Claim or Proceeding by a Third Party (a “ Third Party Claim ”), the Indemnified Party shall provide to the Indemnifying Party a Notice of Claim relating to such Third Party Claim promptly after receiving written notification of such Claim or Proceeding; provided, however , that any failure to give such notification on a timely basis shall not relieve the Indemnifying Party of its obligation to indemnify any Indemnified Party hereunder except to the extent that such failure to provide or delay in providing actually and materially prejudices the ability of the Indemnifying Party to defend against such Third Party Claim.
 
(b)           The Indemnifying Party shall have the right to assume and pursue the defense of any Third-Party Claim with counsel selected by it and reasonably acceptable to the Indemnified Party, upon delivery to the Indemnified Party, within thirty (30) days after notice of the Third-Party Claim has been delivered to the Indemnifying Party, of an irrevocable acknowledgement and agreement that: (i) any Losses resulting therefrom shall, subject to the limitations set forth in this Article VII , be indemnifiable Losses for which the Indemnified Party is entitled to indemnification under this Article VII ; and (ii) that the Indemnifying Party shall post any bond or other security to the extent required in connection with the defense or appeal of such Third-Party Claim (an “ Assumption of Defense Notice ”).  Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume the defense of a Third-Party Claim if: (i) such Third-Party Claim involves criminal liability; (iii) such Third-Party Claim involves any issue relating to Taxes (except as expressly provided in Section 7.6(e ); (iv) such Third-Party Claim demands injunctive or other equitable relief; (v) the Indemnified Party reasonably determines that the Losses associated with such Third-Party Claim are likely to exceed the then-remaining amount of the General Indemnity Cap; (vi) any Indemnifying Party is also a party to such Third-Party Claim; or (vii) the Indemnified Party reasonably determines that it would be
 
 
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inappropriate for a single counsel to represent both the Indemnifying Party and the Indemnified Party in connection with such Third-Party Claim under applicable standards of legal ethics.
 
(c)           Unless and until the Indemnified Party receives, with respect to any Third-Party Claim, an Assumption of Defense Notice from the Indemnifying Party within the thirty (30) day period provided above or if, at any time after the Indemnifying Party has assumed the defense of a Third-Party Claim, the Indemnifying Party fails diligently to defend such Third-Party Claim, (i) the Indemnified Party may fully assume, commence and pursue its defense of such Third-Party Claim in any such manner as it may deem appropriate; (ii) the Indemnified Party shall thereafter promptly inform the Indemnifying Party of all material developments related to such Third-Party Claim (including copying the Indemnifying Party on court filings and correspondence); provided, however , that the Indemnified Party shall not be obligated to turn over any attorney-client privileged information; (iii) the Indemnifying Party shall reasonably cooperate in the defense or prosecution of such Third-Party Claim, including the retention and (upon the Indemnified Party’s request) the provision to the Indemnified Party of records and information which are reasonably relevant to such Third-Party Claim, and making employees and other representatives and advisors available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and (iv) the Indemnified Party shall not settle any such Third-Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.  For the avoidance of doubt, any attorneys’ fees and expenses and other costs and expenses incurred by the Indemnified Party in connection with a Third-Party Claim prior to the time at which such Third-Party Claim has been assumed by the Indemnifying Party as provided herein or during any subsequent time in which the Indemnified Party is conducting its own defense of a Third-Party Claim in accordance with this Section 7.6 shall be Losses hereunder.
 
(d)           If the Indemnifying Party assumes the defense of a Third-Party Claim, it shall control and direct the defense of such Third-Party Claim but the Indemnified Party will have the right to participate in the defense of such Third-Party Claim and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party.  During any time period in which the Indemnifying Party is defending a Third-Party Claim: (i) the Indemnifying Party shall promptly inform the Indemnified Party of all material developments related to such Third-Party Claim (including copying the Indemnified Party on court filings and correspondence)); provided, however , that the Indemnifying Party shall not be obligated to turn over any attorney-client privileged information; and (ii) the Indemnified Party shall reasonably cooperate in the defense or prosecution of such Third-Party Claim, including the retention and (upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and information which are reasonably relevant to such Third-Party Claim, and making employees and other representatives and advisors available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Notwithstanding anything to the contrary herein, the Indemnifying Party shall not settle any Third-Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned, or delayed) if pursuant to or as a result of such settlement: (A) such settlement would lead to liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder (other than to the extent of the Aggregate Threshold) or (B) injunctive or equitable relief or other operational restrictions would be imposed against such Indemnified Party.  If an
 
 
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offer is made to settle a Third Party Claim, which offer the Indemnifying Party is permitted to settle under this Section 7.6(d) only upon the prior written consent of the Indemnified Party, and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party will give prompt written notice to the Indemnified Party to that effect.  If the Indemnified Party does not consent to such firm offer within twenty (20) calendar days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and, in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim, subject to the limitations set forth in this Agreement, will not exceed the amount of such settlement offer, plus costs and expenses paid or incurred by the Indemnified Party through the date such settlement offer is given to the Indemnified Party to the extent such amount is otherwise indemnifiable hereunder.
 
(e)           With respect to any Tax Contest, the procedures of this Section 7.6(e)) shall apply in lieu of the procedures provided in the foregoing provisions of this Section 7.6 .  The Sellers shall have the right, at their own expense, to control any Tax audit or contest and resolve and defend against any assessment, notice of deficiency, or other adjustment or proposed adjustment (each, a “ Tax Proceeding ”) relating to any and all Taxes of the Company or of the Sellers (with respect to the Company or their interest therein), for any Taxable period ending on or before the Closing Date, provided, however , that Purchaser (i) shall have sole control of any Tax Proceeding that relates in whole or in part to the Section 338(h)(10) Election and (ii) shall have the right to participate in any other such Tax Proceeding that may have the effect of increasing the Tax liability of any Purchaser Indemnified Party for any Tax period ending after the Closing, but only as to those items that may have such an effect, and the Sellers shall not settle or compromise any claims in any Tax Proceeding without Purchaser's prior written consent.  Purchaser shall have the right, at its own expense, to control any other Tax Proceeding relating to Taxes with respect to the Company; provided that, with respect to any issue, the resolution of which may cause the Sellers to become obligated to make a material payment pursuant to Section 7.2(a)(vi) , Purchaser shall consult with the Sellers regarding the resolution of such issue, and not settle any such issue or file any amended Tax Return relating to such issue, without the consent of the Sellers, which consent shall not be unreasonably withheld, conditioned or delayed.
 
Section 7.7     Determination of Loss Amount; Reliance .
 
(a)           All materiality qualifications contained in the representations and warranties of the Parties set forth in this Agreement (however they may be phrased and including the term “ Material Adverse Effect ”) shall be taken into account for purposes of this Article VII solely for purposes of determining whether a breach of such representation and warranty has occurred and, if such breach has occurred, all such materiality qualifications shall be ignored and not given any effect for purposes of determining the amount of Losses arising out of, resulting from or relating to such breach of such representation and warranty under this Article VII .
 
(b)           The representations and warranties made by the Sellers, on the one hand, and Purchaser, on the other hand, in this Agreement are made with the knowledge and expectation that each of the Sellers (in the case of representations and warranties made by Purchaser) and Purchaser (in the case of representations and warranties made by the Sellers) is placing complete reliance thereon in entering into, and performing its obligations under, this Agreement.   No investigation made by or for the benefit of a Party, nor any knowledge of information held or
 
 
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obtained by such Party either in the course of such investigation or otherwise, will negate or limit the effect of the representations and warranties made for the benefit of such Party in this Agreement or any right to indemnification with respect to any breach of or inaccuracy therein.
 
(c)           The Indemnifying Party shall not be liable under this Article VII for any (i) Losses relating to any matter to the extent that there is included in the Final Post-Closing NWC Statement a liability or reserve relating to such matter or (ii) Losses that are punitive damages.
 
(d)           Each Indemnified Party shall take commercially reasonable efforts to mitigate the amount of any Losses for which a claim for indemnification is or can be made under this Article VII and, notwithstanding anything to the contrary in this Article VII , with respect to each claim for indemnification under this Agreement the Indemnifying Parties shall not be required to provide indemnification with respect to any Loss (or a portion thereof) if, but only to the extent, such Losses result from the failure of any Indemnified Party to use such commercially reasonable efforts.  For the avoidance of doubt, any Loss incurred by an Indemnified Party in connection with the use of his or its commercially reasonable efforts to mitigate any Loss pursuant to this Section 7.7 shall be deemed to be a Loss incurred by such Indemnified Party and shall be indemnifiable pursuant to this Article VII .
 
(e)           Notwithstanding anything to the contrary in this Article VII or elsewhere in this Agreement, no Indemnified Party shall be deemed to have incurred a Loss (or a portion thereof) to the extent that such Indemnified Party actually receives recovery under insurance coverage with respect to such Loss, provided that in no event shall any indemnification payment be delayed in anticipation of the receipt of any insurance proceeds.  Each Indemnified Party agrees to, and to cause its Affiliates to in good faith, diligently seek recovery of all insurance proceeds from insurers with respect to all Losses with respect to which any Indemnified Party makes a claim for indemnification under this Article VII (it being agreed and acknowledged that any expenses incurred by such Indemnified Party in seeking such recovery in good faith shall be indemnifiable Losses pursuant to this Article VII ).  To the extent that the Indemnified Party receives any amount under insurance coverage with respect to a claim for which a Purchaser Indemnified Party has previously obtained payment in indemnification under this Article VII , the Indemnified Party shall, as soon as reasonably practicable after the receipt of such insurance proceeds, pay and reimburse to the Indemnifying Party for such prior indemnification payments (up to the amount of the insurance proceeds, less any retroactive premium adjustments directly attributable thereto, costs incurred but not previously reimbursed to the applicable Indemnified Party as indemnified Losses and any deductible incurred in obtaining such proceeds).
 
Section 7.8     Payment of Amounts Due .
 
(a)           Subject to the application of Section 7.4 , within five (5) business days after it is finally determined pursuant to this Article VII that any amount is due to any Purchaser Indemnitee under Section 7.2(a) , such amount shall be satisfied as follows: (i) first, by reducing the portion of the Deferred Payments payable pursuant to Section 1.2(b) ; (ii) second, by reducing the portion of the Deferred Payments payable pursuant to Section 1.2(c) ; (iii) third, by reducing the portion of the Deferred Payments payable pursuant to Section 1.2(d) ; and (iv) finally, in the event that such amount exceeds any remaining Deferred Payments payable pursuant to Sections
 
 
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1.2(b) , 1.2(c) and 1.2(d) , then by payment by each Seller to Purchaser of such Seller’s Percentage Interest of such amount by wire transfer of immediately available funds.
 
(b)           Subject to the application of Section 7.4 , within five (5) business days after it is finally determined pursuant to this Article VII that any amount is due to any Purchaser Indemnitee under Section 7.2(b) , such amount shall be satisfied as follows:  (i) first, by reducing the portion of the Deferred Payments payable to such Seller pursuant to Section 1.2(b) ; (ii) second, by reducing the portion of the Deferred Payments payable to such Seller pursuant to Section 1.2(c) ; (iii) third, by reducing the portion of the Deferred Payments payable to such Seller pursuant to Section 1.2(d) ; and (iv) finally, in the event that such amount exceeds any remaining Deferred Payments payable to such Seller pursuant to Sections 1.2(b) , 1.2(c) and 1.2(d) , then by payment by the applicable Seller to Purchaser by wire transfer of immediately available funds.
 
(c)           Subject to the application of Section 7.4 , within five (5) business days after it is determined pursuant to this Article VII that any amount is due to any Seller Indemnitee pursuant to Section 7.3 , such amount shall be paid by Purchaser to such Seller Indemnitee by wire transfer of immediately available funds.
 
(d)           If any payment required under this Section 7.8 is not made in full within five (5) business days after it is determined under this Article VII that such payment is due, the unpaid  payment will thereafter bear simple interest at a rate equal to the prime rate in effect from time to time (as published in The Wall Street Journal ) plus two (2) percentage points, until paid in full.  Any payment made pursuant to this Section 7.8 shall be an adjustment to the Purchase Price for Tax purposes.
 
Section 7.9     Exclusive Remedy .  Notwithstanding anything to the contrary in this Agreement, except: (a) as set forth in Section 8.14 with respect to specific performance or injunctive relief, (b) as set forth in Section 1.7(c) , (c) as set forth in Section 6.2 with respect to Taxes or (d) for any claim based upon fraud or willful misconduct, the indemnification rights set forth in this Article VII shall be the sole and exclusive remedies of: (i) the Purchaser Indemnitees for any breach of or inaccuracy in any of the representations and warranties of the Sellers contained in this Agreement or any breach of any of the covenants and agreements of the Sellers contained in this Agreement; and (ii) the Seller Indemnitees for any breach of or inaccuracy in any of the representations and warranties of Purchaser contained in this Agreement or any breach of any of the covenants and agreements of Purchaser contained in this Agreement.  For the avoidance of doubt, the limitation set forth in this Section 7.9 shall not apply to any of the Transaction Documents.
 
ARTICLE VIII
MISCELLANEOUS
 
Section 8.1     Expenses .  Except as otherwise expressly set forth in this Agreement, Purchaser shall pay its own expenses (including investment banking, brokerage, legal, accounting and other professional fees and expenses) incurred in connection with the negotiation of this Agreement, the performance by Purchaser of its obligations hereunder and the consummation of the transactions contemplated by this Agreement (and for the avoidance of
 
 
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doubt, the Parties acknowledge that the payments provided in Section 1.3(b)(ii) are Company expenses).  Except for the payments provided in Section 1.3(b)(ii) or as otherwise expressly set forth in this Agreement, each Seller shall pay his or its own expenses (including investment banking, brokerage, legal, accounting and other professional fees and expenses) incurred in connection with the negotiation of this Agreement, the performance by such Seller of his or its obligations hereunder and the consummation of the transactions contemplated by this Agreement.  The Company shall pay its own expenses (including investment banking, brokerage, legal, accounting and other professional fees and expenses and the payments provided in Section 1.3(b)(ii) ) incurred in connection with the negotiation of this Agreement, the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated by this Agreement (collectively, the “ Company Transaction Expenses ”); provided, however , that the Sellers (in accordance with their respective Percentage Interests) shall be responsible for and shall pay any Company Transaction Expenses that are not paid prior to the Closing or pursuant to Section 1.3(b)(ii) .
 
Section 8.2     Publicity .  Except as otherwise required by Law or applicable stock exchange rules, press releases and other publicity concerning the Purchase and the other transactions contemplated hereby shall be made only with the prior written consent of Jordan Lowe and Purchaser (and in any event, the Parties shall use all reasonable efforts to consult and agree with each other with respect to the content of any such required press release or other publicity), not to be unreasonably withheld.
 
Section 8.3     Notices .  All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if: (a) delivered personally; (b) mailed using certified or registered United States mail with postage prepaid; or (c) sent by next-day or overnight mail or delivery using a nationally recognized overnight courier service, as follows:
 
Notices to the Sellers :

c/o ServerCentral, Inc.
209 W. Jackson Blvd, Suite 700
Chicago, IL 60606
 
with a copy (which shall not constitute notice, request, demand, waiver or other communication to the Sellers)  to:
 
Brozosky & Brosk, P.C.
40 Skokie Boulevard, Suite 630
Northbrook, Illinois 60062
Attention: Joel Brosk, Esq.
 
 
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Notices to Purchaser, Parent or the Company :
 
Global Telecom & Technology, Inc.
8484 Westpark Drive
Suite 720
McLean, VA 22101
Facsimile: 703.
Attention: General Counsel
 
with a copy (which shall not constitute notice, request, demand, waiver or other communication to Purchaser, Parent or the Company) to:
 
Kelley Drye & Warren LLP
3050 K Street, N.W.
Washington, D.C. 20007
Attention: Jay R. Schifferli
 
A Party may designate a new address to which notices, requests, demands, waivers and other communications shall thereafter be transmitted by providing written notice to that effect to the other Parties.  Each notice, request, demand, waiver or other communication transmitted in the manner described in this Section 8.3 shall be deemed to have been provided, received and become effective for all purposes hereunder (i) when delivered personally to the recipient, if delivered personally, (ii) four (4) days after being mailed by certified or registered United States mail, postage prepaid, (iii) one business day after being sent by next-day or overnight mail or delivery using a nationally recognized overnight courier service, or (iv) when presented for delivery to the addressee as so addressed during normal business hours, if such delivery shall have been rejected, denied or refused for any reason.
 
Section 8.4     Assignment .  Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated (whether in whole or part, voluntarily or involuntarily, by operation of law, merger, consolidation, dissolution or otherwise) by any Party without the prior written consent of (a) in the case of a Seller, Purchaser, and (b) in the case of Purchaser, the Sellers.  No assignment or delegation shall relieve any Party of its responsibility for the performance of any obligation.  Notwithstanding the foregoing, the rights, interests and obligations of each Seller hereunder shall be binding upon and inure to the benefit of such Seller and his or its heirs, executors, administrators or legal representatives upon the death or incapacity of such Seller.  Any purported assignment or delegation of this Agreement or any rights, interests or obligations hereunder in violation of this Section 8.4 shall be void and of no force or effect.  Subject to the foregoing, this Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.  In the event that after the date of this Agreement the Trust makes any distribution to its beneficiaries, each beneficiary shall be responsible to Purchaser for the obligations of the Trust under Article VII of this Agreement, up to the amount distributed to such beneficiary, and the Trust shall take such actions as may be necessary to implement the provision of this sentence.
 
Section 8.5     Severability .  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any
 
 
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provision of this Agreement shall hereafter be held to be invalid, unenforceable or illegal, in whole or in part, in any jurisdiction under any circumstances for any reason: (a) such provision shall be reformed to the minimum extent necessary to cause such provision to be valid, enforceable and legal while preserving the intent of the Parties as expressed in, and the benefits to such Parties provided by, such provision; or (b) if such provision cannot be so reformed, such provision shall be severed from this Agreement and an equitable adjustment shall be made to this Agreement (including addition of necessary further provisions to this Agreement) so as to give effect to the intent as so expressed and the benefits so provided to the maximum extent permitted by applicable Law.  Such holding shall not affect or impair the validity, enforceability or legality of such provision in any other jurisdiction or under any other circumstances.  Neither such holding nor such reformation or severance shall affect or impair the legality, validity or enforceability of any other provision of this Agreement.
 
Section 8.6     Interpretation .  All references in this Agreement to annexes, exhibits, schedules, articles, sections, subsections and other subdivisions refer to the corresponding annexes, exhibits, schedules, articles, sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise.  Titles appearing at the beginning of any articles, sections, subsections or other subdivisions of this Agreement are for convenience only and shall be disregarded in construing the language hereof.  Annexes, exhibits and schedules to this Agreement are attached hereto and by this reference incorporated herein for all purposes.  Any capitalized terms used but not defined in an annex or schedule to this Agreement have the meaning set forth in this Agreement.  The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular article, section, subsection or other subdivision hereof unless expressly so limited herein.  The words “either,” “or,” “neither,” “nor,” and “any” are not exclusive.  The word “including” (in its various forms) means including without limitation.  All references to “$” and “dollars” shall be deemed to refer to United States currency unless otherwise specifically provided.  Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.  Unless expressly stated to the contrary, references in this Agreement or Annex A to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms thereof.
 
Section 8.7     Construction .  The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Person. The inclusion of any item in the Disclosure Schedule attached hereto is not intended to imply that the items so included, or other items, are or are not required to be disclosed (including whether such items are required to be disclosed as material or threatened) or are within or outside of the ordinary course of business, and no Party shall use the fact of the inclusion of any item in the Disclosure Schedule in any dispute or controversy between the Parties as to whether any obligation, item or matter not included in any section in the Disclosure Schedule is or is not required to be disclosed (including whether the items are required to be disclosed as material or threatened) or is within or outside of the ordinary course of business for purposes of this Agreement.  The information contained in this Agreement, and in the schedules is disclosed solely for purposes of this Agreement, and no information contained herein or therein shall be deemed to be an admission by any Party to any
 
 
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third party of any matter whatsoever (including any violation of Law or breach of Contract).  Each representation and warranty contained herein is independent of all other representations and warranties contained herein (whether or not covering an identical or a related subject matter) and must be independently and separately complied with and satisfied.  Exceptions or qualifications to any representations or warranties contained in the text thereof or schedules thereto shall not be construed as exceptions or qualifications to any other representation or warranty.
 
Section 8.8     Amendment and Waiver .  This Agreement may not be amended except by an instrument in writing executed by the Company (with the prior approval of the Company’s board of directors), Purchaser and the Sellers, which states that it constitutes an amendment to this Agreement and specifies the provision(s) that are being amended.  Any provision of this Agreement may be waived at any time by (a) Purchaser, by delivery by Purchaser of a written instrument executed by Purchaser, which states that it constitutes a waiver of this Agreement and specifies the provision(s) that are being waived; (b) by any Seller or both of the Sellers, by delivery by such Seller(s) of a written instrument executed by such Seller(s), which states that it constitutes a waiver of this Agreement and specifies the provision(s) that are being waived and (c) by the Company, by delivery by the Company of a written instrument executed by the Company (with the prior approval of the Company’s board of directors), which states that it constitutes a waiver of this Agreement and specifies the provision(s) that are being waived.  No waiver by any Party of any provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other provision of this Agreement on any future occasion.  No failure or delay by any Party in exercising any right, power, privilege or remedy hereunder shall operate as a waiver thereof.
 
Section 8.9     Entire Agreement .  This Agreement, including the annex, exhibits and schedules hereto, along with the Transaction Documents, constitute the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all other prior and contemporaneous agreements and understandings, both written and oral, by or among the Parties with respect to the subject matter hereof, including any letter of intent, term sheet or memorandum of terms entered into or exchanged by the Parties or any of their respective Affiliates.
 
Section 8.10     Counterparts .  This Agreement may be executed in one or more counterparts, all of which (when executed and delivered) shall be considered one and the same Agreement and shall become effective when one or more counterpart signature pages have been signed by each Party and delivered by each Party to the other Parties, it being understood that each of the Parties need not sign the same counterpart.  Counterparts may be delivered by facsimile or other electronic transmission method (including pdf), and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
 
Section 8.11     Governing Law .  THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ALL RELATIONSHIPS AMONG THE PARTIES HEREUNDER AND ALL DISPUTES AND PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE FOREGOING SHALL BE CONSTRUED AND GOVERNED BY, AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
 
 
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CHOICE OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
 
Section 8.12     Consent to Jurisdiction; Waiver of Jury Trial .
 
(a)           EACH PARTY AGREES THAT ALL PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS AMONG THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING  SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED STATES LOCATED IN THE STATE OF DELAWARE, IN THE CHANCERY COURT OF THE STATE OF DELAWARE (OR, IF THE CHANCERY COURT OF THE STATE OF DELAWARE DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE) AND IN ANY APPELLATE COURTS THEREFROM WITHIN THE STATE OF DELAWARE (COLLECTIVELY, THE “ DELAWARE COURTS ”).  EACH PARTY CONSENTS AND SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY OF THE DELAWARE COURTS IN RESPECT OF ANY SUCH PROCEEDING.  PROCESS WITH RESPECT TO ANY SUCH PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, AND MAY BE SENT OR DELIVERED TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES SET FORTH IN SECTION 8.3 OR IN ANY OTHER MANNER OTHERWISE PERMITTED BY APPLICABLE LAW.
 
(b)           EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS AMONG THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING (IN CONTRACT, TORT OR OTHERWISE) IN ANY OF THE DELAWARE COURTS.  EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY OF THE DELAWARE COURTS.
 
(c)           EACH PARTY AGREES THAT ANY PROCEEDING (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS AMONG THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH PROCEEDING.
 

 
55

 

(d)           EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE FOREGOING WAIVERS, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12 .
 
Section 8.13     No Third Party Beneficiaries .  No Person other than Purchaser, the Company and the Sellers has, is intended to have, or shall have any rights, remedies, obligations or benefits under any provision of this Agreement, other than (a) any heirs, executors, administrators, legal representatives, successors and permitted assigns of the Parties under Section 8.4 (who are intended third party beneficiaries of this Agreement) and (b) the Purchaser Indemnitees and the Seller Indemnitees (who are intended third party beneficiaries of Article VII ).
 
Section 8.14     Remedies .  Subject to the provisions of Section 7.9 and Section 1.7(c) , each of the Parties shall have and retain all rights and remedies, at law or in equity, including rights to specific performance and injunctive or other equitable relief, arising out of or relating to a breach or threatened breach of this Agreement.  Without limiting the generality of the foregoing, each of the Parties acknowledges that money damages would not be a sufficient remedy for any breach or threatened breach of this Agreement and that irreparable harm would result if this Agreement were not specifically enforced.  Therefore, the rights and obligations of the Parties shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith, without the necessity of posting a bond or other security or proving actual damages and without regard to the adequacy of any remedy at law.  A Party’s right to specific performance or injunctive relief  shall be in addition to all other legal or equitable remedies available to such Party.
 
Section 8.15     Deliveries to Purchaser .  Any document or item shall be deemed “provided” or “made available” by any of the Sellers or the Company to Purchaser for purposes of Article III if such document or item (a) is included on or prior to the date of this Agreement in the electronic data room established by the Company and maintained by Bank Street Group LLC in connection with the transactions contemplated by this Agreement, or (b) actually delivered (including electronic delivery) by the Company to Chris McKee prior to the date of this Agreement.
 
Section 8.16     Parent Guarantee .  To induce the Sellers to enter into this Agreement, Parent hereby irrevocably, absolutely and unconditionally guarantees as a primary obligor and not merely as surety to the Sellers, the full and punctual payment, performance and discharge of all of the obligations of Purchaser to the Sellers under this Agreement, and all liabilities and damages payable by Purchaser arising under or in connection with this Agreement, whether pursuant to Section 1.2 , Section 6.2 , Article VII or otherwise, when due, subject to and in accordance with the provisions of this Agreement (the “ Obligations ”).  In furtherance of the
 
 
56

 
 
foregoing, Parent acknowledges that its liability under this Section 8.16 shall extend to the Obligations and that the Sellers may, in their sole discretion, bring and prosecute a separate action or actions against Parent for the full amount of the Obligations, regardless of whether action is brought against Purchaser or any other Person, whether Purchaser or any other Person is joined in any such action or actions or whether Purchaser or any other Person was primarily responsible for causing the Obligations of Purchaser under this agreement.  For the avoidance of doubt, Parent shall remain liable for performing its obligations hereunder in the event that Purchaser assigns this Agreement to an Affiliate thereof in accordance with the terms of this Agreement (with all references to “Purchaser” herein to then be deemed references to such affiliated assignee).  Parent’s obligations hereunder shall apply regardless of any amendments, variations, alterations, waivers or extensions to this Agreement executed pursuant to this Agreement, regardless of whether Parent received notice of the same and Parent hereby waives notice of the same.  In connection with this guaranty, Parent waives: (a) any defenses that would be available to Purchaser arising under applicable bankruptcy Laws; (b) any right to require the Sellers to (i) proceed against Purchaser or any other Person; (ii) proceed against or exhaust any security or (iii) pursue any other remedy for the breach of an obligation by Purchaser under this Agreement; and (c) any defense from the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against Purchaser.  The Sellers acknowledge and agree that, except as otherwise provided in this Section 8.16 , Parent may assert any defenses that would be available to Purchaser with respect to any demand for performance of any Obligations of Purchaser under this Agreement (including those set forth in Article VII ).
 
[Signature Page Follows]
 
 

 
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The Parties have executed this Stock Purchase Agreement as of the date indicated in the first sentence of this Agreement.
 
SELLERS:

/s/ Jordan Lowe                                                     
Jordan Lowe
 
 
DANIEL BROSK TRUST DATED DECEMBER 22, 2006
 
By: /s/ Daniel Brosk                                               
Daniel Brosk, Trustee

 
COMPANY:
 
NLAYER COMMUNICATIONS, INC.
 
By:   /s/ Jordan Lowe                                               
Name:  Jordan Lowe
Title:   President
 
 
PURCHASER:

GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.

By:   /s/ Chris McKee                                              
Name:  Chris McKee
Its:        General Counsel

PARENT:

GLOBAL TELECOM & TECHNOLOGY, INC.

By:   /s/ Chris McKee                                              
Name:  Chris McKee
Its:        General Counsel

 
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ANNEX A

DEFINITIONS

  PART I  - DEFINITIONS:
 
As used in the Agreement, each of the following terms has the meaning given in this Annex A :
 
Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person.  For the purposes of this definition, “controlling,” “controlled” and “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by Contract or otherwise.
 
business day ” means any day of the year other than: (a) any Saturday or Sunday; or (b) any other day on which the banks located in the State of Illinois are closed for business.
 
Claim ” means any complaint, allegation, charge, petition, appeal, demand, notice, filing or claim of any kind that commences, alleges a basis to commence or threatens to commence any Proceeding by or before any Governmental Body, or that asserts, alleges a basis to assert or threatens to assert any right, breach, default, violation, noncompliance, termination, cancellation or other action or omission that would reasonably be expected to result in a Loss.
 
Contract ” means any contract, agreement, instrument, lease, sublease, loan agreement, indenture, bond, note, mortgage, license, sublicense, purchase or sale order, quotation or other arrangement, commitment, plan, understanding, undertaking or other obligation, whether written or oral, that is binding or enforceable on at least one of the parties thereto.
 
Code ” means the Internal Revenue Code of 1986, as amended.
 
Customers ” means (a) (i) each of the Persons that is a customer of the Company as of the Closing Date or that has been a customer of the Company during the period of twelve (12) consecutive full calendar months preceding the Closing Date, and (ii) each of the Persons which Sellers and Purchaser agree is reasonably likely to become a Customer of the Company or the  nLayer Business, and, in each case, is set forth on Schedule I , and (b) each of the Persons that becomes a customer of the Company or the nLayer Business on or following the Closing Date, excluding any Persons that are Existing Customers, the relationships with which the Parties agree, in good faith, were primarily established by a Seller or an Affiliate of any Seller.
 
Disclosure Schedule ” means the disclosure schedule setting forth exceptions to the representations and warranties made by the Sellers in Article III , which is incorporated by reference into this Agreement and thereby made a part hereof.
 

 
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Existing Customers ” means Persons who are customers of Purchaser or any of its Affiliates as of the Closing Date or have been customers of Purchaser or any of its Affiliates during the period of twelve (12) consecutive full calendar months preceding the Closing Date, each of which is set forth on Schedule II .
 
GAAP ” means United States generally accepted accounting principles.
 
Governmental Body ” means any federal, state, regional, county, city, local, municipal, foreign or other government or quasi-governmental entity or authority or any department, branch, agency, commission, board, subdivision, bureau, agency, official, political subdivision or other instrumentality of any of the foregoing, any administrative or regulatory body obtaining authority from any of the foregoing, and any court, tribunal, judicial or arbitral body, mediation or conciliation or self-regulatory authority.
 
Income Taxes ” means Taxes (i) imposed on, or with reference to, net income or gross receipts, or (ii) imposed on, or with reference to, multiple bases including net income or gross receipts.
 
Indebtedness ” means, with respect to any Person, without duplication, (a) any obligation of such Person (i) constituting the principal amount, plus any related accrued and unpaid interest, fees, expenses and prepayment premiums or penalties, of indebtedness for borrowed money; (ii) evidenced by any note, bond, debenture, bankers acceptance, letter of credit or other instrument, facility or debt security (including a purchase money obligation); (iii) upon which interest charges (other than late payment charges) are customarily paid or owed; (iv) issued or assumed as the deferred purchase price of property or services, conditional sale obligations and obligations under any title retention agreement; or (v) under any lease or similar arrangement that would be required to be accounted for by the lessee as a capital lease in accordance with GAAP; (b) any synthetic lease obligations, sale-leaseback obligations and other similar indebtedness obligations, whether secured or unsecured; (c) any direct or indirect guarantee (or keepwell agreement) by such Person of any indebtedness of any other Person described in the preceding clause (a) ; (d) any obligation to reimburse any bank or other Person for amounts paid under a letter of credit or similar instrument (other than those issued in respect of performance obligations in the ordinary course); (e) any obligations under interest rate, currency and other derivative Contracts; and (f) any preferred stock or similar security or equity interest having a preference over the common equity of such Person in a liquidation, dissolution, or winding-up of such Person or otherwise.
 
Intellectual Property Rights ” means all of the following in any jurisdiction throughout the world: (a) copyrights, mask works, and other works of authorship; (b) inventions (whether or not patentable or reduced to practice), patents, patent applications and patent disclosures, together with all divisions, continuations, continuations-in-part, reissues, revisions, additions, extensions, and reexaminations thereof and all industrial designs, industrial models and utility models; (c) trade marks, service marks, trade dress, logos, slogans, trade names, Internet domain names, corporate names, and all other designations of origin, and all goodwill associated with the foregoing; (d) software, computer hardware and information technology systems; (e) rights or interests protected
 

 
A-2

 

by non-statutory or common law evidenced by or embodied in any idea, design, concept, process, technology, invention, discovery, enhancement, improvement or information and data (including formulae, procedures, protocols, techniques and results of experimentation and testing), regardless of patentability, including trade secrets and know-how; (f) moral and economic rights of authors and inventors, however denominated; (g) all other proprietary and intellectual property rights; (h) all appurtenances related to, and derivative works and improvements of, any of the foregoing; (i) all Contracts, applications, registrations, extensions and renewals related to any of the foregoing, regardless of whether any of such rights arise under the laws of the United States or any other state, country or jurisdiction; and (j) copies and tangible embodiments of any of the foregoing in whatever form or medium.
 
IRS ” means the Internal Revenue Service.
 
Knowledge of the Company ” or variations thereof as used herein will be limited to the actual knowledge after reasonable due inquiry of each of the Sellers.
 
Law ” means any constitutional provision, statute, ordinance, law (including common law), rule, regulation, code, plan, decree, injunction, judgment, Order, ruling, assessment or writ of any Governmental Body, or any legally binding regulatory policy statement, binding guidance, binding directive or decree of any Governmental Body, in each case as any of the foregoing may be in effect from time to time.
 
Liability ” with respect to any Person, means any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person, including any liability for payment, Indebtedness, payment obligation or other sum that is or may become due.
 
Lien ” means any lien (including any Tax lien), mortgage, security interest, pledge, deposit, option, infringement, charge, claim, deed of trust, hypothecation, mortgage, contingent sale, title retention, lease or sublease, building or use restriction, adverse claim, right or intent, covenant, easement, encroachment, defect or other matter affecting title, conditional sales agreement, or other  encumbrance or restriction (including a restriction on transfer such as a right of first refusal) of any nature or kind, whether voluntarily or involuntarily incurred, arising by operation of Law, by Contract or otherwise, and including any Contract to give any of the foregoing in the future.
 
Losses ” means any and all Liabilities, Proceedings, Claims, losses, demands, assessments, adjustments, costs, awards, judgments, settlement payments, fines, penalties, Taxes, interest, damages, costs, deficiencies and expenses, including any and all reasonable expenses incurred in connection with investigating, defending or asserting any of the foregoing (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, consultants, expert witnesses, accountants and other professionals).
 

 
A-3

 

Material Adverse Effect ” means any change, effect, matter, event, fact, condition, circumstance, occurrence or development that, individually or in the aggregate, is or would reasonably be expected to (a) be materially adverse to the business, assets or properties (including intangible assets or properties), liabilities, condition (financial or otherwise), operations or operating results or prospects of the Company, or (b) materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.
 
Net Working Capital ” means current assets (excluding cash and cash equivalents) of the Company minus current liabilities (excluding any Indebtedness or Company Transaction Expenses) of the Company, as determined in accordance with GAAP.
 
Non-Income Taxes ” means all Taxes other than Income Taxes.
 
Order ” means any judgment, writ, decree, directive, decision, injunction, ruling, stipulation, award, order (including any consent decree or cease and desist order) or determination of any kind issued, promulgated or entered by or with any Governmental Body.
 
Organizational Documents ” of a Person means: (a) the certificate of incorporation, certificate of trust or similar document(s) filed with a Governmental Body, which filing forms or organizes such Person; and (b) the bylaws, trust agreement or similar document(s), whether or not filed with a Governmental Body, which organize and/or govern the internal affairs of such Person, in the case of each of the foregoing clauses (a) and (b) , as in effect at the time in question.
 
Percentage Interest ” means, with respect to each Seller, the percentage set forth opposite such Seller’s name on Exhibit A .
 
Permitted Liens ” means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by the Company and are accrued in full on the Interim Financial Statements, (b) mechanic’s, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business, and (c) Liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation arising or incurred in the ordinary course of business (and without any violation of applicable Law).
 
Person ” means a natural person, a partnership, a corporation, a company, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or other form of business enterprise or a Governmental Body.
 
Proceeding ” means any suit, action, cause of action (whether at law or in equity), arbitration, audit, hearing, investigation, litigation, claim, complaint, administrative or similar proceeding (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced,
 

 
A-4

 

brought, conducted or heard by or before, or otherwise involving, any Governmental Body.
 
Purchaser Confidential Information ” means any and all information and records, data and other trade secrets of the Company, Purchaser or Purchaser’s Affiliates, as they may exist from time to time, of any Persons that hereafter are or become Subsidiaries of any of the foregoing, or of customers, suppliers, vendors, referral sources or other Persons that the Company does business with, whether written, oral, electronic or in other tangible or intangible form, including: (A) corporate information (including business plans, proposed products, expansion plans, strategies and policies); (B) marketing information (including strategies, methods, customers, prospects, market research data and plans for trademarks, service marks and copyrighted materials); (C) financial information (including cost, sales, pricing and performance data, debt arrangements, investors, client financial information and credit files); (D) operational and scientific information (including current and planned distribution and supply methods and processes, techniques, contracts, business records, trade secrets, computer programs and technical information); and (E) personnel information (including personnel lists, resumes, personnel data, organizational structure, compensation structure and performance evaluations).  The term “ Purchaser Confidential Information ,” however, does not include any information which: (I) is or becomes generally available to the public knowledge other than as a result of a disclosure by any Seller or any Affiliate of any Seller in violation of the terms hereof; (II) was available to such Seller on a non-confidential basis prior to being disclosed or made available to such Seller by or on behalf of the Company, as evidenced by the contemporaneous written records of such Seller; or (III) is disclosed to or becomes available to such Seller on a non-confidential basis by or from a source other than the Company or its Affiliates after the disclosure of such information to such Seller by or on behalf of the Company or its Affiliates, which source does not have a duty of nondisclosure, directly or indirectly, to the Company, its Affiliates or another Person with respect to such information.
 
Seller Confidential Information ” means any and all information and records, data and other trade secrets of each of the Sellers and each of their respective Affiliates, including Server Central and CacheNetworks, as they may exist from time to time (collectively, the “ Seller Confidentiality Parties ”), of any Persons that hereafter are or become Subsidiaries of any of the foregoing, or of customers, suppliers, vendors, referral sources or other Persons that any of the Seller Confidentiality Parties does business with, whether written, oral, electronic or in other tangible or intangible form, including: (A) corporate information (including business plans, proposed products, expansion plans, strategies and policies); (B) marketing information (including strategies, methods, customers, prospects, market research data and plans for trademarks, service marks and copyrighted materials); (C) financial information (including cost, sales, pricing and performance data, debt arrangements, investors, client financial information and credit files); (D) operational and scientific information (including current and planned distribution and supply methods and processes, techniques, contracts, business records, trade secrets, computer programs and technical information); and (E) personnel information (including personnel lists, resumes, personnel data, organizational structure, compensation structure and performance evaluations).  The term “ Seller Confidential
 

 
A-5

 

Information ,” however, does not include any information which: (I) is or becomes generally available to the public knowledge other than as a result of a disclosure by Purchaser or any of its Affiliates, including the Company, in violation of the terms hereof; (II) was available to Purchaser or its Affiliates on a non-confidential basis prior to being disclosed or made available to such Person by or on behalf of any of the Seller Confidentiality Parties, as evidenced by the contemporaneous written records of thereof; or (III) is disclosed to or becomes available to Purchaser or its Affiliates on a non-confidential basis by or from a source other than any of the Seller Confidentiality Parties after the disclosure of such information to Purchaser or its Affiliates by or on behalf of a Seller Confidentiality Party, which source does not have a duty of nondisclosure, directly or indirectly, to the Seller Confidentiality Party or another Person with respect to such information.
 
Subsidiary ” means any Person with respect to which another Person, directly or indirectly owns equity securities collectively: (a) representing a majority of the voting interest of such Person, or (b) having the voting power to be able to elect a majority of the members of the board of directors or similar body or otherwise control the management and operations of such Person.
 
Tax ” or “ Taxes ” means any and all income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, service, recording, import, export, estimated or other tax, assessment, fee, levy, duty, tariff or similar charge of any kind of any Governmental Body, whether computed on a separate, consolidated, unitary, combined or any other basis, including any interest, penalty or addition thereto, whether disputed or not, and including any Liability in respect of any of the foregoing payable by reason of Contract, assumption, transferee liability or operation of law or as an indemnitor or in a similar capacity.
 
Tax Return ” means any return, report, declaration, information return, claim for refund or other document furnished or required to be furnished to a Governmental Body or other Person with respect to any Tax, including any information return or report or statement with respect to payments to any Person or backup withholding, and including any schedule or attachment thereto and any amendment thereof.
 
Transaction Documents ” means the Transition Services Agreement, the Releases, the Services Agreements, the Non-Compete Agreements, the Registration Rights Agreement and any other document or instrument (other than this Agreement) to be entered into by or among the Parties in connection with the transactions contemplated by this Agreement.
 
Transfer Taxes ” means all sales, use, transfer, documentary, stamp, registration, real property transfer or gains and other similar Taxes, and all conveyance, recording and other similar fees, including any penalties and interest with respect to the foregoing and the costs of preparing and filing any Tax Returns with respect to such Taxes and fees.
 

 
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  PART II  - CROSS REFERENCE TO OTHER DEFINITIONS:
 
As used in the Agreement, each of the following terms has the meaning given in the respective location of the Agreement set forth across from such term:
 
 
 
Term
Reference
 
1933 Act
Section 1.8(b)
 
1934 Act
Section 1.2(e)
 
338(h)(10) Consideration
Section 6.2(b)
 
338(h)(10) Election
Section 6.2
 
Additional Deferred Payment Amount
Section 1.7(b)(iii)
 
Aggregate Threshold
Section 7.4(a)
 
Agreement
Preamble
 
Allocation
Section 6.2(b)
 
Annual Financial Statements
Section 3.8(a)
 
Assumption of Defense Notice
Section 7.6(b)
 
Applicable Deferred Payment Period
Section 1.7(a)
 
Applicable Earn-Out Revenue
Section 1.7(a)
 
Assets
Section 6.2(b)
 
Auditor
Section 5.1
 
Balance Sheet
Section 3.8(a)
 
CacheNetworks
Section 1.5(a)(xvi)
 
CacheNetworks Services Agreement
Section 1.5(a)(xvi)
 
Claim Response
Section 7.5(b)
 
Closing
Section 1.4
 
Closing Date
Section 1.4
 
Closing Net Working Capital
Section 1.6(a)
 
Closing Date Payment
Section 1.2(a)
 
Company
Preamble
 
Company Transaction Expenses
Section 8.1
 
Company Permits
Section 3.13
 
Custodian
Section 1.2(e)
 
Deferred Payment Conversion Price
Section 1.8(a)
 
Deferred Payment Date
Section 1.2(d)
 
Deferred Payment Shares
Section 1.8(a)
 
Deferred Payments
Section 1.2(d)
 
Deferred Payments Period
Section 1.7(c)
 
Deferred Payments Statement
Section 1.7(b)(ii)
 
Delaware Courts
Section 8.12(a)
 
Disclosing Party
Section 5.4
 
Draft Allocation
Section 6.2(b)
 
Estimated Gross-Up Payment
Section 6.2(a)
 
Existing Customer Prior Revenue
Section 1.7(a)
 
Final Adjustment Amount
Section 1.6(b)
 
Final Allocation
Section 6.2(b)
 
 
A-7

 
 
 
 
Final Closing Net Working Capital
Section 1.6(a)
 
Final Gross-Up Payment
Section 6.2(d)
 
Final Post-Closing NWC Statement
Section 1.6(a)
 
Financial Statements
Section 3.8(a)
 
Form 8023
Section 6.2(a)
 
Fundamental Representations
Section 7.1(a)
 
General Indemnity Cap
Section 7.4(c)
 
Gross-Up
Section 6.2(d)
 
Gross-Up Payment
Section 6.2(d)
 
Incremental Tax
Section 6.2(d)
 
Indemnified Party
Section 7.5(a)
 
Indemnifying Party
Section 7.5(a)
 
Independent Accountants
Section 1.6(a)
 
Insurance Policies
Section 3.12
 
Interim Financial Statements
Section 3.8(a)
 
Latest Balance Sheet
Section 2.11(a)
 
Material Adverse Effect
Section 7.7(a)
 
Material Contract(s)
Section 3.15(b)
 
Maximum Deferred Payment Shares
Section 2.8
 
nLayer Business
Recitals
 
Non-Compete Agreements
Section 1.5(a)(v)
 
Notice of Claim
Section 7.5(a)
 
NWC Dispute Notice
Section 1.6(a)
 
NWC Review Period
Section 1.6(a)
 
Obligations
Section 8.16
 
Party /Parties
Preamble
 
Permits
Section 3.13
 
Permitted Activities
Section 5.5
 
Personal Property
Section 3.10(b)
 
Post-Closing NWC Statement
Section 1.6(a)
 
Pre-Closing Tax Period
Section 6.3(a)
 
Pre-Closing Tax Returns
Section 6.1(b)
 
Purchase
Recitals
 
Purchase Price
Section 1.1
 
Purchaser
Preamble
 
Purchaser Indemnitees
Section 7.2(a)
 
Purchaser Loan Agreement
Section 1.2(e)
 
Registration Rights Agreement
Section 1.5(a)(vii)
 
Releases
Section 1.5(a)(vi)
 
Representation Letter
Section 5.1
 
Representatives
Section 1.7(d)
 
Response Period
Section 7.5(b)
 
Restrictive Covenant Period
Section 5.5
 
SEC
Section 1.2(e)
 
SEC Documents
Section 2.11(a)
 
 
A-8

 
 
 
 
Seller(s)
Preamble
 
Seller Indemnities
Section 7.3
 
Server Central
Section 1.5(a)(iv)
 
Server Central Services Agreement
Section 1.5(a)(xv)
 
Services Agreements
Section 1.5(a)(xvii)
 
Shares
Recitals
 
Straddle Period
Section 3.17(c)
 
Tax Proceeding
Section 7.6(e)
 
Third Party Claim
Section 7.6(a)
 
Transition Services Agreement
Section 1.5(a)(iv)
 
Triggering Event
Section 1.2(e)
 
Trust
Preamble
     


 





 
A-9

 

EXHIBIT A
 
Stockholders List
 
 
Stockholder
Common
Shares
Percentage
Interests
     
Jordan Lowe
60
60%
Daniel Brosk Trust
   
Dated12/22/2006
40
40%
     
TOTALS:
100
100%


 
A-10

 

Exhibit B

Example F orm of Post-Closing NWC Statement

   
Apr 28, 12
   
Adj
   
Projected
Apr 30,
2012
 
Current Assets
                 
Checking/Savings
                 
Chase Deposit Accounts
                 
Chase A/R 761214592
    1,515,979.90       -1,515,979.90       0.00  
Total Chase Deposit Accounts
    1,515,979.90       -1,515,979.90       0.00  
Total Checking/Savings
    1,515,979.90       -1,515,979.90       0.00  
Accounts Receivable
                       
Accounts Receivable
    434,141.48       0.00       434,141.48  
Total Accounts Receivable
    434,141.48       0.00       434,141.48  
Other Current Assets
                       
Accounts Rec.-billed in arrears
    644,554.94       -33,854.04       610,700.90  
Prepaid Network Expense
    94,535.31       51,871.15       146,406.46  
Prepaid Legal
    8,000.00       0.00       8,000.00  
Security Deposits
    22,563.40       0.00       22,563.40  
Total Other Current Assets
    769,653.65       18,017.11       787,670.76  
                         
Total Current Assets
    2,719,775.03       -1,497,962.79       1,221,812.24  
Current Liabilities
                       
Accounts Payable
                       
Accounts Payable
    157,517.56       -232,034.04       -74,516.48  
Total Accounts Payable
    157,517.56       -232,034.04       -74,516.48  
Other Current Liabilities
                       
Accrued Expenses
    0.00       85,000.00       85,000.00  
Deferred Revenue
    598,320.00       141,750.00       740,070.00  
Accrued Wages
    79,683.00       -79,683.00       0.00  
Notes Payable
                    0.00  
Note to SvrCentral (7/11-6/12)
    111,108.75       -111,108.75       0.00  
Total Notes Payable
    111,108.75       -111,108.75       0.00  
Total Other Current Liabilities
    789,111.75       35,958.25       825,070.00  
Total Current Liabilities
    946,629.31       -196,075.79       750,553.52  
                         
Net Working Capital Surplus (Deficit)
    1,773,145.72       -1,301,887.00       471,258.72  
 

 
A-11
EXHIBIT 10.2
Execution Version

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of April 30, 2012, by and among Global Telecom & Technology, Inc., a Delaware corporation (the “ Company ”), Jordan Lowe (“ Lowe ”) and Daniel Brosk Trust dated December 22, 2006 (with Lowe, each, a “ Seller ” and together, the “ Sellers ”).

WHEREAS:

A.           In connection with the Stock Purchase Agreement, by and between Global Telecom & Technology Americas, Inc., a subsidiary of the Company (“ Purchaser ”), the Company and each of the Sellers, dated as of April 30, 2012 (as the same may be amended, modified, restated or supplemented and in effect from time to time, the “ Purchase Agreement ”), the Purchaser has agreed, upon the terms and subject to the conditions set forth in the Purchase Agreement, to cause the Company to issue to a Seller, upon the election by such Seller pursuant to Section 1.8 of the Purchase Agreement, shares of the Company’s common stock (“ Common Stock ”).

B.           Pursuant to the Purchase Agreement, Purchaser has agreed to cause the Company to provide certain registration rights under the Securities Act of 1933, as amended, or any similar successor statute, and the rules and regulations thereunder (collectively, the “ 1933 Act ”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Sellers hereby agree as follows:

1.              DEFINITIONS.
 
As used in this Agreement, the following terms shall have the following meanings:
 
a.             “1934 Act” means, collectively, the Securities Exchange Act of 1934, as amended, or any similar successor statute, and the rules and regulations thereunder.
 
b.             “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed.
 
c.             “Filing Deadline” means the date that is sixty (60) days after delivery to the Company of a Demand Registration Request; provided, however , that in the case of a Demand Registration for an offering pursuant to Rule 415, the “Demand Registration Filing Deadline” shall mean the later of such date and the earliest date that the Company is permitted to file the Registration Statement by the SEC.
 

 
 

 

d.             “Investor” means a Seller, any transferee or assignee thereof to whom the Seller assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 10 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 10 .
 
e.             “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, or any other legal entity.
 
f.             “Principal Market” means, with respect to the Common Stock, the OTC Bulletin Board; provided, however , that, if after the date of this Agreement the Common Stock is listed on a national securities exchange, “Principal Market” shall mean such national securities exchange; and, with respect to any other security, “ Principal Market ” means the principal securities exchange or trading market for such security.
 
g.             “Register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.
 
h.             “Registrable Securities” means (i) the aggregate shares of Common Stock then issued and outstanding upon exercise by either of the Sellers of their respective rights pursuant to, and in accordance with, Section 1.8 of the Purchase Agreement (collectively, the “ Deferred Payment Shares ”) and (ii) any shares of capital stock of the Company issued or issuable with respect to the Deferred Payment Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided, however , that any such Registrable Securities shall cease to be Registrable Securities when (A) a Registration Statement with respect to the sale of such securities becomes effective under the 1933 Act and such securities are disposed of in accordance with such Registration Statement, (B) such securities are sold in accordance with Rule 144 (as defined in Section 9 ) or (C) such securities are otherwise transferred and such securities may thereafter be resold without subsequent registration under the 1933 Act.
 
i.             “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable Securities.
 
j.             “Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.
 
k.             “Trading Day” means any day on which the Common Stock is traded on the Principal Market; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade, or actually trades, on the Principal Market for less than 4.5 hours.
 
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

 
2

 
 
2.             DEMAND REGISTRATION .
 
a.             Long-Form Registrations .  Subject to the terms of this Agreement, any Investors holding at least a majority of the then-outstanding Registrable Securities may at any time following the Closing Date, so long as at such time there are Registrable Securities outstanding, request (any such request, a “ Long-Form Demand Registration Request ”) registration of all or part of their Registrable Securities on Form S-1, or any similar long-form registration.  Within ten (10) days after receipt of any request pursuant to this Section 2(a), the Company will give written notice of such request to all other Investors holding Registrable Securities.  The Company shall prepare, and, as soon as practicable but in no event later than the Filing Deadline, file with the SEC a Registration Statement, and the Company shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion within twenty (20) days after delivery of the Company’s notice.  All registrations requested pursuant to this Section 2(a) are referred to herein as “ Long-Form Demand Registrations .”  The Company is obligated to effect no more than three (3) Demand Registrations pursuant to this Agreement.
 
b.             Short-Form Registrations .  In addition to the Long-Form Registrations provided pursuant to Section 2(a) , at any time following the Closing Date that the Company is eligible to use a Form S-3 (or any similar short-form registration) for resale of Common Stock by selling security holders, and so long as at such time there are Registrable Securities outstanding, Investors holding at least a majority of the then-outstanding Registrable Securities may request (any such request, or any Long-Form Demand Registration Request, a “ Demand Registration Request”) registrations of all or part of their Registrable Securities on Form S-3 or any similar short-form registration (“ Short-Form Demand Registrations ” and, together with the Long-Form Demand Registrations, “ Demand Registrations ”).  Within ten (10) Business Days after receipt of any request pursuant to this Section 2(b) , the Company will give written notice of such request to all other Investors holding Registrable Securities.  The Company shall prepare, and, as soon as practicable but in no event later than the Filing Deadline, file with the SEC a Registration Statement, and the Company shall include in such Registration Statement all Registrable Securities with respect to which the Company has received written requests for inclusion within twenty (20) days after delivery of the Company’s notice.  Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use Form S-3 or any applicable short form therefor.
 
c.             Effectiveness Deadlines.   The Company shall use its reasonable best   efforts to have any Registration Statement filed pursuant to this Section 2 declared effective by the SEC as soon as practicable, but in no event later than the date which is ninety (90) days after the date such Registration Statement is initially filed with the SEC (the “ Effectiveness Deadline ”).  Notwithstanding the foregoing, the Company may postpone for up to thirty (30) days the Filing Deadline or the Effectiveness Deadline of a Registration Statement if the board of directors of the Company's determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate organization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the 1933 Act or 1934 Act.  

 
3

 
 
The Company may delay a Demand Registration hereunder only once with respect to each Demand Registration.
 
d.             Underwritten Demand Registrations.   If the holders of the Registrable Securities initially requesting a Demand Registration elect to distribute the Registrable Securities covered by their request in an underwritten offering, they shall so advise the Company as a part of their request made pursuant to Section 2(a) or (b) , and the Company shall include such information in its notice to the other holders of Registrable Securities. The holders of a majority of the Registrable Securities initially requesting the Demand Registration shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering; provided , that such selection shall be subject to the consent of the Company, which consent shall not be unreasonably withheld or delayed.
 
e.             Allocation and Priority of Registrable Securities in a Demand Registration .  If a Demand Registration involves an underwritten offering and the managing underwriter of the requested Demand Registration advises the Company and the holders of Registrable Securities in writing that in its opinion the number of shares of Common Stock proposed to be included in the Demand Registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such underwritten offering and/or the number of shares of Common Stock proposed to be included in such registration would adversely affect the price per share of the Registrable Securities proposed to be sold in such underwritten offering, the Company shall include in such Demand Registration (i) first, the number of shares of Common Stock that the holders of Registrable Securities propose to sell, and (ii) second, the number of shares of Common Stock proposed to be included therein by any other Persons (including shares of Common Stock to be sold for the account of the Company and/or other holders of Common Stock) allocated among such Persons in such manner as they may agree. If the managing underwriter determines that less than all of the Registrable Securities proposed to be sold can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder.
 
3.              [intentionally omitted] .
 
4.              RELATED OBLIGATIONS .
 
Whenever the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2 ,  the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, or the Company is otherwise obligated to file a Registration Statement pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

a.            The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the applicable Registrable Securities (and, in the case of a Demand Registration, in no event later than the applicable Filing Deadline) and use its reasonable best
 
4

 
 
efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as practicable after such filing (and, in the case of a Demand Registration, in no event later than the applicable Effectiveness Deadline). No later than the first Business Day after such Registration Statement becomes effective, the Company shall file with the SEC the final prospectus included therein pursuant to Rule 424 (or successor thereto) promulgated under the 1933 Act.  The Company shall keep each Registration Statement effective at all times (i) in the case of an underwritten public offering, until the consummation in full of such offering (including any period during which underwriters or dealers must deliver prospectuses in connection therewith), and (ii) in the case of any other offering, until the earlier of (A) the date as of which the Investors may sell all of the Registrable Securities covered by such Registration Statement pursuant to Rule 144 (or successor thereto) promulgated under the 1933 Act, without restriction or condition thereunder or (B) the date on which the Investors shall have sold all the Registrable Securities covered by such Registration Statement (any such period, the “ Registration Period ”).  Such Registration Statement (including any amendments or supplements thereto and any prospectuses (preliminary, final, summary or free writing) contained therein or related thereto shall comply as to form and content with the applicable requirements of the 1933 Act and shall not contain or incorporate by reference 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 in which they were made, not misleading.  In the case of a Demand Registration, such Registration Statement shall contain a “plan of distribution” approved by the holders of at least a majority of the Registrable Securities included therein.  The term “reasonable best efforts” shall mean, among other things, that the Company shall submit to the SEC, within three (3) Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on the Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than forty-eight (48) hours after the submission of such request.
 
b.            The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement (which prospectus supplements shall be filed pursuant to Rule 424 (or successor thereto) promulgated under the 1933 Act) as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of any amendment or supplement to a Registration Statement or prospectus that is required to be filed pursuant to this Agreement (including pursuant to this Section 4(b) ) by reason of the Company filing a report under the 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable and permitted by law, or shall file such amendments or supplements with the SEC on the same day.  The Company shall use its reasonable best efforts to cause any post-effective amendment to a Registration Statement to become effective as soon as practicable after such filing.  No later than the third Business Day after a post-effective amendment to a Registration Statement becomes effective, the Company shall file with the SEC the final

 
5

 
 
prospectus included therein pursuant to Rule 424 (or successor thereto) promulgated under the 1933 Act.
c.            The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference that have not been filed via the SEC’s EDGAR system (or successor thereto), all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, at least one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any prospectus (preliminary, final, summary or free writing), as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
 
d.            The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by the Investors of the Registrable Securities covered by a Registration Statement under the securities or “blue sky” laws of all the states of the United States and any other jurisdiction reasonably requested by any Investor, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however , that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(d) or (y) subject itself to general taxation in any such jurisdiction.  The Company shall promptly notify each Investor that holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
 
e.            The Company shall notify each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which any prospectus included in, or relating to, a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission 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 in no event shall such notice contain any material, nonpublic information), and promptly prepare and file with the SEC a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver at least one copy of such supplement or amendment to each Investor.  The Company shall also promptly notify each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each

 
6

 
 
Investor by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.
 
f.            The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as soon as reasonably possible and to notify each Investor that holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
 
g.            The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
 
h.            The Company shall use its reasonable best efforts to (i) cause all the Registrable Securities covered by a Registration Statement to be listed on each securities exchange or trading market on which securities of the same class or series issued by the Company are listed.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 4(h) .
 
i.            The Company shall cooperate with the Investors that hold Registrable Securities being offered and the underwriters, if any, and, to the extent applicable, facilitate the timely preparation and delivery of certificates shares (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request.
 
j.            The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of the applicable Registration Statement.
 
k.            If requested by an Investor, the Company shall (i) as soon as reasonably practicable incorporate in a prospectus supplement or post-effective amendment such information as such Investor requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to such Investor, the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other

 
7

 

terms of the offering of the Registrable Securities to be sold in such offering; and (ii) as soon as reasonably practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment.
 
l.            The Company shall use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary to consummate the disposition of such Registrable Securities.
 
m.            The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a 12-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of a Registration Statement (which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the 1934 Act and otherwise complies with Rule 158 under the 1933 Act)
 
n.            The Company shall otherwise use its reasonable best   efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
 
o.            Within one (1) Business Day after a Registration Statement that covers applicable Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in substantially the form attached hereto as Exhibit A ; provided that if the Company changes its transfer agent, it shall immediately deliver any previously delivered notices under this Section 4(o) and any subsequent notices to such new transfer agent.
 
p.            To the extent not made by the underwriters in the case of an underwritten offering, the Company shall make such filings with Financial Industry Regulatory Authority (“ FINRA ”), pursuant to FINRA Rule 5110 or otherwise (including providing all required information and paying required fees thereto), as and when requested by any Investor, or in the case of an underwritten offering, by any underwriter, and make all other filings and take all other actions reasonably necessary to expedite and facilitate the disposition by the Investors of Registrable Securities pursuant to a Registration Statement, including reasonably cooperating with any broker-dealer through which any Investor proposes to resell Registrable Securities and promptly responding to any comments received from FINRA.
 
q.            Notwithstanding anything to the contrary in Section 4(e) , in the case of an offering pursuant to Rule 415, at any time after the applicable Registration Statement has been declared effective by the SEC, the Company may delay the disclosure of material non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and not, in the opinion of counsel to the Company, otherwise required (a “ Grace

 
8

 

Period ”); provided , that the Company shall promptly (i) notify the Investors in writing of the existence of material non-public information giving rise to a Grace Period ( provided that in each notice the Company shall not disclose the content of such material non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further , that (A) no Grace Period shall exceed thirty (30) consecutive days, (B) during any 365 day period such Grace Periods shall not exceed an aggregate of sixty (60) days and (C) the first day of any Grace Period must be at least ten (10) Trading Days after the last day of any prior Grace Period (a Grace Period that satisfies all of the requirements of this Section 4(q) being referred to as an “ Allowable Grace Period ”).  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice.  The provisions of Section 4(e) hereof shall not be applicable during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the Company shall again be bound by the provisions of the first sentence of Section 4(e) with respect to the information giving rise thereto unless such material non-public information is no longer applicable.
 
r.            The Company shall enter into such customary agreements (including, in the case of underwritten offering, an underwriting agreement) and take such other actions as the any of the Investors or underwriters, if any, may reasonably request in order to expedite and facilitate the disposition of the Registrable Securities and any other securities covered by a Registration Statement.  Without limiting the foregoing, in connection with any underwritten offering and taking into account the Company’s business needs, the Company shall make appropriate officers of the Company available for meetings with prospective purchasers of the Registrable Securities and prepare and present to potential investors customary “road show” materials, in each case in accordance with the recommendations of the underwriters and in all respects in a manner consistent with other issuances of securities in an offering of a similar size to such offering of the Registrable Securities.
 
5.              OBLIGATIONS OF THE INVESTORS .
 
a.            At least ten (10) Business Days prior to the first anticipated filing date of a Registration Statement and at least five (5) Business Days prior to the filing of any amendment or supplement to a Registration Statement or prospectus, the Company shall notify each Investor in writing of the information, if any, the Company requires from each such Investor if such Investor elects to have any of such Investor’s Registrable Securities included in such Registration Statement or, with respect to an amendment or a supplement, if such Investor’s Registrable Securities are included in such Registration Statement (each an “ Information Request ”). Provided that the Company shall have complied with its obligations set forth in the preceding sentence, it shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company, in response to an Information Request, such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities at least three (3) Business Days prior to the anticipated filing date.
 

 
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b.            Each Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement in which any Registrable Securities held by such Investors are being included.
 
c.            Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) or the first sentence of Section 4(e) or, in the case of an offering pursuant to Rule 415, written notice from the Company of an Allowable Grace Period, such Investor will promptly discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(f) or the first sentence of   Section 4(e) or receipt of notice that no supplement or amendment is required or that the Allowable Grace Period has ended.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor provides reasonable evidence that such Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 4(f) or the first sentence of Section 4(e) or of an Allowable Grace Period and for which the Investor has not yet settled.
 
d.            No Investor may participate in any registration hereunder which is underwritten unless such Investor (a) agrees to sell such Investor’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided , that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder, such holder's ownership of its shares of Common Stock to be sold in the offering and such holder's intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 7 .
 
6.               EXPENSES OF REGISTRATION .
 
All expenses, other than underwriting discounts and commissions and stock transfer taxes, incurred in connection with registrations, filings and qualifications pursuant to, or otherwise in connection with the Company’s compliance with its obligations under, Sections 2 and 4 , including all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company; provided, however , that with respect to each Registration Statement the Company shall not be required to pay for the expenses of more than one counsel acting on behalf of the Investors.
 
7.               INDEMNIFICATION .
 
In the event any Registrable Securities are included in a Registration Statement under this Agreement:
 

 
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a.            To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and any underwriter, and the directors, officers, shareholders, partners, members, managers, employees, agents, representatives of, and each Person, if any, who controls any Investor or underwriter within the meaning of the 1933 Act or the 1934 Act (each, an “ Indemnified Person ”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively, “ Claims ”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency authority, or body (including the SEC or any state securities commission, authority or self-regulatory organization, in the United States or anywhere else in the world), whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“ Indemnified Damages ”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in (including by way of incorporation by reference) Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“ Blue Sky Filing ”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (including by way of incorporation by reference) not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained (including by way of incorporation by reference) in any preliminary, final, summary or free writing prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein (including by way of incorporation by reference), in light of the circumstances under which the statements therein (including by way of incorporation by reference) were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any material violation of this Agreement by the Company (the matters in the foregoing clauses (i) through (iv) being, collectively, “ Violations ”).  Subject to Section 7(c) , the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 7(a) : (x) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto if such prospectus (or amendment or supplement thereto) was timely filed with the SEC and furnished by the Company to such Investor pursuant to Section 4(c) , and (y) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on
 

 
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behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 10 .
 
b.            In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 7(a) , the Company, each of its directors, each of its officers who signs the Registration Statement, each underwriter, broker or other Person acting on behalf of the Investors and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an “ Indemnified Party ”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 7(c) , such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however , that the indemnity agreement contained in this Section 7(b) and the agreement with respect to contribution contained in Section 8 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld, conditioned or delayed; provided, further, however , that the aggregate liability of the Investor in connection with any Violation shall not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to the Registration Statement giving rise to such Claim.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive any transfer of the Registrable Securities by an Investor pursuant to Section 10 .
 
c.            Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 7 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 7 , deliver to the indemnifying party a written notice 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 control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be. In any such proceeding, any Indemnified Person or Indemnified Party may retain its own counsel, but, except as provided in the following sentence, the fees and expenses of that counsel will be at the expense of that Indemnified Person or Indemnified Party, as the case may be, unless (i) the indemnifying party and the Indemnified Person or Indemnified Party, as applicable, shall have mutually agreed to the retention of that counsel, (ii) the indemnifying party does not assume the defense of such proceeding in a timely manner or (iii) in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by such counsel for the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  The Company shall pay reasonable fees for up to one separate legal counsel (plus local counsel) for the Investors, and such legal counsel
 

 
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shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however , that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise with respect to any pending or threatened action or claim in respect of which indemnification or contribution may be or has been sought hereunder (whether or not the Indemnified Party or Indemnified Person is an actual or potential party to such action or claim) which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation or which includes any admission as to fault on the part of such Indemnified Party or Indemnified Person.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 7 , except to the extent that the indemnifying party is prejudiced in its ability to defend such action, and shall not relieve such indemnifying party of any liability otherwise than under this Section 7 .
 
d.            The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
 
e.            The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liability to which the indemnifying party may be subject pursuant to the law.
 
8.               CONTRIBUTION .
 
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 7 to the fullest extent permitted by law; provided, however , that:  (i) no Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale, shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any Investor shall be limited to an amount equal to the net amount of proceeds received by such Investor from the sale of such Registrable Securities pursuant to the Registration Statement giving rise to such action or claim for indemnification less the amount of any damages that such Investor has otherwise been required to pay in connection with such sale.
 

 
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9.               REPORTS UNDER THE 1934 ACT .
 
With a view to making available to the holders of Registrable Securities the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit such holders to sell Registrable Securities of the Company to the public without registration (“ Rule 144 ”), the Company agrees to:
 
a.            make and keep public information available, as those terms are understood and defined in Rule 144 at all times during any Registration Period;
 
b.            file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and
 
c.            furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company (or information regarding the locations thereof on the SEC’s EDGAR filing system or successor thereto), and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
 
10.             ASSIGNMENT OF REGISTRATION RIGHTS .
 
The rights under this Agreement shall be assignable by any of the Investors to any assignee of such Investor’s rights under the Purchase Agreement to acquire Registrable Securities thereunder, which assignment is made in accordance with the terms of the Purchase Agreement and shall be effective upon delivery to the Company of: (i) a written notice from the Investor stating the name and address of such transferee or assignee and (ii) the written agreement of such transferee or assignee to be bound by all of the provisions contained herein.
 
11.             AMENDMENT OF REGISTRATION RIGHTS .
 
Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who then hold at least a majority of the Registrable Securities.  Any amendment or waiver effected in accordance with this Section 11 shall be binding upon each Investor and the Company.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities, other than to those Investors who expressly agree to be bound thereby.  No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
 

 
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12.             MISCELLANEOUS .
 
a.            A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
 
b.            Any notice, consent, waiver or other communication required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been duly given:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile ( provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:
 
Notices to the Investors :

c/o ServerCentral, Inc.
209 W. Jackson Blvd, Suite 700
Chicago, IL 60606
Facsimile:
Attention: Legal Department
 
with a copy (which shall not constitute notice, request, demand, waiver or other communication to the Investors)  to:
 
Brozosky & Brosk, P.C.
40 Skokie Boulevard, Suite 630
Northbrook, Illinois 60062
Facsimile:
Attention: Joel Brosk, Esq.
 
Notices to the Company :
 
Global Telecom & Technology, Inc.
8484 Westpark Drive
Suite 720
McLean, VA 22101
Facsimile: 703.
Attention: General Counsel
 
with a copy (which shall not constitute notice, request, demand, waiver or other communication to the Company) to:
 
Kelley Drye & Warren
3050 K Street, N.W.
Washington, D.C. 20007
Facsimile: 202.342.8451
Attention: Jay R. Schifferli
 

 
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Or, in the case of an Investor or the Company, to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party at least five (5) days prior to the effectiveness of such change.
 
Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or deposit with a nationally recognized overnight delivery service in accordance with clause (i) , (ii) or (iii) above, respectively.
 
c.            Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
 
d.            All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof by registered or certified mail, return receipt requested, or by deposit with a nationally recognized overnight delivery service, to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
e.            This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein.  This Agreement supersedes all prior and contemporaneous agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.
 

 
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f.            Subject to the requirements of Section 10 , this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.
 
g.            The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
 
h.            This Agreement and any amendments hereto may be executed and delivered in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when counterparts have been signed by each party hereto and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart.  In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.  No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.
 
i.            Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
j.            All consents and other determinations to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by Investors holding at least a majority of the Registrable Securities.  Any consent or other determination approved by Investors as provided in the immediately preceding sentence shall be binding on all Investors.
 
k.            The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
 
l.            Remedies referred to under this Agreement are cumulative and not exclusive or any other remedy available to any party under any other agreement by or among the parties or under applicable law.  The Company acknowledges that a breach by it of any of its obligations under this Agreement may cause irreparable harm to each of the Investors.  Accordingly, any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security or proving actual damages), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or in equity.
 

 
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m.            This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, to the extent provided in Sections 7 and 8 , each Investor, any underwriter, and the directors, officers, shareholders, partners, members, managers, employees, agents, representatives of, and each Person, if any, who controls any Investor or underwriter within the meaning of the 1933 Act or the 1934 Act and each of the Company’s directors, each of the Company’s officers who signs the Registration Statement, and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 
n.            The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor.  Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.
 
o.            Unless the context otherwise requires, (i) all references to Sections or Exhibits are to Sections or Exhibits contained in or attached to this Agreement, (ii) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, and (iii) the use of the word “including” in this Agreement shall be by way of example rather than limitation.
 
* * * * * *


[Signature Page Follows]



 
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

COMPANY :

GLOBAL TELECOM & TECHNOLOGY, INC.


By:   /s/ Chris McKee                                                                            
Name:  Chris McKee
Title:    General Counsel

 

SELLERS :


/s/ Jordan Lowe                                                                                                  
Jordan Lowe


DANIEL BROSK TRUST DATED DECEMBER 22, 2006


By:  /s/ Daniel Brosk                                    
Name:  Daniel Brosk
Title:    Trustee

 






[Signature Page to Registration Rights Agreement]

 
 

 


EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

[TRANSFER AGENT]
Attn:

Re:            Global Telecom & Technology, Inc.

Ladies and Gentlemen:

We are counsel to Global Telecom & Technology, Inc., a Delaware corporation (the “ Company ”).  In connection with the Company’s obligations under a Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-__] (File No. 333-_____________) (the “ Registration Statement ”) with the Securities and Exchange Commission (the “ SEC ”).

In connection with the foregoing, we advise you that a member of the SEC’s staff has advised us that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] .

Very truly yours,

[ISSUER’S COUNSEL]

By:                                                               
cc:      [LIST NAMES OF HOLDERS]





 
 

EXHIBIT 10.3
 
JOINDER AND SECOND LOAN MODIFICATION AGREEMENT
 
 
This Joinder and Second Loan Modification Agreement (this “ Loan Modification Agreement ”) is entered into as of April 30, 2012 (the “ Second Loan Modification Effective Date ”), by and between (i) SILICON VALLEY BANK , a California corporation with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“ Bank ”); (ii) GLOBAL TELECOM & TECHNOLOGY, INC ., a Delaware corporation (“ GTTI ”), GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC. , a Virginia corporation (“ GTTA ”), each with offices located at 8484 Westpark Drive, Suite 720, McLean, Virginia 22102, PACKETEXCHANGE (USA), INC. , a Delaware corporation (“ PEUSA ”), PACKETEXCHANGE, INC. , a Delaware corporation (“ PEINC ”) and WBS CONNECT, LLC, a Colorado limited liability company with offices located at 8400 E. Crescent Parkway, Suite 600, Greenwood Village, Colorado 80111 (“ WBS ”, and together with GTTI, GTTA, PEINC and PEUSA, individually and collectively, jointly and severally, the “ Borrower ”); and (iii) nLAYER COMMUNICATIONS, INC. , an Illinois corporation (the “ New Borrower ”).
 
1.            DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS .  Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of June 29, 2011, evidenced by, among other documents, a certain Loan and Security Agreement dated as of June 29, 2011, between Borrower and Bank, as amended by a certain First Loan Modification Agreement, dated as of December 15, 2011(as amended, the “ Loan Agreement ”).  Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.
 
2.            DESCRIPTION OF COLLATERAL .  Repayment of the Obligations is secured by (a) the Collateral as described in the Loan Agreement and (b) the Intellectual Property Collateral as defined in each Intellectual Property Security Agreement between each Borrower and Bank (each, as amended, an “ IP Agreement ”) (together with any other collateral security granted to Bank, the “ Security Documents ”)
 
Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “ Existing Loan Documents ”.
 
3.            JOINDER AND ASSUMPTION .  New Borrower has been purchased by GTTI and is a wholly owned Subsidiary of GTTI.  New Borrower hereby joins the Loan Agreement and each of the other appropriate Existing Loan Documents, and agrees to comply with and be bound by all of the terms, conditions and covenants of the Loan Agreement and each of the other appropriate Existing Loan Documents, as if New Borrower were originally named a “Borrower” and/or a “Debtor” therein.  Without limiting the generality of the preceding sentence, New Borrower hereby assumes and agrees to pay and perform when due all present and future indebtedness, liabilities and obligations of Borrower under the Loan Agreement, including, without limitation, the Obligations.  From and after the date hereof, all references in the Existing Loan Documents and in this Loan Modification to “Borrower” and/or “Debtor” shall be deemed to refer to and include New Borrower.  Further, all present and future Obligations of Borrower shall be deemed to refer to all present and future Obligations of New Borrower.  New Borrower acknowledges that the Obligations are due and owing to Bank from Borrower including, without limitation, New Borrower, without any defense, offset or counterclaim of any kind or nature whatsoever as of the date hereof.
 
4.            GRANT OF SECURITY INTEREST .  To secure the payment and performance of all of the Obligations, New Borrower hereby grants to Bank a continuing lien upon and security interest in all of New Borrower’s now existing or hereafter arising rights and interest in the Collateral, whether now owned or existing or hereafter created, acquired, or arising, and wherever located, including, without limitation, all of New Borrower’s assets listed on Exhibit A attached to the Loan Agreement and all of New Borrower’s books and records relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.  New Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under the Loan Agreement).  If New Borrower shall acquire a commercial tort claim, New Borrower shall promptly notify Bank in a writing signed by New Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of the Loan Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.  New Borrower further covenants and agrees that by its execution hereof it shall provide all such information, complete all such forms, and take all such actions, and enter into all such agreements, in form and substance reasonably satisfactory to Bank that are reasonably deemed necessary by Bank in order to grant and continue a valid,
 

 
1

 

first perfected security interest to Bank in the Collateral.  New Borrower hereby authorizes Bank to file financing statements, without notice to any Borrower, with all appropriate jurisdictions in order to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either any Borrower or any other Person, may be deemed to violate the rights of Bank under the Code.  Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.
 
5.            SUBROGATION AND SIMILAR RIGHTS .  Borrower (in each case including, without limitation, New Borrower) waives any suretyship defenses available to it under the Code or any other applicable law.  Borrower waives any right to require Bank to: (i) proceed against any other Borrower or any other Person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy.  Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability.  Notwithstanding any other provision of this Loan Modification Agreement, the Loan Agreement, or other Loan Documents, Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating such Borrower to the rights of Bank under the Loan Agreement) to seek contribution, indemnification or any other form of reimbursement from any other Borrower or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by a Borrower with respect to the Obligations in connection with the Loan Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by any Borrower with respect to the Obligations in connection with the Loan Agreement or otherwise.  Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this section shall be null and void.  If any payment is made to any Borrower in contravention of this section, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.  Each Borrower may, acting singly, request Credit Extensions under the Loan Agreement.  Each Borrower hereby appoints the other as agent for the other for all purposes under the Loan Agreement, including with respect to requesting Credit Extensions thereunder.  Each Borrower shall be jointly and severally obligated to repay all Credit Extensions made under the Loan Agreement or any other Loan Documents, regardless of which Borrower actually received said Credit Extension, as if each Borrower directly received all Credit Extensions.
 
6.            REPRESENTATIONS AND WARRANTIES .  Except as described in the updated Perfection Certificate(s) delivered in connection herewith and the Perfection Certificate of New Borrower, Borrower hereby represents and warrants to Bank that all representations and warranties in the Loan Documents made on the part of any Borrower are true and correct in all material respects on the date hereof with respect to New Borrower, with the same force and effect as if New Borrower were originally named as “Borrower” in the Loan Documents.  In addition, Borrower and New Borrower hereby represent and warrant to Bank that this Loan Modification Agreement has been duly executed and delivered by Borrower and New Borrower, and constitutes their legal, valid and binding obligation, enforceable against each in accordance with its terms.
 
7.            DESCRIPTION OF CHANGE IN TERMS .
 
 
1
The Loan Agreement shall be amended by inserting the following new text as Section 2.1.6 immediately following Section 2.1.5 thereof:
 
2.1.6             Term Loan 2012.
 
(a)            Availability .  Bank shall make one (1) term loan available to Borrower in the amount of the Term Loan 2012 Amount on the Second Loan Modification Effective Date subject to the satisfaction of the terms and conditions of this Agreement.
 
(b)            Repayment .  Commencing on August 1, 2012 and quarterly on each November 1, February 1, May 1 and August 1 thereafter, Borrower shall repay the Term Loan 2012 (i) in sixteen (16) equal installments of principal, based on a sixteen (16) quarter amortization schedule, plus (ii) quarterly payments of accrued interest (each such payment being a “ Term Loan 2012 Payment ”).   Borrower’s final Term Loan 2012  Payment, due on the Term Loan 2012 Maturity Date, shall include all outstanding principal and accrued and unpaid interest under the Term Loan 2012.  Once repaid, the Term Loan 2012 may not be reborrowed.

 
2

 

 
(c)            Use of Term Loan 2012 Proceeds .  Borrower and Bank acknowledge that the outstanding principal balance of the Term Loan is $10,833,333.30.  Borrower shall use the Term Loan 2012 proceeds (i) for the payment in full of all outstanding principal and accrued but unpaid interest on the Term Loan, together with any outstanding fees or expenses related thereto (it being understood and agreed that the prepayment fee described in Section 2.1.5(c) will not be charged by Bank); and (ii) as partial payment of the purchase price for the nLayer Acquisition.
 
(d)            Prepayment .  The Term Loan 2012 may be prepaid, in whole or in part prior to the Term Loan 2012 Maturity Date by Borrower, effective three (3) Business Days after written notice of such prepayment is given to Bank.  Notwithstanding any such prepayment, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate liabilities, but including, without limitation, Obligations arising under the European Loan Agreement).  If such prepayment is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a prepayment premium in an amount equal to (i) if such prepayment occurs after the Second Loan Modification Effective Date but prior to the First Anniversary, two percent (2.00%) of the principal amount of the Term Loan 2012 Amount; (ii) if such prepayment occurs on or after the First Anniversary but prior to the Second Anniversary, one percent (1.00%) of the Term Loan 2012 Amount; and (iv) if such prepayment occurs on or after the Second Anniversary, zero percent (0.00%).  Notwithstanding the foregoing, no prepayment premium shall be charged if the Term Loan 2012 is replaced with a new facility from Bank or another division of Silicon Valley Bank.  Upon payment in full of the Obligations (other than inchoate liabilities, but including, without limitation, Obligations arising under the European Loan Agreement) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall terminate and release its liens and security interests in the Collateral and all rights therein shall revert to Borrower.”
 
 
2
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.3(a) thereof:
 
“(a)            Interest Rate .
 
(i)            Advances .  Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus two percent (2.00%); provided , however , during a Performance Pricing Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one percent (1.00%).  Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(f) below.
 
(ii)            Term Loan .  Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus three and three-quarters percent (3.75%) provided , however , during a Performance Pricing Period, the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%), which interest shall in any event be payable monthly.”
 
and inserting in lieu thereof the following:
 
“(a)            Interest Rate .
 
(i)            Advances .  Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%); provided , however , during a Performance Pricing Period, the principal amount outstanding under the Revolving Line

 
3

 
 
shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and three-quarters percent (1.75%).  Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(f) below.
 
(ii)            Term Loan 2012 .  Subject to Section 2.3(b), the principal amount outstanding under the Term Loan 2012 shall accrue interest at a floating per annum rate equal to the Prime Rate plus three and three-quarters percent (3.75%); provided , however , during a Performance Pricing Period, the principal amount outstanding under the Term Loan 2012 shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%), which interest shall in any event be payable quarterly.”
 
 
3
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.4(c) thereof:
 
“(c)           [Reserved];”
 
and inserting in lieu thereof the following:
 
“(c)            Unused Revolving Line Facility Fee .  A fee (the “ Unused Revolving Line Facility Fee ”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one-quarter percent (0.25%) per annum of the average unused portion of the Revolving Line.  The unused portion of the Revolving Line, for purposes of this calculation, shall equal the difference between (x) the Revolving Line amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balance of the Revolving Line outstanding.  Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder;”
 
 
4
The Loan Agreement shall be amended by deleting the following text appearing as Section 6.3(c) thereof:
 
“(c)            Collection of Accounts .  Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion.  Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to an account maintained with Bank to be applied (i) prior to an Event of Default, to the Revolving Line pursuant to the terms of Section 2.5(b) hereof, and (ii) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided however , during a Streamline Period, such payments and proceeds shall be transferred to an account of Borrower maintained at Bank.”
 
and inserting in lieu thereof the following:
 
“(c)            Collection of Accounts .  Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion.  Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the lockbox or such blocked account, to be transferred by Bank to an account of Borrower maintained at Bank; provided , that , in Bank’s sole discretion, such payments and proceeds may be applied to the Revolving Line pursuant to the terms of Section
 

 
4

 

2.5(b) hereof; and provided further , that after the occurrence and during the continuance of an Event of Default, such payments and proceeds shall be applied pursuant to the terms of Section 9.4 hereof.”
 
 
5
The Loan Agreement shall be amended by deleting the following text appearing as Section 6.8(a) thereof:
 
“(a)           (i) Maintain its and its Subsidiaries’ domestic depository, operating accounts and securities accounts with Bank and Bank’s affiliates with all excess domestic funds maintained at or invested through Bank or an affiliate of Bank; and (ii) maintain not less than sixty percent (60%) of the dollar value of GTTI’s and its Subsidiaries accounts at all financial institutions worldwide at Bank and Bank’s affiliates. Any domestic Guarantor shall maintain all depository, operating and securities accounts with Bank or SVB Securities. Notwithstanding the foregoing, no later than August 20, 2011 (or such later date as Bank shall determine, in its sole but reasonable discretion), all accounts of PEUSA and PEINC maintained at financial institutions other than Bank or Bank’s Affiliates shall be (i) closed, with all proceeds in such accounts transferred to a Collateral Account at Bank or Bank’s Affiliates; or (ii) subject to an account control agreement in favor of Bank, in form and substance acceptable to Bank, in its reasonable discretion.”
 
and inserting in lieu thereof the following:
 
“(a)           (i) Maintain its and its Subsidiaries’ domestic depository, operating accounts and securities accounts with Bank and Bank’s affiliates with all excess domestic funds maintained at or invested through Bank or an affiliate of Bank; and (ii) maintain not less than sixty percent (60%) of the dollar value of GTTI’s and its Subsidiaries accounts at all financial institutions worldwide at Bank and Bank’s affiliates. Any domestic Guarantor shall maintain all depository, operating and securities accounts with Bank or SVB Securities. Notwithstanding the foregoing, no later than July 13, 2012 (or such later date as Bank shall determine, in its sole but reasonable discretion), all accounts of nLayer maintained at financial institutions other than Bank or Bank’s Affiliates shall be (i) closed, with all proceeds in such accounts transferred to a Collateral Account at Bank or Bank’s Affiliates; or (ii) subject to a Control Agreement in favor of Bank, in form and substance acceptable to Bank, in its reasonable discretion.”
 
 
6
The Loan Agreement shall be amended by deleting Section 6.9 (Financial Covenants) thereof, and inserting in lieu thereof the following:
 
6.9             Financial Covenants.
 
Maintain at all times, to be tested and certified as of the last day of each month, unless otherwise noted, on a consolidated basis, unless otherwise noted:
 
(a)            Liquidity .                      GTTI and its direct and indirect Subsidiaries shall at all times maintain unrestricted worldwide cash plus the unused availability under the Borrowing Base (the “ Minimum Liquidity ”) of at least Five Million Dollars ($5,000,000).
 
 (b)            Fixed Charge Coverage Ratio .  On a quarterly basis, as of the last day of each fiscal quarter of the Borrower, measured on a trailing three month basis, GTTI and its direct and indirect Subsidiaries shall maintain a ratio of (i) Free Cash Flow for such period divided by (ii) Fixed Charges of at least the following for the periods indicated below:
 
 
Quarterly Period Ending
 Minimum Fixed Charge Coverage Ratio
     
 
June 30, 2012 and September 30, 2012
         1.25:1.00
     
 
December 31, 2012, March 31, 2013 and June 30, 2013
         1.35:1.00

 
5

 
 
 
September 30, 2013, and each quarterly period ending thereafter
1.50:1.00

(c)            Senior Leverage Ratio .  On a quarterly basis, as of the last day of each of the following fiscal quarters of Borrower, GTTI and its direct and indirect Subsidiaries shall maintain a ratio (the “ Senior Leverage Ratio ”) of (i) total Indebtedness of GTTI and its direct and indirect Subsidiaries owed to Bank divided by (ii) trailing twelve (12) months Free Cash Flow, not to exceed the following:
 
 
 Quarterly Period Ending
Maximum Senior Leverage Ratio
     
 
June 30, 2012
         2.50:1.00
     
 
September 30, 2012
         2.50:1.00
     
 
December 31, 2012
         2.25:1.00
     
 
March 31, 2013
         2.25:1.00
     
 
June 30, 2013, and as of the last day of each quarterly period ending thereafter
         2.00:1.00
 
; provided , that (i) for the quarterly period ending June 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing three (3) month basis, multiplied by four (4); (ii) for the quarterly period ending September 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing six (6) month basis, multiplied by two (2); and (iii) for the quarterly period ending December 31, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing nine (9) month basis, multiplied by four-thirds (4/3).”
 
 
7
The Loan Agreement shall be amended by inserting the following text as new Section 7.12 immediately following Section 7.11 thereof.
 
7.12             nLayer Earnout Obligations .  Directly or indirectly satisfy any nLayer Earnout Obligations; provided that Borrower may make the following payments in satisfaction of the nLayer Earnout Obligations in accordance with the terms and conditions of the nLayer Acquisition Agreement, so long as in each case an Event of Default has not occurred and is continuing, or would not result after giving effect to such payment in satisfaction of such nLayer Earnout Obligation: (i) up to $3,000,000 on or about the date that is twelve (12) months after the nLayer Closing; (ii) $1,500,000 on or about the date that is eighteen (18) months after the nLayer Closing; and (iii) $1,500,000 on or about the date that is twenty four (24) months after the nLayer Closing.”
 
 
8
The Loan Agreement shall be amended by deleting the following text appearing as Section 8.1 thereof:
 
8.1             Payment Default.   Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date and/or the Term Loan Maturity Date).  During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);”
 
and inserting the following in lieu thereof:
 

 
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8.1             Payment Default.   Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date and/or the Term Loan 2012 Maturity Date).  During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);”
 
 
9
The Loan Agreement shall be amended by inserting the following definitions in Section 13.1 thereof, each in its applicable alphabetical order:
 
““ nLayer ” is nLayer Communications, Inc., a wholly owned Subsidiary of GTTA.
 
nLayer Acquisition ” means the transactions contemplated under the nLayer Acquisition Documents.
 
nLayer Acquisition Agreement ” is that certain Stock Purchase Agreement, by and among, nLayer, each of the stockholders named therein and GTTI, dated on or about the Second Loan Modification Effective Date.
 
nLayer Acquisition Documents ” means the nLayer Acquisition Agreement, and each other document and/or agreement executed and/or delivered in connection therewith.
 
nLayer Closing ” is April 30, 2012.
 
nLayer Earnout Obligations ” are, on and after the nLayer Closing, any unsecured obligations of Borrower owed to any “Seller”, as such term is defined in the nLayer Acquisition Agreement.  
 
Plexus ” is Plexus Fund II L.P., a Delaware limited partnership.
 
Second Loan Modification Effective Date ” is April 30, 2012.
 
Term Loan 2012 ” is a loan made by Bank pursuant to the terms of Section 2.1.6 hereof.
 
Term Loan 2012 Amount ” is an aggregate amount equal to Eighteen Million, Three Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars ($18,333,333.00) outstanding at any time.
 
Term Loan 2012 Maturity Date ” is the earliest of (a) May 1, 2016 or (b) the occurrence of an Event of Default.
 
Term Loan 2012 Payment ” is defined in Section 2.1.6(b).
 
Unused Revolving Line Facility Fee ” is defined in Section 2.4(c).”
 
 
10
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:
 
““ BIA Note Purchase Agreement ” is that certain Note Purchase Agreement, dated on or about June 6, 2011, by and between Borrower and BIA, as the same may be amended, restated, supplemented or modified in accordance with the BIA Intercreditor Agreement.
 
BIA Intercreditor Agreement ” is that certain Amended and Restated Intercreditor and Subordination Agreement, dated as of the date hereof, by and between Bank and BIA, as the same may be amended, restated, supplemented or modified from time to time.
 

 
7

 

Credit Extension ” is any Advance, letter of credit, Term Loan, foreign exchange forward contract, amount utilized for cash management services, or any other extension of credit by Bank for Borrower’s benefit.
 
First Anniversary ” is the date that is 365 days after the Effective Date.
 
Fixed Charges ” are, for any period of measurement, the sum of Borrower’s (a) interest payments made to Bank, plus (b) any principal and interest payments on outstanding Indebtedness ( including , without limitation, principal amortization and prepayments of the Term Loan but excluding payments of principal on the Revolving Line), plus (c) principal amortization of and interest payments on capitalized leases.
 
Free Cash Flow ” is, for any period of measurement, Cash Basis EBITDA minus taxes actually paid in cash.
 
Performance Pricing Period ” is, provided no Event of Default has occurred and is continuing, the period (i) commencing on the first (1 st ) day of the month following the Subject Month in which GTTI reports, for such Subject Month that GTTI and its direct and indirect Subsidiaries has maintained a Senior Leverage Ratio in an amount at all times equal to or less than 2.00:1.00, as confirmed by Bank, in good faith (the “ Performance Pricing Threshold ”); and (ii) terminating on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first (1 st ) day of the month following the Subject Month in which Borrower fails to maintain the Performance Pricing Threshold, as determined by Bank, in its reasonable discretion.  Upon the termination of a Performance Pricing Period, Borrower must maintain the Performance Pricing Threshold each consecutive day for a complete Subject Month, as determined by Bank, in good faith, prior to entering into a subsequent Performance Pricing Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Performance Pricing Period.
 
Revolving Line Maturity Date ” is September 29, 2012.
 
Senior Leverage Ratio ” is, for any period of measurement, the sum of GTTI’s and its direct and indirect Subsidiaries’ Indebtedness owed to Bank divided by Cash Basis EBITDA.
 
and inserting in lieu thereof the following:
 
““ BIA Note Purchase Agreement ” is that certain Amended and Restated Note Purchase Agreement, dated on or about April 30, 2012, by and between Borrower, BIA, Plexus, and each other Purchaser (as such term is defined in such BIA Note Purchase Agreement) party thereto from time to time, as the same may be amended, restated, supplemented or modified in accordance with the BIA Intercreditor Agreement.
 
BIA Intercreditor Agreement ” is that certain Second Amended and Restated Intercreditor and Subordination Agreement, dated as of the date hereof, by and between Bank, as Subordinated Agent (as such term is defined in such BIA Intercreditor Agreement), BIA and Plexus, as Subordinated Creditors (as such term is defined in such BIA Intercreditor Agreement) thereunder, and each other Subordinated Creditor party thereto from time to time, as the same may be amended, restated, supplemented or modified from time to time.
 
Credit Extension ” is any Advance, letter of credit, Term Loan 2012, foreign exchange forward contract, amount utilized for cash management services, or any other extension of credit by Bank for Borrower’s benefit.
 
First Anniversary ” is the date that is 365 days after the Second Loan Modification Effective Date.
 

 
8

 

Fixed Charges ” are, for any period of measurement, the sum of Borrower’s (a) interest payments made to Bank, plus (b) any principal and interest payments on outstanding Indebtedness ( including , without limitation, principal amortization and prepayments of the Term Loan 2012 but excluding payments of principal on the Revolving Line), plus (c) principal amortization of and interest payments on capitalized leases. For the avoidance of doubt, nLayer Earnout Obligations will not be included in any calculation of “Fixed Charges”.
 
Free Cash Flow ” is, for any period of measurement, the sum of (i) Net Income (calculated in accordance with GAAP; plus (ii) the following, in each case to the extent deducted from the calculation of Net Income: (a) Interest Expense; (b) non-cash foreign exchange losses; (c) tax expense; (d) depreciation and amortization expense; (e) non-cash stock compensation expense and non-cash warrant expense; (f) other non-cash and/or non-recurring items or expenses on a case-by-case- basis, in each case with the Bank’s prior written approval; and (g) one-time non-recurring expenses incurred with the nLayer Acquisition and the Second Loan Modification Agreement, in an aggregate amount not to exceed Six Hundred Eighty Thousand Dollars ($680,000) minus (iii) taxes actually paid in cash; minus (iv) unfinanced Capital Expenditures.
 
Performance Pricing Period ” is, provided no Event of Default has occurred and is continuing, the period (i) commencing on the first (1 st ) day of the month following the fiscal quarter in which GTTI reports that GTTI and its direct and indirect Subsidiaries has maintained a Senior Leverage Ratio in an amount at all times equal to or less than 2.00:1.00, as confirmed by Bank, in good faith (the “ Performance Pricing Threshold ”); and (ii) terminating on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first (1 st ) day of the month following the Subject Month in which Borrower fails to maintain the Performance Pricing Threshold, as determined by Bank, in its reasonable discretion.  Upon the termination of a Performance Pricing Period, Borrower must maintain the Performance Pricing Threshold each consecutive day for a complete fiscal quarter, as determined by Bank, in good faith, prior to entering into a subsequent Performance Pricing Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Performance Pricing Period.
 
Revolving Line Maturity Date ” is April 30, 2016.
 
Senior Leverage Ratio ” is, for any period of measurement, the sum of GTTI’s and its direct and indirect Subsidiaries’ Indebtedness owed to Bank divided by Free Cash Flow (measured on a trailing twelve (12) month basis).”
 
 
11
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:
 
““ Cash Basis EBITDA ” is, for any period of measurement, EBITDA minus (a) unfinanced Capital Expenditures; plus (b) non-recurring cash expenses related to the PEX Acquisition approved by Bank, in its reasonable discretion, on a case-by-case basis.
 
EBITDA ” shall mean, for any period of measurement, (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense, plus (f) non-cash stock compensation expense, plus (g) at Bank’s discretion, other non-cash one-time charges reasonably acceptable to and approved by Bank, on a case-by-case basis.
 
Leverage Ratio ” is, for any period of measurement, the sum of Borrower’s Indebtedness divided by Cash Basis EBITDA.
 
Streamline Period ” is, provided no Default or Event of Default has occurred and is continuing, the period (i) beginning on the first (1 st ) day in which Borrower has, for each consecutive day in the immediately preceding thirty (30) day period, maintained unrestricted cash at Bank plus the unused Availability Amount, as determined by Bank,
 

 
9

 

in good faith, in an amount at all times greater than Three Million Five Hundred Thousand Dollars ($3,500,000) (the “ Streamline Balance ”); and (ii) ending on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first day thereafter in which Borrower fails to maintain the Streamline Balance, as determined by Bank, in good faith. Testing for the Streamline Period shall include the period that is thirty (30) days prior to the Effective Date. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Balance each consecutive day for thirty (30) consecutive days, as determined by Bank, in good faith, prior to entering into a subsequent Streamline Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Streamline Period.”
 
Third Anniversary ” is the date that is 365 days after the Second Anniversary.”
 
 
12
The Compliance Certificate attached as Exhibit B to the Loan Agreement is hereby deleted and shall be replaced with Exhibit A attached hereto.
 
8.            CONDITIONS PRECEDENT .  As a condition precedent to the effectiveness of this Loan Modification Agreement and the Bank’s obligation to make further Advances under the Revolving Line, the Bank shall have received the following documents prior to or concurrently with this Agreement, each in form and substance satisfactory to the Bank:
 
 
A.
Copies, certified by a duly authorized officer of each Borrower, to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower, respectively, as in effect on the date hereof (but only to the extent modified since last delivered to the Bank), (ii) the resolutions of each Borrower, respectively, authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s respective performance of all of the transactions contemplated hereby (but only to the extent required since last delivered to Bank), and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized (but only to the extent any signatories have changed since such incumbency certificate was last delivered to Bank);
 
 
B.
Fully executed signature pages to this Joinder and Second Loan Modification Agreement, the GTT-EMEA Second Loan Modification Agreement, each Second Amended and Restated Unconditional Guaranty, the Second Amended and Restated Security Agreement, the IP Security Agreement executed by nLayer, and the Amended and Restated GTTI Unconditional Guaranty (in favor of Bank, guaranteeing the GTT-EMEA Obligations);
 
 
C.
A fully executed Officer’s Certificate from GTTI, certifying that (i) attached as Exhibit A to such Officer’s Certificate are final, executed copies of the nLayer Acquisition Documents; (ii) attached as Exhibit B to such Officer’s Certificate is evidence satisfactory to Bank that Borrower has an $8,000,000 commitment under the BIA Note Purchase Agreement, $6,000,000 of which shall be funded on or before the Second Loan Modification Effective Date, with the remaining $2,000,000 funded in accordance with the terms and conditions of the BIA Note Purchase Agreement; (iii) no Event of Default has occurred and is continuing, and no Event of Default would result immediately after giving effect to the (x) the Second Loan Modification Agreement; (y) the nLayer Acquisition; or (z) the BIA Note Purchase Agreement; and (iv) attached as Exhibit C to such Officer’s Certificate are final, executed copies of the BIA Note Purchase Agreement and all other documents executed and/or delivered in connection therewith;
 
 
D.
Evidence satisfactory to Bank that the Liens in favor of JPMorgan Chase Bank, N.A. (“ JPMorgan ”) on NLayer have been terminated, and all outstanding Indebtedness owed to JPMorgan by NLayer shall have been paid in full;
 
 
E.
A fully executed copy of the BIA Intercreditor Agreement; and
 
 
F.
Such other documents as Bank may reasonably request.
 

 
10

 

9.            CONDITION SUBSEQUENT .  On or before May 11, 2012 (or such later date as Bank shall determine, in its sole discretion, Borrower shall deliver to Bank updated evidence of insurance for each Borrower and each Guarantor, in each case acceptable to Bank, in its reasonable discretion.
 
10.            FEES .  Borrower shall pay to Bank a (i) Revolving Line modification fee equal to Twenty Five Thousand Dollars ($25,000) plus (ii) a Term Loan 2012 fee equal to One Hundred Thousand Dollars ($100,000), each of which fees shall be due on the date hereof and shall be deemed fully earned as of the date hereof.  Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection the Existing Loan Documents and this Loan Modification Agreement.
 
11.            RATIFICATION OF IP AGREEMENTS .  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of each IP Agreement, and acknowledges, confirms and agrees that each respective IP Agreement contains an accurate and complete listing of all Intellectual Property Collateral as defined in each such IP Agreement as otherwise supplemented by the Loan Agreement and any Perfection Certificate related thereto , shall remain in full force and effect. Notwithstanding the terms and conditions of each IP Agreement, the Borrower shall not register any Copyrights or Mask Works in the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior-written notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s) with the United States Copyright Office.  Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works.  Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within fifteen (15) days of any such filing.
 
12.            ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE .  Borrower is not a party to, nor is bound by, any license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.  Borrower shall provide written notice to Bank within ten (10) days of entering or becoming bound by any such license or agreement (other than over-the-counter software that is commercially available to the public).  Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (x) all such licenses or contract rights to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement (such consent or authorization may include a licensor’s agreement to a contingent assignment of the license to Bank if Bank determines that is necessary in its good faith judgment), whether now existing or entered into in the future , and (y) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under the Loan Agreement and the other Loan Documents.  In addition, the Borrower hereby certifies that no Collateral with a value greater than Twenty-Five Thousand Dollars ($25,000)  in the aggregate is in the possession of any third party bailee (such as at a warehouse).  In the event that Borrower, after the date hereof, intends to store or otherwise deliver the Collateral with a value in excess of Twenty-Five Thousand Dollars ($25,000), in the aggregate to such a bailee, then Borrower shall first receive, the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank.  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate, dated as of June 29, 2011, and acknowledges, confirms and agrees the disclosures and information Borrower provided to Bank in the Perfection Certificate remain true and correct in all material respects as of the date hereof.
 
13.            CONSISTENT CHANGES .  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
 
14.            RATIFICATION OF LOAN DOCUMENTS .  Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.
 

 
11

 

15.            NO DEFENSES OF BORROWER .  Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
 
16.            CONTINUING VALIDITY .  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to waive the Existing Defaults pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future waivers or any other modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.
 
17.            JURISDICTION/VENUE .  Section 11 of the Loan Agreement is hereby incorporated by reference.
 
18.            COUNTERSIGNATURE .  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.
 
 
[The remainder of this page is intentionally left blank]

 
12

 

 
IN WITNESS WHEREOF , the parties hereto have caused this Loan Modification Agreement to be executed as of the date first above written.
 

BORROWER:
 
GLOBAL TELECOM & TECHNOLOGY, INC .
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
 
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
PACKETEXCHANGE, INC.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
WBS CONNECT, LLC
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer of Sole
Managing Member
 
PACKETEXCHANGE (USA), INC.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
nLAYER COMMUNICATIONS, INC.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
 
 
BANK:
 
SILICON VALLEY BANK
 
By    /s/ Chris Leary
Name:  Chris Leary
Title:    Relationship Manager
 
 

 

 
13

 

 
Exhibit B to Joinder and Second Loan Modification Agreement
Exhibit B

SILICON VALLEY BANK
Date:  ____________
FROM:  GLOBAL TELECOM & TECHNOLOGY, INC. et al.

The undersigned authorized officer of Global Telecom and Technology, Inc. ( a “ Borrower ”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (as amended, the “ Agreement ”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) each Borrower, and each of its respective Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state, national and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against any Borrower or any of its respective Subsidiaries, if any, relating to unpaid employee payroll or benefits of which any Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant
Required
Complies
     
Monthly consolidated unaudited financial statements
of (w)  GTTI and its direct and indirect Subsidiaries;
(x) monthly consolidated unaudited financial statements of
GTTI and its direct and indirect Domestic Subsidiaries;
(y) monthly consolidated unaudited financial statements of
EMEA and its direct and indirect Subsidiaries; and
(z) monthly consolidating unaudited financial statements
for GTTI and its direct and indirect Subsidiaries with a
Compliance Certificate
Monthly within 30 days
Yes   No
Annual financial statement (CPA Audited) + CC
FYE within150 days
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings, Deferred Revenue report
Monthly within 20 days (current as of
the 15 th day of the immediately
preceding month)
Yes   No
Transaction Reports
Monthly within 20 days (current as of
the 15 th day of the immediately
preceding month)and with each request
for a Credit Extension
Yes   No
Projections
FYE within 45 days and as amended or updated
Yes   No
 
 
The following Intellectual Property was registered and/or the following Governmental Approvals were obtained after the delivery of the last Compliance Certificate (if no registrations or approvals, state “None”)
_______________________________________________________________
 


 
14

 


Financial Covenant
Required
Actual
Complies
       
Maintain as indicated:
     
Minimum Liquidity (at all times certified monthly)
$5,000,000
$_______
Yes   No
Minimum Fixed Charge Coverage Ratio (tested quarterly, on
a T3M basis
*
_____:1.0
Yes   No
Senior Leverage Ratio
**
_____:1.0
Yes   No

*           See Section 6.9(b) of the Loan Agreement
**           See Section 6.9(c) of the Loan Agreement

Performance Pricing
Applies
     
Senior Leverage Ratio < 2.00:1.00
Prime + 1.75% (Revolving Line);
Prime + 2.75% (Term Loan 2012)
Yes   No
Senior Leverage Ratio > 2.00:1.00
Prime + 2.75% (Revolving Line);
Prime + 3.75% (Term Loan 2012)
Yes   No

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate .

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 
 
 
GLOBAL TELECOM & TECHNOLOGY, INC. et al.
 
 
 
By: _____________________________ 
Name: ___________________________
Title: ____________________________
BANK USE ONLY
 
Received by: _____________________
authorized signer
Date: ___________________________
 
 
Verified: _________________________
authorized signer
Date: ___________________________
 
Compliance Status:     Yes       No

 
 



 
15

 

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated:   ____________________

 
I.             Liquidity (Section 6.9(a))
 
Required:      GTTI and its direct and indirect Domestic Subsidiaries shall at all times maintain unrestricted worldwide cash plus the unused availability under the Borrowing Base (the “ Minimum Liquidity ”) of at least Five Million Dollars ($5,000,000)
 
Actual:

A.
Aggregate value of the unrestricted worldwide cash of GTTI and its direct and indirect Domestic Subsidiaries
$ _________
 
B.
Aggregate value of the unused availability under the Borrowing Base
$ _________
 
C.
LIQUIDITY (line A plus line B)
 
$ _________

Is line C equal to or greater than $5,000,000?

 ________ No, not in compliance                                                                                     ________ Yes, in compliance


 
16

 

II.             Fixed Charge Coverage Ratio. (Section 6.9(b))
 
Required:      Maintain, on a quarterly basis, as of the last day of each fiscal quarter of the Borrower, measured on a trailing three month basis, GTTI and its direct and indirect Subsidiaries shall maintain a ratio of (i) Free Cash Flow for such period divided by (ii) Fixed Charges of at least the following for the periods indicated below:
 
 
Quarterly Period Ending
 Minimum Fixed Charge Coverage Ratio
     
 
June 30, 2012 and September 30, 2012
         1.25:1.00
     
 
December 31, 2012, March 31, 2013 and June 30, 2013
         1.35:1.00
     
 
September 30, 2013, and each quarterly period ending thereafter
         1.50:1.00
 
Actual: All amounts measured on a trailing three month basis:

  A.
Net Income (calculated in accordance with GAAP
     $ _________ 
 
  B.
To the extent deducted from the calculation of Net Income:
     $ _________      
 
 
1.  Interest Expense
 
     $ _________         
 
2. Non-cash foreign exchange losses
 
     $ _________        
 
3. Tax expense
 
     $ _________         
 
4. Depreciation and amortization expense
 
     $ _________         
 
5. Non-cash stock compensation expense and non-cash warrant expense
     $ _________         
 
 
6. Other non-cash and/or non-recurring items or expenses on a case-by-case- basis, in each case with the Bank’s prior written approval
 
     $ _________
 
7. One-time non-recurring expenses incurred with the nLayer Acquisition and the Second Loan Modification Agreement
 
     $ _________         
  C.
 
ADJUSTED NET INCOME (line A plus the sum of lines B.1 through B.7)
     $ _________         
  D.
 
Taxes actually paid in cash
     $ _________        
E.
Unfinanced Capital Expenditures
 
     $ _________         
F.
 
FREE CASH FLOW (line C minus line D minus line E)
     $ _________         
G.
 
Fixed Charges
     $ _________         
H.
 
FIXED CHARGE COVERAGE RATIO (line F divided by line G)
_______:1.00

Is line H equal to or greater than  ________:1.00
 
________ No, not in compliance                                                                 ________ Yes, in compliance
 

 
1

 

III.             Senior Leverage Ratio. (Section 6.9(c))
 
Required:      On a quarterly basis, as of the last day of each of the following fiscal quarters of Borrower, GTTI and its direct and indirect Subsidiaries shall maintain a ratio (the “ Senior Leverage Ratio ”) of (i) total Indebtedness of GTTI and its direct and indirect Subsidiaries owed to Bank divided by (ii) trailing twelve (12) months Free Cash Flow, not to exceed the following:
 

 
 Quarterly Period Ending
Maximum Senior Leverage Ratio
     
 
June 30, 2012
         2.50:1.00
     
 
September 30, 2012
         2.50:1.00
     
 
December 31, 2012
         2.25:1.00
     
 
March 31, 2013
         2.25:1.00
     
 
June 30, 2013, and as of the last day of each quarterly period ending thereafter
         2.00:1.00
 
; provided , that (i) for the quarterly period ending June 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing three (3) month basis, multiplied by four (4); (ii) for the quarterly period ending September 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing six (6) month basis, multiplied by two (2); and (iii) for the quarterly period ending December 31, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing nine (9) month basis, multiplied by four-thirds (4/3).
 
Actual - all amounts measured and calculated as indicated above:
 
 
  A.
 
Total Indebtedness of Borrower and its respective Subsidiaries owed to Bank
       $ _________        
  B.
 
Free Cash Flow (from line II.F above)
       $ _________      
  C.
MAXIMUM SENIOR LEVERAGE RATIO (line A divided by line B)
_________:1.00
 

 
 
Is line C equal to or less than _______1:00?

________ No, not in compliance                                                ________ Yes, in compliance


 

       
 
 
2
 
 
EXHIBIT 10.4
SECOND LOAN MODIFICATION AGREEMENT
 
 
This Second Loan Modification Agreement (this “ Loan Modification Agreement ”) is entered into as of April 30, 2012 (the “ Second Loan Modification Effective Date ”), by and between (i) SILICON VALLEY BANK , a California corporation with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“ Bank ”), and (ii) GTT-EMEA, LTD ., a private limited liability company incorporated and registered in England and Wales with offices located at 5 th Floor, Morley House, 26 Holborn Viaduct, London EC1A 2AT (“ EMEA ”) PACKETEXCHANGE (IRELAND) LIMITED ., a company incorporated and existing under the laws of Ireland with registered number 373202, and whose registered address is 24-26 City Quay, Dublin 2 Ireland (“ PEIRL ”) and PACKETEXCHANGE (EUROPE) LIMITED. , a private limited company incorporated and registered in England and Wales under company number 05164474 (“ PELTD ”,  and together with EMEA and PEIRL, individually and collectively, jointly and severally, the “ Borrower ”).
 
1.            DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS . Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of June 29, 2011, evidenced by, among other documents, a certain Amended and Restated Loan and Security Agreement dated as of June 29, 2011, as further amended by a certain First Loan Modification Agreement, dated as of December 15, 2011, in each case between Borrower and Bank (as amended, the “ Loan Agreement ”).  Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.
 
2.            DESCRIPTION OF COLLATERAL .  Repayment of the Obligations is secured by (a) the Collateral as described in the Loan Agreement and (b) the Intellectual Property Collateral as defined in each Intellectual Property Security Agreement between each Borrower and Bank (each, as amended, an “ IP Agreement ”) (together with any other collateral security granted to Bank, the “ Security Documents ”)
 
 
Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “ Existing Loan Documents ”.
 
3.            DESCRIPTION OF CHANGE IN TERMS .
 
 
A.
Modifications to Loan Agreement.
 
 
1
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.1.5 thereof:
 
2.1.5             Term Loan.
 
(a)            Repayment .  Borrower is obligated to the Bank for the Term Loan 2011 (as defined in the Prior Loan Agreement and defined herein as the “ Term Loan ”), made by Bank to Borrower pursuant to the Prior Loan Agreement.  Borrower acknowledges that, as of the Effective Date, the outstanding principal amount of the Term Loan is $2,000,000.  Borrower acknowledges there is no additional availability under the Term Loan, and no amount of the Term Loan may be reborrowed.  Borrower shall repay the Term Loan (i) in sixty (60) equal installments of principal, based on a sixty (60) month amortization schedule, plus (ii) monthly payments of accrued interest (each such payment being a “ Term Loan Payment ”).  Beginning on the first Payment Date following the Funding Date each Term Loan Payment shall be payable on each successive Payment Date.  Borrower’s final Term Loan Payment, due on the Term Loan Maturity Date, shall include all outstanding principal and accrued and unpaid interest under the Term Loan.  Once repaid, the Term Loan may not be reborrowed.
 
(b)            Prepayment .  The Term Loan may be prepaid, in whole or in part prior to the Term Loan Maturity Date by Borrower, effective three (3) Business Days after written notice of such prepayment is given to Bank.  Notwithstanding any such prepayment, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations).  If such prepayment is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other
 

 
1

 

expenses or fees then-owing, a prepayment premium in an amount equal to (i) if such prepayment occurs after the Effective Date but prior to the First Anniversary, two percent (2.00%) of the principal amount of the Term Loan Amount; (ii) if such prepayment occurs on or after the First Anniversary but prior to the Second Anniversary, one and one-half percent (1.50%) of the Term Loan Amount; (iii) if such prepayment occurs on or after the Second Anniversary but prior to the Third Anniversary, one percent (1.00%) of the Term Loan Amount; and (iv) if such prepayment occurs on or after the Third Anniversary, zero percent (0.00%); provided that no prepayment premium shall be charged if the Term Loan is replaced with a new facility from Bank or another division of Silicon Valley Bank.  Upon payment in full of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall terminate and release its liens and security interests in the Collateral and all rights therein shall revert to Borrower.”
 
and inserting in lieu thereof the following:
 
2.1.5             Term Loan.
 
(a)            Repayment .  Borrower is obligated to the Bank for the Term Loan.  Borrower acknowledges that, as of the Second Loan Modification Effective Date, the outstanding principal amount of the Term Loan is $1,666,666.70.  Borrower acknowledges there is no additional availability under the Term Loan, and no amount of the Term Loan may be reborrowed.  Borrower shall repay the Term Loan (i) in sixteen (16) equal installments of principal, based on a sixteen (16) quarter amortization schedule, plus (ii) quarterly payments of accrued interest (each such payment being a “ Term Loan Payment ”).   Borrower’s final Term Loan Payment, due on the Term Loan Maturity Date, shall include all outstanding principal and accrued and unpaid interest under the Term Loan.  Once repaid, the Term Loan may not be reborrowed.
 
(b)            Prepayment .  The Term Loan may be prepaid, in whole or in part prior to the Term Loan Maturity Date by Borrower, effective three (3) Business Days after written notice of such prepayment is given to Bank.  Notwithstanding any such prepayment, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate liabilities, but including, without limitation, Obligations arising under the European Loan Agreement).  If such prepayment is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a prepayment premium in an amount equal to (i) if such prepayment occurs after the Second Loan Modification Effective Date but prior to the First Anniversary, two percent (2.00%) of the principal amount of the Term Loan Amount; (ii) if such prepayment occurs on or after the First Anniversary but prior to the Second Anniversary, one percent (1.00%) of the Term Loan Amount; and (iv) if such prepayment occurs on or after the Second Anniversary, zero percent (0.00%).  Notwithstanding the foregoing, no prepayment premium shall be charged if the Term Loan is replaced with a new facility from Bank or another division of Silicon Valley Bank.  Upon payment in full of the Obligations (other than inchoate liabilities, but including, without limitation, Obligations arising under the European Loan Agreement) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall terminate and release its liens and security interests in the Collateral and all rights therein shall revert to Borrower.”
 
 
2
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.3(a) thereof:
 
“(a)            Interest Rate .
 
(i)            Advances .  Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus two percent (2.00%); provided , however , during a Performance Pricing Period, the
 

 
2

 

principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one percent (1.00%).  Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(f) below.
 
(ii)            Term Loan .  Subject to Section 2.3(b), the principal amount outstanding under the Term Loan  shall accrue interest at a floating per annum rate equal to the Prime Rate plus three and three-quarters percent (3.75%) provided , however , during a Performance Pricing Period, the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%), which interest shall in any event be payable monthly.”
 
and inserting in lieu thereof the following:
 
“(a)            Interest Rate .
 
(i)            Advances .  Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%); provided , however , during a Performance Pricing Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and three-quarters percent (1.75%).  Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(f) below.
 
(ii)            Term Loan .  Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus three and three-quarters percent (3.75%) provided , however , during a Performance Pricing Period, the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%), which interest shall in any event be payable quarterly.”

 
3
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.4(c) thereof:
 
“(c)           [Reserved];”
 
and inserting in lieu thereof the following:
 
“(c)            Unused Revolving Line Facility Fee .  A fee (the “ Unused Revolving Line Facility Fee ”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one-quarter percent (0.25%) per annum of the average unused portion of the Revolving Line.  The unused portion of the Revolving Line, for purposes of this calculation, shall equal the difference between (x) the Revolving Line amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balance of the Revolving Line outstanding.  Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder;”
 
 
4
The Loan Agreement shall be deleted by deleting the following text appearing as Section 6.2(a)(iii) thereof:
 
“(iii)           within thirty (30) days after the end of each month, monthly consolidated unaudited financial statements of EMEA and its direct and indirect Subsidiaries;”
 
and inserting in lieu thereof the following:
 
“(iii)           within thirty (30) days after the end of each month, monthly consolidated unaudited financial statements of EMEA and its direct and indirect Subsidiaries, and such
 

 
3

 

other unaudited financial statements from the Guarantor as Bank shall require from time to time;”
 
 
5
The Loan Agreement shall be amended by deleting the following text appearing as Section 6.3(c) thereof:
 
 
“(c)            Collection of Accounts .  Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion.  Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to an account maintained with Bank to be applied (i) prior to an Event of Default, to the Revolving Line pursuant to the terms of Section 2.5(b) hereof, and (ii) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided, however , during a Streamline Period, such payments and proceeds shall be transferred to an account of Borrower maintained at Bank.”
 
and inserting in lieu thereof the following:
 
“(c)            Collection of Accounts .  Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion.  Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the lockbox or such blocked account, to be transferred by Bank to an account of Borrower maintained at Bank; provided , that , in Bank’s sole discretion, such payments and proceeds may be applied to the Revolving Line pursuant to the terms of Section 2.5(b) hereof; and provided further , that after the occurrence and during the continuance of an Event of Default, such payments and proceeds shall be applied pursuant to the terms of Section 9.4 hereof.”
 
 
6
The Loan Agreement shall be amended by deleting Section 6.9 (Financial Covenants) thereof, and inserting in lieu thereof the following:
 
6.9             Financial Covenants.
 
Maintain at all times, to be tested and certified as of the last day of each month, unless otherwise noted, on a consolidated basis, unless otherwise noted:
 
(a)            Liquidity .                      GTTI and its direct and indirect Subsidiaries shall at all times maintain unrestricted worldwide cash plus the unused availability under the Borrowing Base (the “ Minimum Liquidity ”) of at least Five Million Dollars ($5,000,000).
 
 (b)            Fixed Charge Coverage Ratio .  On a quarterly basis, as of the last day of each fiscal quarter of the Borrower, measured on a trailing three month basis, GTTI and its direct and indirect Subsidiaries shall maintain a ratio of (i) Free Cash Flow for such period divided by (ii) Fixed Charges of at least the following for the periods indicated below:
 
 
Quarterly Period Ending
 Minimum Fixed Charge Coverage Ratio
     
 
June 30, 2012 and September 30, 2012
         1.25:1.00
     
 
December 31, 2012, March 31, 2013
         1.35:1.00
 
 
4

 
 
 
  and June 30, 2013   
     
 
September 30, 2013, and each quarterly period ending thereafter
         1.50:1.00
 
(c)            Senior Leverage Ratio .  On a quarterly basis, as of the last day of each of the following fiscal quarters of Borrower, GTTI and its direct and indirect Subsidiaries shall maintain a ratio (the “ Senior Leverage Ratio ”) of (i) total Indebtedness of GTTI and its direct and indirect Subsidiaries owed to Bank divided by (ii) trailing twelve (12) months Free Cash Flow, not to exceed the following:
 
 
 Quarterly Period Ending
Maximum Senior Leverage Ratio
     
 
June 30, 2012
         2.50:1.00
     
 
September 30, 2012
         2.50:1.00
     
 
December 31, 2012
         2.25:1.00
     
 
March 31, 2013
         2.25:1.00
     
 
June 30, 2013, and as of the last day of each quarterly period ending thereafter
         2.00:1.00
 
; provided , that (i) for the quarterly period ending June 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing three (3) month basis, multiplied by four (4); (ii) for the quarterly period ending September 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing six (6) month basis, multiplied by two (2); and (iii) for the quarterly period ending December 31, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing nine (9) month basis, multiplied by four-thirds (4/3).”
 
 
7
The Loan Agreement shall be amended by inserting the following definitions, each in its appropriate alphabetical order, in Section 13.1 thereof:
 
Second Loan Modification Effective Date ” is April 30, 2012.”
 
 
8
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:
 
First Anniversary ” is the date that is 365 days after the Effective Date.
 
Fixed Charges ” are, for any period of measurement, the sum of Borrower’s (a) interest payments made to Bank, plus (b) any principal and interest payments on outstanding Indebtedness ( including , without limitation, principal amortization and prepayments of the Term Loan but excluding payments of principal on the Revolving Line), plus (c) principal amortization of and interest payments on capitalized leases.
 
Free Cash Flow ” is, for any period of measurement, Cash Basis EBITDA minus taxes actually paid in cash.
 
Performance Pricing Period ” is, provided no Event of Default has occurred and is continuing, the period (i) commencing on the first (1 st ) day of the month following the Subject Month in which GTTI reports, for such Subject Month that GTTI and its direct and indirect Subsidiaries has maintained a Senior Leverage Ratio in an amount at all times equal to or less than 2.00:1.00, as confirmed by Bank, in good faith (the “ Performance Pricing Threshold ”); and (ii) terminating on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first (1 st ) day of the month
 

 
5

 

following the Subject Month in which Borrower fails to maintain the Performance Pricing Threshold, as determined by Bank, in its reasonable discretion.  Upon the termination of a Performance Pricing Period, Borrower must maintain the Performance Pricing Threshold each consecutive day for a complete Subject Month, as determined by Bank, in good faith, prior to entering into a subsequent Performance Pricing Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Performance Pricing Period.
 
Revolving Line Maturity Date ” is September 29, 2012.
 
Senior Leverage Ratio ” is, for any period of measurement, the sum of GTTI’s and its direct and indirect Subsidiaries’ Indebtedness owed to Bank divided by Cash Basis EBITDA.
 
 
Term Loan Amount ” is an aggregate amount equal to Two Million Dollars ($2,000,000) outstanding at any time.
 
Term Loan Maturity Date ” is the earliest of (a) June 1, 2016 or (b) the occurrence of an Event of Default.”
 
and inserting in lieu thereof the following:
 
““ First Anniversary ” is the date that is 365 days after the Second Loan Modification Effective Date.
 
Fixed Charges ” are, for any period of measurement, the sum of Borrower’s (a) interest payments made to Bank, plus (b) any principal and interest payments on outstanding Indebtedness ( including , without limitation, principal amortization and prepayments of the Term Loan 2012 but excluding payments of principal on the Revolving Line), plus (c) principal amortization of and interest payments on capitalized leases.
 
Free Cash Flow ” is, for any period of measurement, the sum of (i) Net Income (calculated in accordance with GAAP; plus (ii) the following, in each case to the extent deducted from the calculation of Net Income: (a) Interest Expense; (b) non-cash foreign exchange losses; (c) tax expense; (d) depreciation and amortization expense; (e) non-cash stock compensation expense and non-cash warrant expense; (f) other non-cash and/or non-recurring items or expenses on a case-by-case- basis, in each case with the Bank’s prior written approval; and (g) one-time non-recurring expenses incurred with the nLayer Acquisition and the Second Loan Modification Agreement, in an aggregate amount not to exceed Six Hundred Eighty Thousand Dollars ($680,000) minus (iii) taxes actually paid in cash; minus (iv) unfinanced Capital Expenditures.  For the avoidance of doubt, nLayer Earnout Obligations will not be included in any calculation of “Fixed Charges”.
 
Performance Pricing Period ” is, provided no Event of Default has occurred and is continuing, the period (i) commencing on the first (1 st ) day of the month following the fiscal quarter in which GTTI reports that GTTI and its direct and indirect Subsidiaries has maintained a Senior Leverage Ratio in an amount at all times equal to or less than 2.00:1.00, as confirmed by Bank, in good faith (the “ Performance Pricing Threshold ”); and (ii) terminating on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first (1 st ) day of the month following the Subject Month in which Borrower fails to maintain the Performance Pricing Threshold, as determined by Bank, in its reasonable discretion.  Upon the termination of a Performance Pricing Period, Borrower must maintain the Performance Pricing Threshold each consecutive day for a complete fiscal quarter, as determined by Bank, in good faith, prior to entering into a subsequent Performance Pricing Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Performance Pricing Period.
 
Revolving Line Maturity Date ” is April 30, 2016.
 

 
6

 

Senior Leverage Ratio ” is, for any period of measurement, the sum of GTTI’s and its direct and indirect Subsidiaries’ Indebtedness owed to Bank divided by Free Cash Flow (measured on a trailing twelve (12) month basis).
 
Term Loan Amount ” is an aggregate amount equal to One Million Six Hundred Sixty Six Thousand Six Hundred Sixty Seven Dollars ($1,666,667.00) outstanding at any time.
 
Term Loan Maturity Date ” is the earliest of (a) May 1, 2016 or (b) the occurrence of an Event of Default.”
 
 
9
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:
 
““ Cash Basis EBITDA ” is, for any period of measurement, EBITDA minus (a) unfinanced Capital Expenditures; plus (b) non-recurring cash expenses related to the PEX Acquisition approved by Bank, in its reasonable discretion, on a case-by-case basis.
 
EBITDA ” shall mean, for any period of measurement, (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense, plus (f) non-cash stock compensation expense, plus (g) at Bank’s discretion, other non-cash one-time charges reasonably acceptable to and approved by Bank, on a case-by-case basis.
 
Leverage Ratio ” is, for any period of measurement, the sum of Borrower’s Indebtedness divided by Cash Basis EBITDA.
 
Streamline Period ” is, provided no Default or Event of Default has occurred and is continuing, the period (i) beginning on the first (1 st ) day in which Borrower has, for each consecutive day in the immediately preceding thirty (30) day period, maintained unrestricted cash plus the unused Availability Amount, as determined by Bank, in good faith, in an amount at all times greater than One Million Five Hundred Dollars ($1,500,000) (the “ Streamline Balance ”); and (ii) ending on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first day thereafter in which Borrower fails to maintain the Streamline Balance, as determined by Bank, in good faith. Testing for the Streamline Period shall include the period that is thirty (30) days prior to the Effective Date. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Balance each consecutive day for thirty (30) consecutive days, as determined by Bank, in good faith, prior to entering into a subsequent Streamline Period.  Borrower shall give Bank prior-written notice of Borrower’s intention to enter into any such Streamline Period.
 
Third Anniversary ” is the date that is 365 days after the Second Anniversary.”
 
 
10
The Compliance Certificate attached as Exhibit B to the Loan Agreement is hereby deleted and shall be replaced with Exhibit A attached hereto.
 
4.            CONDITIONS PRECEDENT .  As a condition precedent to the effectiveness of this Loan Modification Agreement and the Bank’s obligation to make further Advances under the Revolving Line, the Bank shall have received the following documents prior to or concurrently with this Agreement, each in form and substance satisfactory to the Bank:
 
 
A.
Copies, certified by a duly authorized officer of each Borrower, to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower, respectively, as in effect on the date hereof (but only to the extent modified since last delivered to the Bank), (ii) the resolutions of each Borrower, respectively, authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s respective performance of all of the transactions contemplated hereby (but only to the extent required since last delivered to Bank), and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized (but only to the

 
7

 
 
 
extent any signatories have changed since such incumbency certificate was last delivered to Bank); and
 
 
B.
Such other documents as Bank may reasonably request.
 
5.            CONDITION SUBSEQUENT .  On or before May 11, 2012 (or such later date as Bank shall determine, in its sole discretion, Borrower shall deliver to Bank updated evidence of insurance for each Borrower and each Guarantor, in each case acceptable to Bank, in its reasonable discretion.
 
6.            FEES .    Borrower shall reimburse Bank for all legal fees and expenses incurred in connection with the Existing Loan Documents and this Loan Modification Agreement.
 
7.            RATIFICATION OF IP AGREEMENTS .  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of each IP Agreement, and acknowledges, confirms and agrees that each respective IP Agreement contains an accurate and complete listing of all Intellectual Property Collateral as defined in each such IP Agreement as otherwise supplemented by the Loan Agreement and any Perfection Certificate related thereto , shall remain in full force and effect.  Notwithstanding the terms and conditions of each IP Agreement, the Borrower shall not register any Copyrights or Mask Works in the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior-written notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s) with the United States Copyright Office.  Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works.  Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within fifteen (15) days of any such filing.
 
8.            ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE .  Borrower is not a party to, nor is bound by, any license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.  Borrower shall provide written notice to Bank within ten (10) days of entering or becoming bound by any such license or agreement (other than over-the-counter software that is commercially available to the public).  Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (x) all such licenses or contract rights to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement (such consent or authorization may include a licensor’s agreement to a contingent assignment of the license to Bank if Bank determines that is necessary in its good faith judgment), whether now existing or entered into in the future , and (y) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under the Loan Agreement and the other Loan Documents.  In addition, the Borrower hereby certifies that no Collateral with a value greater than Twenty-Five Thousand Dollars ($25,000)  in the aggregate is in the possession of any third party bailee (such as at a warehouse).  In the event that Borrower, after the date hereof, intends to store or otherwise deliver the Collateral with a value in excess of Twenty-Five Thousand Dollars ($25,000), in the aggregate to such a bailee, then Borrower shall first receive, the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank.  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate, dated as of June 29, 2011, and acknowledges, confirms and agrees the disclosures and information Borrower provided to Bank in the Perfection Certificate remain true and correct in all material respects as of the date hereof.
 
9.            CONSISTENT CHANGES .  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
 
10.            RATIFICATION OF LOAN DOCUMENTS .  Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.
 

 
8

 

11.     NO DEFENSES OF BORROWER .  Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
 
12.            CONTINUING VALIDITY .  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to waive the Existing Defaults pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future waivers or any other modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.
 
13.            JURISDICTION/VENUE .  Section 11 of the Loan Agreement is hereby incorporated by reference.
 
14.            COUNTERSIGNATURE .  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.
 
 
[The remainder of this page is intentionally left blank]

 
9

 

 
IN WITNESS WHEREOF , the parties hereto have caused this Loan Modification Agreement to be executed as of the date first above written.
 

BORROWER:
 
GTT-EMEA, LTD .
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
 
PACKETEXCHANGE (EUROPE) LTD.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
PACKETEXCHANGE (IRELAND) LIMITED
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
 
 
BANK:
 
SILICON VALLEY BANK
 
By    /s/ Chris Leary
Name:  Chris Leary
Title:    Relationship Manager
 
 
The undersigned, President and Chief Executive Officer of GTT Global Telecom Government Services, LLC, a Virginia limited liability company and wholly owned Subsidiary of GTTA, ratifies, confirms and reaffirms, all and singular, the terms and conditions of (i) a certain Unconditional Guaranty dated as of June 29, 2011 (the “Guaranty”) and (ii) a certain Second Amended and Restated Security Agreement dated as of the date hereof (the “Security Agreement”) and acknowledges, confirms and agrees that the Guaranty and the Security Agreement shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.
 
By   /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title:   President and Chief Executive Officer
 

 
The undersigned, President and Chief Executive Officer of TEK Channel Consulting, LLC, a Colorado limited liability company and wholly owned Subsidiary of GTTA, ratifies, confirms and reaffirms, all and singular, the terms and conditions of (i) a certain Unconditional Guaranty dated as of June 29, 2011 (the “Guaranty”) and (ii) a certain Second Amended and Restated Security Agreement dated as of the date hereof (the “Security Agreement”) and acknowledges, confirms and agrees that the Guaranty and the Security Agreement shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.
 
By /s/ Richard D. Calder, Jr.
Name: Richard D. Calder, Jr.
Title: President and Chief Executive Officer

 
10

 

EXHIBIT B


COMPLIANCE CERTIFICATE

 
TO: SILICON VALLEY BANK     Date:  
FROM: GTT-EMEA, LTD. et al.     
                                                                                                                                             
The undersigned authorized officer of GTT-EMEA, LTD. (a “ Borrower ”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “ Agreement ”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) each Borrower, and each of its respective Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state, national and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against any Borrower or any of its respective Subsidiaries, if any, relating to unpaid employee payroll or benefits of which any Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
 
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Monthly consolidated unaudited financial statements of EMEA and its direct and indirect Subsidiaries with
Compliance Certificate
Monthly within 30 days
Yes   No
Annual financial statement (CPA Audited) + CC
FYE within150 days
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings, Deferred Revenue report
Monthly within 15 days
Yes   No
Transaction Reports
Monthly within 20 days and with each request for a Credit Extension
Yes   No
Projections
FYE within 45 days and as amended or updated
Yes   No
 
 
The following Intellectual Property was registered and/or the following Governmental Approvals were obtained
after the Effective Date (if no registrations or approvals, state “None”)
 ____________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
Maintain as indicated:
     
Minimum Liquidity (at all times certified monthly)
$5,000,000
$_______
Yes   No
Minimum Fixed Charge Coverage Ratio (tested quarterly, on
a T3M basis
*
_____:1.0
Yes   No
Senior Leverage Ratio
**
_____:1.0
Yes   No

*           See Section 6.9(b) of the Loan Agreement
**           See Section 6.9(c) of the Loan Agreement

 
11

 


Performance Pricing
Applies
     
Senior Leverage Ratio < 2.00:1.00
Prime + 1.75% (Revolving Line);
Prime + 3.50% (Term Loan)
Yes   No
Senior Leverage Ratio > 2.00:1.00
Prime + 2.75% (Revolving Line);
Prime + 4.00% (Term Loan)
Yes   No


The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)
 
 
 
 
GTT-EMEA, LTD. et al.
 
 
By:                                                       
Name:                                                        
Title:                                                          
 
BANK USE ONLY
 
Received by: _____________________
authorized signer
Date:                                                                          
 
Verified:                                                           
authorized signer
Date:                                                                 
 
Compliance Status:      Yes      No
 




 
12

 

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated:                                                            

 
I.            Liquidity (Section 6.9(a))
 
Required:      GTTI and its direct and indirect Domestic Subsidiaries shall at all times maintain unrestricted worldwide cash plus the unused availability under the Borrowing Base (the “ Minimum Liquidity ”) of at least Five Million Dollars ($5,000,000)
 

Actual:

A.
Aggregate value of the unrestricted worldwide cash of GTTI and its direct and indirect Domestic Subsidiaries
 
                      
B.
Aggregate value of the unused availability under the Borrowing Base
                      
 
C.
LIQUIDITY (line A plus line B)
 
                       

Is line C equal to or greater than $5,000,000?

 ________ No, not in compliance                                                                                ________ Yes, in compliance


 
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II.            Fixed Charge Coverage Ratio. (Section 6.9(b))
 
Required:      Maintain, on a quarterly basis, as of the last day of each fiscal quarter of the Borrower, measured on a trailing three month basis, GTTI and its direct and indirect Subsidiaries shall maintain a ratio of (i) Free Cash Flow for such period divided by (ii) Fixed Charges of at least the following for the periods indicated below:
 
 
Quarterly Period Ending
 Minimum Fixed Charge Coverage Ratio
     
 
June 30, 2012 and September 30, 2012
         1.25:1.00
     
 
December 31, 2012, March 31, 2013 and June 30, 2013
         1.35:1.00
     
 
September 30, 2013, and each quarterly period ending thereafter
         1.50:1.00
 
Actual: All amounts measured on a trailing three month basis:

  A.
Net Income (calculated in accordance with GAAP
     $ _________       
 
  B.
To the extent deducted from the calculation of Net Income:
     $ _________
 
 
1.  Interest Expense
 
     $ _________
 
2. Non-cash foreign exchange losses
 
     $ _________
 
3. Tax expense
 
     $ _________
 
4. Depreciation and amortization expense
 
     $ _________
 
5. Non-cash stock compensation expense and non-cash warrant expense
     $ _________
 
 
6. Other non-cash and/or non-recurring items or expenses on a case-by-case- basis, in each case with the Bank’s prior written approval
 
     $ _________
 
 
7. One-time non-recurring expenses incurred with the nLayer Acquisition and the Second Loan Modification Agreement
 
     $ _________
  C.
 
ADJUSTED NET INCOME (line A plus the sum of lines B.1 through B.7)
     $ _________
  D.
 
Taxes actually paid in cash
     $ _________
  E.
Unfinanced Capital Expenditures
 
     $ _________
  F.
 
FREE CASH FLOW (line C minus line D minus line E)
     $ _________
  G.
 
Fixed Charges
     $ _________
  H.
 
FIXED CHARGE COVERAGE RATIO (line F divided by line G)
 _________:1.00

Is line H equal to or greater than  ________:1.00

 ________ No, not in compliance                                                   ________ Yes, in compliance


 
1

 

III.            Senior Leverage Ratio. (Section 6.9(c))
 
Required:      On a quarterly basis, as of the last day of each of the following fiscal quarters of Borrower, GTTI and its direct and indirect Subsidiaries shall maintain a ratio (the “ Senior Leverage Ratio ”) of (i) total Indebtedness of GTTI and its direct and indirect Subsidiaries owed to Bank divided by (ii) trailing twelve (12) months Free Cash Flow, not to exceed the following:
 

 
 Quarterly Period Ending
Maximum Senior Leverage Ratio
     
 
June 30, 2012
         2.50:1.00
     
 
September 30, 2012
         2.50:1.00
     
 
December 31, 2012
         2.25:1.00
     
 
March 31, 2013
         2.25:1.00
     
 
June 30, 2013, and as of the last day of each quarterly period ending thereafter
         2.00:1.00
 
; provided , that (i) for the quarterly period ending June 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing three (3) month basis, multiplied by four (4); (ii) for the quarterly period ending September 30, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing six (6) month basis, multiplied by two (2); and (iii) for the quarterly period ending December 31, 2012, the trailing twelve (12) months Free Cash Flow will be calculated based on a trailing nine (9) month basis, multiplied by four-thirds (4/3).
 
Actual - all amounts measured and calculated as indicated above:
 
  A.
 
Total Indebtedness of Borrower and its respective Subsidiaries owed to Bank
     $ _________        
  B.
 
Free Cash Flow (from line II.F above)
     $ _________        
  C.
MAXIMUM SENIOR LEVERAGE RATIO (line A divided by line B)
_________:1.00

 
Is line C equal to or less than  ________1:00?

 ________ No, not in compliance                                                               ________ Yes, in compliance





2
EXHIBIT 10.5
EXECUTION COPY

 
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
 
 
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this “ Agreement ”) dated as of April 30, 2012 (the “ Restatement Date ”) is entered into by and between (i) the financial institutions from time to time party hereto as purchasers (each a “ Purchaser ” and collectively, the “ Purchasers ”); (ii) BIA DIGITAL PARTNERS SBIC II LP, a Delaware limited partnership with an office located at 15120 Enterprise Court, Chantilly, VA 20151, in its capacity as agent for the Purchasers (in such capacity, the “ Agent ”), and (iii) GLOBAL TELECOM & TECHNOLOGY, INC., a Delaware corporation (“ GTTI ”), GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC., a Virginia corporation (“ GTTA ”), each with offices located at 8484 Westpark Drive, Suite 720, McLean, Virginia 22102, WBS CONNECT, LLC, a Colorado limited liability company with offices located at 8400 E. Crescent Parkway, Suite 600, Greenwood Village, Colorado 80111 (“ WBS ”), PACKETEXCHANGE (USA), INC., a Delaware corporation (“ PEUSA ”), PACKETEXCHANGE, INC., a Delaware corporation (“ PEINC ”) and nLayer Communications, Inc., an Illinois corporation (“ nLayer ”, and together with GTTI, GTTA, WBS, PEUSA and PEINC, individually and collectively, jointly and severally, the “ Borrower ”).
 
RECITALS:
 
WHEREAS Borrower (other than nLayer) and BIA DIGITAL PARTNERS SBIC II LP (in its capacity as a purchaser, in such capacity, the “ Original Purchaser ”) previously entered into a Note Purchase Agreement (the “ Existing Note Purchase Agreement ”) dated as of June 6, 2011.

AND WHEREAS pursuant to the Stock Purchase Agreement (the “ Purchase Agreement ”) dated as of April, 30, 2012 by and among nLayer, each of its shareholders party thereto, and GTTA, as buyer, and GTTI, as guarantor, GTTA has agreed to acquire 100% of the outstanding shares of common stock of nLayer (the “ nLayer Acquisition ”).

AND WHEREAS Borrower has requested that the Original Purchaser and the other Purchasers party hereto amend and restate the Existing Note Purchase Agreement to, among other things, (i) partially finance the nLayer Acquisition and other growth or working capital initiatives, and (ii) add nLayer as a Borrower hereunder, in each case by adding additional Purchasers who will extend additional credit to Borrower and the other Loan Parties, as provided herein, and the Agent and Purchasers are willing amend and restate Existing Note Purchase Agreement upon the terms and conditions hereinafter set forth;

AND WHEREAS the parties hereto have agreed to amend and restate the terms and provisions of the Existing Note Purchase Agreement in their entirety on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

 
 
1
ACCOUNTING AND OTHER TERMS
 
Accounting terms not defined in this Agreement shall be construed following GAAP.  Calculations and determinations must be made following GAAP, as applicable.  Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13.  All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.
 
 
2
PURCHASE AND SALE
 
2.1             Promise to Pay .  Borrower hereby unconditionally, jointly and severally, promises to pay each Purchaser the outstanding principal amount of the Notes held by such Purchaser and accrued and unpaid interest thereon as and when due in accordance with this Agreement.
 
 
2.1.1
Reserved.
 
 
2.1.2
Reserved.
 
 
 

 

 
 
2.1.3
Reserved.
 
 
2.1.4
Reserved.
 
 
2.1.5
Notes.
 
(a)            Original Notes; Commitment to Purchase Additional Notes .  The Borrower sold to the Original Purchaser, and the Original Purchaser purchased from the Borrower, in reliance on the representations, warranties and covenants of the Borrower and the other Note Parties under the Existing Note Purchase Agreement, upon the terms and subject to the conditions set forth therein, notes in the original principal amount set forth after such Original Purchaser’s name under the heading “Original Notes” contained on Schedule 2.1.5 (the “ Original Notes ”).  The Original Notes remain in full force and effect as of the Restatement Date and are hereby ratified and reaffirmed in all respects.  On the Restatement Date, the Borrower shall deliver to the Original Purchaser an amended and restated note reflecting the outstanding principal amount of the Original Notes on the Restatement Date (the “ Amended and Restated Note ”).  Subject to and in reliance upon the representations, warranties, terms and conditions of this Agreement, each Purchaser agrees (severally and not jointly) to purchase from Borrower, and Borrower agrees to sell to each Purchaser, Notes (the “ Additional Notes ” and together with the Original Notes, the “ Notes ”) in an aggregate principal amount not to exceed the amounts set forth next to such Purchaser’s name under the heading “Additional Notes” contained on Schedule 2.1.5 (the “ Commitment Amount ”).  The Commitment Amount shall be reduced by the amount of any Additional Notes funded in accordance with this Agreement, and on the Commitment Termination Date the Commitment Amount shall automatically be reduced to zero.
 
(b)            Take Down Procedures for Additional Notes .
 
(i)           The initial purchase and sale of Additional Notes hereunder (the “ Initial Additional Takedown ”) shall occur on the Restatement Date and the Notes to be purchased and sold on the Initial Additional Takedown shall be in an aggregate principal amount of $6,000,000.
 
(ii)           At any time on or prior to the Commitment Termination Date, Borrower may, subject to the terms hereof, sell additional Notes to those Purchasers with a commitment to purchase Additional Notes hereunder in aggregate principal amounts (together with all other Additional Notes) up to the Commitment Amount, by giving Agent and such Purchaser notice not later than thirty (30) days prior to the date of such proposed purchase and sale (each, an “ Additional Takedown ”), of ( x ) the principal amount of the Note to be purchased and sold at such Additional Takedown (which amount shall be not less than $1,000,000 and shall be in increments of $1,000,000 for any Additional Takedown), and ( y ) the date of such Additional Takedown.  In the case of any Additional Takedown used to finance a Permitted Acquisition, such notice will also describe, in reasonable detail satisfactory to Agent and such Purchaser, the Permitted Acquisition or acquisitions to be financed with the proceeds of such Additional Takedown, including, without limitation, ( A ) the amount and types of consideration proposed to be paid, ( B ) the proposed sources of financing therefor and ( C ) a reasonably detailed description of the business or businesses to be acquired.
 
(iii)           If the SVB Syndication has not occurred on the date that is ninety (90) days following the Restatement Date then, at the option of Plexus in its sole discretion,  subject to the conditions set forth in Section 3 (unless waived by the Required Purchasers in their sole discretion), Borrower shall issue and Plexus shall purchase Additional Notes in an aggregate principal amount equal to the remaining Commitment Amount (if any) (an “ Automatic Takedown ” and, collectively with the Initial Additional Takedown and any Additional Takedowns, the “ Takedowns ”).  Any failure by the Borrower to consummate such Automatic Takedown (to the extent required by Plexus) shall constitute an immediate Event of Default.
 
(iv)           On the Restatement Date and on the Closing Date for each Takedown, Borrower will deliver to each Purchaser purchasing Additional Notes at such Takedown a single Note, dated the applicable Closing Date and registered in each such Purchaser’s name, in a principal amount equal to the aggregate principal amount of the Note being purchased and sold to such Purchaser in connection with the applicable Takedown, in consideration for delivery by each such Purchaser to Borrower of immediately available funds by wire transfer to an account designated in writing by Borrower prior to such Closing Date of an amount equal to the aggregate principal amount of the Note being purchased by each such Purchaser in connection with such Takedown.  If on such Closing Date Borrower shall fail to tender such Notes as provided in this Section 2.1.5(b)(iv) or any of the conditions specified in Section 3 shall not have been fulfilled to each such Purchaser’s satisfaction, any such Purchaser shall, at
 

 
- 2 -

 

its election, be relieved of all further obligations hereunder with respect to the applicable Takedown, without thereby waiving any other rights it may have by reason of such failure or such nonfulfillment.
 
(c)            Mandatory Redemption at Maturity .  The Notes shall be due and payable in full on the Maturity Date, unless payment is sooner required hereunder.
 
(d)            Voluntary Redemptions .  The Notes may be prepaid, in whole or in part prior to the Maturity Date by Borrower, effective three (3) Business Days after written notice of such prepayment is given to Agent and Purchasers, by payment of the principal amount of the Notes (or portion thereof in a minimum amount of $1,000,00 0   and integral multiples of $250,00 0 in excess of such amount) to be redeemed, plus accrued and unpaid interest and fees thereon through the date of such redemption, plus the Prepayment Premium.  Notwithstanding any such redemption, Agent’s and Purchasers’ lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations).  Upon payment in full of the Obligations (other than inchoate indemnity obligations) and at such time as each Purchaser’s obligation to purchase additional Notes at Additional Takedowns have terminated, Agent and Purchasers shall terminate and release its liens and security interests in the Collateral and all rights therein shall revert to Borrower.  All payments (including prepayments) on account of the Notes shall be applied to all Notes on a pro rata basis.
 
(e)            AHYDO .  Notwithstanding anything to the contrary contained herein, if (1) the Notes remain outstanding after the fifth anniversary of the initial issuance thereof and (2) the aggregate amount of the accrued but unpaid interest on the Notes (including any amounts treated as interest for federal income Tax purposes, such as “original issue discount”) as of any Testing Date occurring after such fifth anniversary exceeds an amount equal to the Maximum Accrual, then all such accrued but unpaid interest on the Notes (including any amounts treated as interest for federal income Tax purposes, such as “original issue discount”) as of such time in excess of an amount equal to the Maximum Accrual shall be paid in cash by Borrower to the holders thereof on such Testing Date, it being the intent of the parties hereto that the deductibility of interest under the Notes shall not be limited or deferred by reason of Section 163(i) of the U.S. Internal Revenue Code.  For these purposes, the “Maximum Accrual” is an amount equal to the product of such Notes’ issue price (as defined in U.S. Internal Revenue Code Sections 1273(b) and 1274(a)) and their yield to maturity, and a “Testing Date” is any Interest Payment Date and the date on which any “accrual period” (within the meaning of Section 1272(a)(5) of the U.S. Internal Revenue Code) closes.  Any accrued interest which for any reason has not theretofore been paid shall be paid in full on the date on which the final principal payment on a Note is made.
 
(f)            OID .  Borrower, Agent and each Purchaser agree (i) that the Notes are debt for federal income Tax purposes, (ii) that the Notes issued to each Purchaser constitute a single debt instrument for purposes of Sections 1271 through 1275 of the U.S. Internal Revenue Code and the Treasury Regulations thereunder (pursuant to Treasury Regulations Section 1.1275-2(c)), that such debt instrument is issued with original issue discount (“OID”), and that such debt instrument is described in Treasury Regulations Section 1.1272-1(c)(2) and therefore is governed by the rules set out in Treasury Regulations Section 1.1272-1(c), including Section 1.1272-1(c)(5), and is not governed by the rules set out in Treasury Regulations Section 1.1275-4, (iii) that any calculation by Borrower regarding the amount of OID for any accrual period on the Notes shall be subject to the review and approval of each respective Purchaser, not to be unreasonably withheld, and (iv) to adhere to this Agreement for federal income Tax purposes and not to take any action or file any Tax return, report or declaration inconsistent herewith (including with respect to the amount of OID on the Notes as determined in accordance with the preceding Section 2.1.5(f)(iii).  The inclusion of this Section 2.1.5(f) is not an admission by any Purchaser that it is subject to United States Taxation.  In connection with the purchase of the Original Notes, Original Purchaser received the Original Warrants.  In the event the Original Notes and such Original Warrants are considered the issuance of an “investment unit” under Code Section 1273(c)(2), the parties previously agreed that the fair market value of the Original Warrants is $377,661 and $34,414, respectively, for purposes of investment unit allocation under Code Section 1273(c)(2).  Borrower and Original Purchaser previously agreed to report in a manner that is consistent with this allocation for all Tax purposes and such agreement remains in full force and effect as of the Restatement Date.  In connection with the purchase of the Additional Note at the Initial Additional Takedown, Plexus is receiving the Initial Plexus Warrant.  In the event such Additional Note and the Initial Plexus Warrant are considered the issuance of an “investment unit” under Code Section 1273(c)(2), the parties agree that the fair market value of the Initial Plexus Warrants is $515,793 for purposes of investment unit allocation under Code Section 1273(c)(2).  Borrower and Plexus agree to report in a manner that is consistent with this allocation for all Tax purposes.  In connection with the purchase of Additional Notes at Additional Takedowns or Automatic Takedowns, if any, Plexus will receive Additional Warrants.  In the
 

 
- 3 -

 

 
event such Additional Notes and the Additional Warrants are considered the issuance of an “investment unit” under Code Section 1273(c)(2), the parties agree, for purposes of investment unit allocation under Code Section 1273(c)(2), to calculate the fair market value of such Additional Warrants in the same manner as the Initial Plexus Warrant, which final calculation shall be mutually agreed upon by Plexus and Borrower.  Borrower and Plexus agree to report in a manner that is consistent with such allocation for all Tax purposes.
 
 
2.2
Warrants .
 
(a)            Original Warrants .  Prior to the Restatement Date, GTTI sold to the Original Purchaser, and the Original Purchaser purchased from GTTI, in reliance on the representations, warranties and covenants of Borrower and the Original Purchaser contained in the Existing Note Purchase Agreement, the Original Warrants.  The Original Warrants remain in full force and effect as of the Restatement Date.
 
(b)            Additional Warrants .
 
(i)           Subject to the terms and conditions of this Agreement, on the Restatement Date (in connection with the Initial Additional Takedown), Plexus agrees to subscribe for and purchase from GTTI, and the GTTI agrees to issue to Plexus a warrant (the “ Initial Plexus Warrant ”) to purchase 535,135 shares of common stock, $0.001 par value per share (the “ Common Stock ”), of GTTI at an exercise price equal to $2.208 per share (as adjusted from time to time as provided in therein).
 
(c)           At any Additional Takedown or Automatic Takedown, Plexus agrees to subscribe for, and GTTI agrees to issue to Plexus an additional warrant (together with the Initial Plexus Warrant, each an “ Additional Warrant ” and collectively the “ Additional Warrants ”) to purchase the Applicable Number (as defined below) of shares of Common Stock of GTTI at an exercise price equal to the trailing 30-day average price per share prior to the applicable Closing Date (as adjusted from time to time as provided in the Additional Warrant).  Each Additional Warrant shall be substantially in the form of the Initial Plexus Warrant (other than the exercise price and other adjustments satisfactory to Plexus).  For purposes hereof, “Applicable Number” means an amount equal to the product of (x) 713,513, and (y) a fraction, (A) the numerator of which equals the aggregate principal amount of the Additional Note issued to Plexus at such Takedown, and (B) the denominator of which equals 8,000,000.
 
(d)            Representations and Warranties regarding Additional Warrants .  Plexus (in its capacity as a Purchaser of Additional Notes and each Additional Warrant) acknowledges, represents and warrants as follows:
 
(i)           Each Additional Warrant and the capital stock issuable upon the exercise of each Additional Warrant are being acquired for Plexus’s account for investment only and not with a view towards, or with any intention of, a distribution or resale thereof, in whole or in part, or the grant of any participation therein by subdivision or otherwise.
 
(ii)           Each Additional Warrant and the capital stock issuable upon exercise of each such Additional Warrant have not been registered under the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “ Securities Act ”), or the securities laws of any state or any other domestic or foreign jurisdiction and may not be offered for sale, sold, pledged, hypothecated, transferred, assigned or otherwise disposed of in the absence of (i) an effective registration for such transaction under the Securities Act or (ii) a valid exemption from the registration requirements of the Securities Act for such transaction. In addition, Plexus acknowledges that the certificates evidencing the shares of such capital stock will contain a legend to this effect.
 
(iii)           Plexus acknowledges that it   may not be possible for it to liquidate its investment in any Additional Warrant or the capital stock issuable upon exercise of any Additional Warrant, and Plexus is prepared, therefore, to hold the same indefinitely.
 
(iv)           Plexus is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act by virtue of the fact that it (i) is a limited partnership, (ii) was not formed for the specific purpose of acquiring an Additional Warrant and the capital stock issuable upon exercise of any Additional Warrant and (iii) has total assets in excess of $5,000,000.
 

 
- 4 -

 

 
2.3           Payment of Interest on the Notes.
 
(a)            Interest Rate .   The Obligations shall bear interest at a rate of thirteen and one half percent (13.5%) per annum, of which ( i ) at least eleven and one half percent (11.5%) per annum shall be payable in cash monthly in arrears on each Interest Payment Date in each year (the “ Cash Interest Portion ”), commencing with the first Interest Payment Date following the Initial Closing Date and ( ii ) two percent (2.0%) per annum shall be, at Borrower’s option, paid in cash (upon not less than three (3) Business Days notice prior to such Interest Payment Date) or paid-in-kind (the “ PIK Interest ”); provided , however , during a Performance Pricing Period, the Obligations shall bear interest at a rate of twelve percent (12%), with a Cash Interest Portion of at least eleven percent (11.0%) per annum payable in arrears on each Interest Payment date of each year.  Any PIK Interest shall ( x ) be added to the principal amount of the Notes on each Interest Payment Date in each year or ( y ) at the request of any Purchaser, be paid by the issuance of additional Notes on any Interest Payment Date.
 
(b)            Default Rate .   Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is four percentage points (4.00%) above the rate that is otherwise applicable thereto (the “ Default Rate ” or “ Default Interest ”) unless Agent (as directed by Required Purchasers) otherwise elects from time to time in its sole discretion to impose a smaller increase.  Fees and expenses which are required to be paid by Borrower pursuant to the Note Documents (including, without limitation, Costs and Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Default Interest shall be payable upon demand by Agent (as directed by Required Purchasers); provided it shall be paid in cash or at Borrower’s option, paid-in-kind.  Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Agent and any Purchaser.
 
(c)            Reserved .
 
(d)            Computation; 360-Day Year .  In computing interest, the date of the purchase of any Notes shall be included and the date of payment shall be excluded.  Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed.
 
(e)            Reserved .
 
(f)            Payment; Interest Computation .  Unless otherwise provided, interest is payable monthly in arrears on the last calendar day of each month (each such date, an “ Interest Payment Date ”).  In computing interest on the Obligations, all Payments received after 3:00 p.m. Eastern time on any day shall be deemed received on the next Business Day.  Agent shall not, however, be required to credit Borrower’s account for the amount of any item of payment which is unsatisfactory to Agent in its good faith business judgment.  All such payments of interest shall be made by way of automatic bank draft.
 
2.4             Fees.   Borrower shall pay the following fees:
 
(a)            Processing Fee .  On the Restatement Date and each Closing Date for any Additional Takedown or Automatic Takedown, a fully earned, non refundable processing fee equal to two percent (2.0%) of the aggregate principal amount of the Additional Notes being purchased and sold in connection with the applicable Takedown (each a “ Processing Fee ” and collectively, the “ Processing Fees ”) shall be paid by Borrower to each Purchaser purchasing Additional Notes at such Takedown or any designee of any such Purchaser, in immediately available funds by wire transfer to accounts designated by any such Purchaser or designee prior to such Closing Date; provided, however, that the Processing Fee payable to Plexus on the Restatement Date shall be reduced by the amount which has already been paid to Plexus as an initial deposit of such Processing Fee prior to the Restatement Date.  Furthermore, any Processing Fee payable at any Additional Takedown or Automatic Takedown shall be reduced, on a dollar-for-dollar basis, by the sum of any Commitment Fees previously paid pursuant to the following Section 2.4(b) .  For avoidance of doubt, in no event shall any Processing Fee be less than zero; and
 
(b)            Commitment Fee .  On each Interest Payment Date prior to the Commitment Termination Date (including the Interest Payment Date occurring on the Commitment Termination Date), if applicable, a commitment fee (each a “ Commitment Fee ” and collectively, the “ Commitment Fees ”) shall be paid by Borrower
 

 
- 5 -

 

 
to any Purchaser with a commitment to purchase Additional Notes or any designee of any such Purchaser, in immediately available funds by wire transfer to accounts designated by such Purchaser or designee prior to such Interest Payment Date, in an equal to one percent (1.0%) per annum of the Unfunded Commitment Amount on such Interest Payment Date.  For purposes hereof, “ Unfunded Commitment Amount ” shall mean, as of any date of determination, the sum of (i) the Commitment Amount, less (ii) the aggregate principal amount of all Additional Notes purchased.
 
(c)            Reserved .
 
(d)            Reserved .
 
(e)            Costs and Expenses .  All Costs and Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Initial Closing Date, when due.
 
 
2.5
Payments; Application of Payments.
 
(a)           All payments (including prepayments) to be made by Borrower under any Note Document shall be made in immediately available funds in U.S. Dollars, without setoff or counterclaim, before 3:00 p.m. Eastern time on the date when due.  All such payments shall be made to each Purchaser in respect of the Notes held by such Purchasers by wire transfer to an account designated by each such Purchaser to Borrower from time to time.  Payments of principal and/or interest received after 3:00 p.m. Eastern time are considered received at the opening of business on the next Business Day.  When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.
 
(b)           Purchasers shall apply the whole or any part of collected funds against the Notes on a pro rata basis.
 
2.6             Withholding .
 
(a)           Payments received by Agent or any Purchaser from Borrower hereunder will be made free and clear and without reduction of any withholding Taxes that are not Excluded Taxes.  Specifically, however, if at any time any Governmental Authority, Applicable Laws, regulation or international agreement requires any Borrower to make any such withholding or deduction from any such payment or other sum payable hereunder to Purchaser, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction (including withholding of deductions applicable to additional sums payable under this Section), Agent or any Purchaser, as applicable, receives a net sum equal to the sum which it would have received had no withholding or deduction been required and Borrower shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with Applicable Law.  Borrower will furnish Purchaser with proof satisfactory to Agent and each Purchaser indicating that Borrower has made such withholding payment provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower.
 
(b)           To the extent it is legally permitted to do so, each Foreign Lender shall deliver to Borrower on or prior to the date on which such Foreign Lender becomes a party to this Agreement one or more (as Borrower may reasonably request) properly completed and executed IRS Forms W-8ECI, W-8BEN, W-8IMY (as applicable) or other applicable form, certificate or document prescribed by the IRS certifying as to such Lender’s entitlement to exemption or reduction from withholding or deduction of Taxes.  Each Lender shall (to the extent legally entitled to do so) provide updated forms to Borrower on or prior to the date any prior form previously provided under this Section 2.6(b) becomes obsolete or expires, after the occurrence of an event requiring a change in the most recent form or certification previously delivered by it pursuant to this Section 2.6(b) or from time to time if requested by Borrower.  In the case of a Foreign Lender claiming exemption from Tax on portfolio interest under Section 881(c) of the IRC, the documentation to be provided by such Foreign Lender to Borrower under this Section 2.6(b) shall include (x) a certificate in to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section
 
 
 
 
- 6 -

 
 
 
881(c)(3)(A) of the IRC, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the IRC, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the IRC, and (y) a properly executed and completed IRS Form W-8BEN.  Each U.S. Lender shall deliver to Borrower on or prior to the date on which such Lender becomes a party to this Agreement (and from time to time thereafter upon the request of Borrower) properly completed and executed originals of IRS Form W-9 to enable Borrower to determine whether or not the Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not be required to pay additional amounts to or indemnify Agent or any Lender pursuant to this Section 2.6 or Section 2.7 to the extent that the obligation to pay Taxes or additional amounts would not have arisen but for the failure of Agent or such Lender to comply with this paragraph.  The agreements and obligations of Borrower contained in this Section 2.6, 2.7, 2.8 and 2.9 shall survive the termination of this Agreement.
 
2.7             Indemnification by Borrower .   Borrower shall indemnify Agent and each Purchaser within 10 days after demand therefore, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Agent or such Purchaser and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to Borrower by Agent or any Purchaser shall be conclusive absent manifest error.
 
2.8             Payment of Other Taxes .  Without limiting the provisions of Section 2.6 or 2.7 above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
 
2.9             Tax Refunds.   If Agent or any Purchaser determines, in its sole discretion, that it has received a refund of any Taxes for which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to Section 2.6, it shall promptly pay over such refund to Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by one or more Borrower under Section 2.6, 2.7, 2.8 or 2.9, as applicable), net of all out-of-pocket expenses of Agent or such Purchaser, as applicable, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that Borrower, upon the request of Agent or any Purchaser, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent or such Purchaser, as applicable, in the event Agent or such Purchaser, as applicable, is required to repay such refund to such Governmental Authority.  This paragraph shall not be construed to require Agent or any Purchaser to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to Borrower or any other Person or to alter its internal practices or procedures with respect to the administration of Taxes.
 
 
3
CONDITIONS OF PURCHASE
 
3.1             Conditions Precedent to Initial Additional Takedown on the Restatement Date. Each Purchaser’s obligation to purchase the Notes at the Initial Additional Takedown under this Agreement is subject to the condition precedent that Purchasers shall have received, in form and substance satisfactory to Required Purchasers, such documents, and completion of such other matters, as Required Purchasers may reasonably deem necessary or appropriate, including, without limitation:
 
(a)           duly executed original signatures to the Note Documents;
 
(b)           copy of the Stock certificate of nLayer (with original delivered to Senior Lender in accordance with the Intercreditor Agreement), with stock power executed in blank; (ii) a UCC1 Financing Statement for nLayer; and (iii) a Perfection Certificate for nLayer;
 
(c)           for each Borrower (including nLayer), Borrower’s Operating Documents and a good standing certificate or similar certification of Borrower certified by each applicable jurisdiction of incorporation or formation, together with a certificate of foreign qualification from each jurisdiction in which Borrower is qualified as a foreign corporation where the failure to be so qualified would result in a Material Adverse Effect, each dated as of a date no earlier than thirty (30) days prior to the Restatement Date;
 
(d)           duly executed original signatures to the Secretary’s Certificate with completed Borrowing Resolutions for each Borrower (including nLayer);
 
 
 
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(e)           duly executed Second Amended and Restated Intercreditor Agreement, in form and substance satisfactory to Agent and each Purchaser;
 
(f)           Purchasers shall have received evidence that EBITDA, on a trailing twelve month basis (after giving pro forma effect to the nLayer Acquisition) is greater than $11,500,000;
 
(g)           duly executed original signatures to the Amended and Restated Pledge Agreement;
 
(h)           certified copies, dated as of a recent date, of financing statement searches, as Purchasers shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the Initial Additional Takedown, will be terminated or released;
 
(i)           updated Perfection Certificates of Borrower and each Guarantor, together with the duly executed original signatures thereto;
 
(j)           UCC3 assignments to existing financing statements for each appropriate jurisdiction as is necessary, in the Purchasers’ sole discretion, assigning the Liens granted to the Purchasers in the Collateral pursuant to the Note Documents to the Agent, for the benefit of the Secured Parties;
 
(k)           Purchasers shall have received evidence that the Leverage Ratio (after giving pro forma effect to the nLayer Acquisition) does not exceed 3.5 to 1.00;
 
(l)           a legal opinion of Borrower’s counsel (including special counsel and local counsel, as deemed necessary by Agent), in form and substance acceptable to Required Purchasers, in their reasonable discretion, dated as of the Restatement Date together with the duly executed original signature thereto;
 
(m)           the duly executed original signatures to the Amended and Restated Guarantees, together with Secretary’s Certificate/duly executed original signatures to the completed Borrowing Resolutions for each Guarantor;
 
(n)           evidence satisfactory to Required Purchasers that the insurance policies required by Section 6.7 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Agent;
 
(o)           Purchasers shall have received true and correct copies of the amendments to the Senior Loan Documents and the Acquisition Agreement, each in form and substance satisfactory to Required Purchasers;
 
(p)           Plexus shall have completed its business, financial and legal due diligence of the Note Parties; and
 
(q)           duly executed original signatures to the Initial Plexus Warrant;
 
(r)           Borrower shall have completed (or concurrently with the Initial Additional Takedown will complete) the nLayer Acquisition in accordance with the terms of the Acquisition Agreement in all material respects (without any material amendment thereto or material waiver thereunder unless consented to by Required Purchasers); and
 
(s)           Evidence satisfactory to Required Purchasers that the Liens in favor of JPMorgan Chase Bank, N.A. (“ JPMorgan ”) on nLayer have been terminated, and all outstanding Indebtedness owed to JPMorgan by NLayer shall have been paid in full.
 
3.2             Conditions Precedent to all Takedowns.   In addition to the conditions set forth in Section 3.1 with respect to the Initial Additional Takedown, no Purchaser shall be required to purchase Notes at any Takedown until the date (each such date, a " Closing Date ") that each of the following conditions has been satisfied (in each case in such manner and in form and substance reasonably satisfactory to Required Purchasers):
 
 
 
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(a)           A Note shall have been executed by Borrower and delivered to each Purchaser purchasing Additional Notes that requests issuance of a Note;
 
(b)           the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the applicable Closing Date; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Default or Event of Default shall have occurred and be continuing or result from purchase of the Notes.  Each sale of Notes is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and
 
(c)           in Required Purchasers’ good faith reasonable business judgment, there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Required Purchasers;
 
(d)           Borrower shall have delivered such other certificates, documents and agreements as any Required Purchasers may reasonably request;
 
(e)           Borrower shall have paid all fees and expenses (including fees and expenses of counsel) to be paid to Agent or any Purchaser, as applicable, on such Closing Date as specified in Section 2.4 hereof;
 
(f)           Purchasers shall have received evidence reasonably satisfactory to Agent indicating that, immediately prior to and after giving effect to such Takedown, Borrower shall be in pro forma compliance with the Financial Covenants set forth in Section 6.9; and
 
(g)           Each Purchaser shall have received all closing certificates, corporate documents, evidence of authorization, forms and information required by the U.S. Small Business Administration, including without limitation SBA Forms 480 and 652, and other agreements, instruments and documents in respect of any aspect or consequence of the transactions contemplated hereby as such Purchaser may reasonably request, all of which shall be in form and substance reasonably satisfactory to such Purchaser.
 
3.3             Conditions Precedent to Additional Takedowns and Automatic Takedowns.   In addition to the conditions set forth in Section 3.2 , no Purchaser shall be required to purchase Notes at any Additional Takedown or Automatic Takedown until the date that each of the following conditions has been satisfied (in each case in such manner and in form and substance reasonably satisfactory to Required Purchasers):
 
(a)           To the extent proceeds of any such Takedown are to be used by any Person who is not a US Borrower, Purchasers shall have received a duly executed amendment to the Secured Intercompany Note and, if necessary, a corresponding amendment to each Debenture, in each case increasing the principal amount thereto by such amount and otherwise in form and substance acceptable to Required Purchasers; and
 
(b)           To the extent Plexus is the Purchaser of such Additional Notes purchased at any such Takedown, Plexus shall have received an Additional Warrant pursuant to Section 2.2(b), in form and substance satisfactory to Agent and Plexus in their discretion.
 
(c)           To the extent proceeds of any such Takedown are to be used to finance growth initiatives (other than Permitted Acquisitions) or working capital needs, Purchasers shall have received a description, in reasonable detail satisfactory to the Purchasers, of the growth initiative(s) or working capital needs to be financed with such proceeds, which initiative(s) or working capital needs, as applicable, shall be satisfactory to the Purchasers in their sole discretion.
 
 
 
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3.4             Covenant to Deliver.   Borrower agrees to deliver to Agent and Purchasers each item required to be delivered to Agent or any Purchaser under this Agreement as a condition precedent to any Takedown.  Borrower expressly agrees that a Note purchased prior to the receipt by Agent or any Purchaser of any such item shall not constitute a waiver by Agent or any Purchaser of Borrower’s obligation to deliver such item, and the purchasing of any Note in the absence of a required item shall be in Required Purchasers’ sole discretion.
 
 
4
CREATION OF SECURITY INTEREST
 
4.1             Grant of Security Interest.   Each US Borrower (including nLayer) hereby grants Agent, for the benefit of the Secured Parties, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Agent, for the benefit of the Secured Parties, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
 
4.2             Priority of Security Interest.   Each US Borrower (including nLayer) represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens (including Liens securing the Senior Debt) that may have superior priority to Agent’s Lien under this Agreement).  If a US Borrower (including nLayer) shall acquire a commercial tort claim, such US Borrower (including nLayer) shall promptly notify Agent in a writing signed by such US Borrower of the general details thereof and grant to Agent, for the benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Agent.
 
If this Agreement is terminated, Agent’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash.  Upon payment in full in cash of the Obligations and at such time as each Purchaser’s obligation to purchase Notes has terminated, Agent shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower.
 
4.3             Authorization to File Financing Statements.   Each US Borrower (including nLayer) hereby authorizes Agent to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Agent’s and each Purchaser’s interest or rights hereunder, including a notice that any disposition of the Collateral except as set forth in this Agreement, by either such US Borrower or any other Person, shall be deemed to violate the rights of Agent under the Code.  Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Agent’s discretion.
 
 
5
REPRESENTATIONS AND WARRANTIES
 
Borrower represents and warrants as follows:
 
5.1             Due Organization; Authorization; Power and Authority.   Borrower and each of its Subsidiaries are duly existing and in good standing as a Registered Organization in its jurisdiction of formation and each is qualified and licensed to do business and each is in good standing in any jurisdiction in which the conduct of each of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business, taken as a whole (a “ Material Adverse Effect ”).  In connection with this Agreement, Borrower has delivered to Agent completed certificates each signed by Borrower and Guarantor, respectively, entitled “Perfection Certificate”.  Borrower represents and warrants to Agent that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Initial Closing Date to the extent permitted by one or more specific provisions in this Agreement).  If Borrower is not now a Registered Organization but later becomes
 
 
 
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one, Borrower shall promptly notify Agent of such occurrence and provide Agent with Borrower’s organizational identification number.
 
The execution, delivery and performance by Borrower of the Note Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect and further subject to), or (v) constitute an event of default under any material agreement by which Borrower is bound.  Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a Material Adverse Effect.
 
5.2             Collateral.   Borrower has good title to each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens.  Borrower has no deposit accounts other than the deposit accounts with Senior Lender, the deposit accounts, if any, described in the Perfection Certificate delivered to Agent in connection herewith, or of which Borrower has given Agent notice and taken such actions as are necessary to give Agent a perfected security interest therein (subject to the Required Foreign Filings).  The Accounts are bona fide, existing obligations of the Account Debtors.
 
The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.  None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.  In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral in excess of One Hundred Thirty Thousand Dollars ($130,000) in the aggregate to a bailee, then Borrower will first receive the written consent of Agent and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in its sole discretion.
 
All Inventory is in all material respects of good and marketable quality, free from material defects.
 
Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate.  Each Patent which it owns or purports to own and which is material to Borrower’s business is to the knowledge of Borrower, valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business, taken as a whole, has been judged invalid or unenforceable, in whole or in part.  To Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not have a Material Adverse Effect.
 
Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.
 
5.3             Intentionally omitted .
 
5.4             Litigation.   There are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000).
 
5.5             Financial Condition .  All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations.  There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Agent.
 
5.6             Solvency .  Borrower is able to pay its debts (including trade debts as they mature).
 
 
 
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5.7             Regulatory Compliance.   Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended.  Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material respects with the Federal Fair Labor Standards Act or, in the case of EMEA, with all employment legislation in force in England and Wales (including, without limitation, the Employment Rights Act 1996).  Borrower has complied in all material respects with all Securities Laws. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005.  Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a Material Adverse Effect.  None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally.  Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted, except where the failure to obtain or make such consents, declarations, notices or filings would not reasonably be expected to have a Material Adverse Effect.  Borrower (a) is in compliance in all material respects with and (b) has procured and is now in possession of, all material licenses, permits, approvals and consents required by any applicable federal, state or local law, rule or regulation (including, without limitation, rules and regulations promulgated by the Federal Communications Commission and any similar state agency) for the operation of Borrower’s business in each jurisdiction wherein it is now conducted.  No Note Party, nor any Affiliate thereof nor any present stockholder thereof appears on any list of "Specially Designated Nationals" or known or suspected terrorists that has been generated by the Office of Foreign Assets Control of the United States Department of Treasury (" OFAC "), nor is any Note Party, Affiliate or stockholder thereof a citizen or resident of any country that is subject to embargo or trade sanctions enforced by OFAC, or otherwise is a Person (i) whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or transactions prohibited by Section 2 of such executive order, or, to its knowledge, is otherwise associated with any such person in any manner violative of Section 2, or (iii) subject to the limitations or prohibitions under any other OFAC regulation or executive order.
 
5.8             Subsidiaries; Investments .  Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.
 
5.9             Tax Returns and Payments; Pension Contributions .  Borrower and each of its Subsidiaries has   timely filed all required Tax returns, and Borrower and each of its Subsidiaries has paid, or made provision to pay, all foreign, federal, state, national, and local Taxes, assessments, deposits and contributions owed by Borrower and its Subsidiaries (whether or not reflected on a Tax return) in excess of $50,000.00 in the aggregate; provided that Borrower may defer payment of any contested Taxes, provided further that Borrower (a) in good faith contests its obligation to pay the Taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Agent in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the Governmental Authority levying such contested Taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien”.  Borrower has no knowledge of any claims or adjustments proposed or asserted for any of Borrower's prior Tax years which could result in additional Taxes becoming due and payable by Borrower.  Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.
 
5.10             Use of Proceeds .  Borrower (i) acknowledges that it used the proceeds of the Original Notes to finance the Packet Exchange Acquisition and for working capital purposes, and (ii) agrees that it shall use the proceeds of Additional Notes (a) to partially finance the nLayer Acquisition, (b) to fund additional Permitted Acquisitions and other growth related initiatives, or (c) with respect to any Additional Notes purchased at any Automatic Takedown, to prepay Senior Debt in order to increase availability under the Revolving Line.  In no event shall any proceeds of any Notes be used for personal, family, household or agricultural purposes.
 
 
 
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5.11             Full Disclosure .  No written representation, warranty or other statement of Borrower in any certificate or written statement given to Agent or any Purchaser, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Agent or any Purchaser, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Agent and each Purchaser that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).
 
5.12             Definition of “Knowledge.”   For purposes of the Note Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of the Responsible Officers.
 
5.13             Acquisition Agreement.                                            Borrower has delivered to Agent a complete and correct copy of the Acquisition Agreement (including all schedules, exhibits, amendments, supplements, modifications, assignments and all other documents delivered pursuant thereto or in connection therewith).  No event of Default has occurred thereunder.  The Acquisition Agreement complies with, and the nLayer Acquisition has been, or concurrent with the Initial Additional Takedown will be, consummated in accordance with, all Applicable Laws.  The Acquisition Agreement is in full force and effect as of the Restatement Date, has not been terminated, rescinded or withdrawn. All Governmental Approvals having jurisdiction over the seller, any Note Party and other Persons referenced therein, with respect to the transactions contemplated by the Acquisition Agreement, have been obtained, and no such approvals impose any conditions to the consummation of the transactions contemplated by the Acquisition Agreement or to the conduct by any Note Party of its business thereafter.
 
5.14             Capitalization.                                 The authorized capital stock of GTTI consists of (x) 80,000,000 shares of Common Stock, of which as March 23, 2012, 18,901,564 are issued and outstanding, 6,500,000 shares are reserved for issuance pursuant to GTTI’s stock option and purchase plans and zero (0) shares are reserved for issuance pursuant to securities (other than the Notes, the Original Warrant and the Additional Warrant) exercisable or exchangeable for, or convertible into, shares of Common Stock, and (y) no shares of preferred stock.  All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.  Except as set forth on Schedule 5.14 or in the first sentence of this Section 5.14, no shares of the GTTI’s capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by GTTI; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of GTTI or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which GTTI or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of GTTI or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of GTTI or any of its Subsidiaries; (iii) there are no agreements or arrangements under which GTTI or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act, (iv) there are no outstanding securities or instruments of GTTI or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which GTTI or any of its Subsidiaries is or may become bound to redeem a security of GTTI or any of its Subsidiaries; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Original Warrants or the Additional Warrant; and (vi) GTTI does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement.  No Person has any valid right to rescind any purchase of the Original Warrants or the Additional Warrant, any shares of capital stock or other securities of any Note Party.
 
 
6
AFFIRMATIVE COVENANTS
 
Borrower shall do all of the following:
 
6.1             Government Compliance .  (a) Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect.  Borrower shall comply, and
 
 
 
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have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, the noncompliance with which would reasonably be expected to have a Material Adverse Effect.
 
(b)           Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Note Documents to which it is a party and the grant of a security interest to Agent and Purchasers in all of its property.  Borrower shall promptly notify Agent and each Purchaser of any such Governmental Approvals obtained by Borrower and, upon request of Agent or any Purchaser, provide copies of any such obtained Governmental Approvals to Agent or such Purchaser, as the case may be.
 
6.2             Financial Statements, Reports, Certificates .
 
(a)           Borrower shall provide Agent and each Purchaser with the following:
 
(i)  intentionally omitted;
 
(ii) intentionally omitted;
 
(iii) within thirty (30) days after the end of each month, monthly unaudited financial statements including year-to-date calculations, setting forth in each case in comparative form the figures for (A) such period set forth in the projections delivered pursuant to this Section 6.2(a)(vi) hereof, (B) the corresponding month of the previous fiscal year and (C) the corresponding portion of the previous fiscal year, all in reasonable detail;
 
(iv) within thirty (30) days after the end of each fiscal quarter of Borrower, a quarterly Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such fiscal quarter, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Agent or any Purchaser shall reasonably request, including, without limitation, a statement that at the end of such quarter there were no held checks;
 
(v) within sixty (60) days after the end of each fiscal year of Borrower, and as and when amended or updated in any material respect, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a quarterly basis), together with any related business forecasts used in the preparation of such annual financial projections;
 
(vi) within one hundred twenty (120) days following the end of Borrower's fiscal year, annual financial statements certified by, and with an unqualified opinion of J.H. Cohn LLP, or any other independent certified public accountants acceptable to Agent and each Purchaser;
 
(vii)  within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt;
 
(viii) a prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000) or more or have a Material Adverse Effect;
 
(ix)  promptly, and in any event no later than five (5) days following execution thereof, true, correct and complete copies of any agreement, instrument or document effecting an amendment, modification, supplement or waiver of any Senior Loan Document, the Intercompany Note, or any Debenture;
 
(x)  promptly, and in any event no longer than five (5) days after the date thereof, copies of all amendments, consents, waivers, forbearances, or modifications to and any other material notice or reports provided by or to any Note Party under or with respect to the Senior Debt (other than reports or notices identical to reports or notices provided pursuant to the terms hereof) or the Intercompany Note;
 
 
 
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(b)           For so long as Borrower is subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, Borrower shall provide Agent and each Purchaser, within five (5) days after filing, all reports on Form 10-K, 10-Q and 8-K filed with the SEC or a link thereto on Borrower’s or another website on the Internet, including the SEC’s EDGAR website.  Any materials filed with the SEC reports that otherwise satisfy the requirements of Section 6.2(a) shall be considered delivered for the purposes of that section when filed with the SEC.
 
(c)           Borrower shall provide Agent and each Purchaser with prompt written notice of (i) any material change in the composition of the Intellectual Property, (ii) the registration of any Copyright (including any subsequent ownership right of Borrower in or to any Copyright), Patent or Trademark not previously disclosed to Agent, (iii) Borrower’s knowledge of an event that materially adversely affects the value of the Intellectual Property, (iv) any pending or threatened (in writing) labor dispute, strike or walkout, or the expiration of any labor contract if any would have a Material Adverse Effect; (v) any default under or termination of a material contract which could reasonably be expected to have a Material Adverse Effect; (vi) Borrower’s knowledge of the existence of any Default or Event of Default; (vii) Borrower’s knowledge of any violation of any Applicable Law which could reasonably be expected to have a Material Adverse Effect; (viii) the discharge of or any withdrawal or resignation by Borrower's independent accountants; or (ix) Borrower’s knowledge of the occurrence of any “defaults” or “events of default” under any Senior Loan Documents, the Intercompany Note, or any Debenture.
 
6.3             Accounts Receivable .
 
(a)            Intentionally Omitted .
 
(b)            Intentionally Omitted .
 
(c)            Collection of Accounts .  Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing.  All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Agent or Senior Lender (as applicable) may specify, pursuant to a blocked account agreement in form and substance satisfactory to Agent in its sole discretion and in accordance with the Intercreditor Agreement.
 
(d)            Intentionally Omitted .
 
(e)            Verification .   Agent and each Purchaser may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Agent or such other name as Agent or any Purchaser may choose, provided that, prior to the occurrence of an Event of Default, any such verification shall be subject to prior written notice to Borrower.
 
(f)            No Liability .   Agent and each Purchaser shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Agent or any Purchaser be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account.  Nothing herein shall, however, relieve Agent or any Purchaser from liability for its own gross negligence or willful misconduct.
 
6.4             Remittance of Proceeds .  Deliver, in kind, all proceeds arising from the disposition of any Collateral to Senior Lender or Purchasers, as applicable in accordance with the Intercreditor Agreement, in the original form in which received by Borrower not later than the second Business Day after receipt by Borrower, to be applied to the Obligations (1) prior to an Event of Default, pursuant to the terms of Section 2.5(b) hereof, and (2) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided that , if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Purchasers the proceeds of the sale of surplus, worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of Two Hundred Thousand Dollars ($200,000) or less (for all such transactions in any fiscal year).  Borrower agrees that it will maintain all proceeds of Collateral in an account satisfactory to Purchasers.  Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.
 
 
 
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6.5             Taxes; Pensions; Withholding.   Timely file, and require each of its Subsidiaries to timely file, all required Tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state, national and local Taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any Taxes contested or otherwise permitted pursuant to the terms of Section 5.9 hereof, and shall deliver to Purchasers, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.
 
6.6             Access to Collateral; Books and Records.   At reasonable times, on two (2) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), each Purchaser, or their agents, shall have the right, up to two (2) times in any fiscal year (or more frequently, as each Purchaser shall determine necessary), to inspect the Collateral and the right to audit and copy Borrower’s Books.  The foregoing inspections and audits shall be at Borrower’s expense (not to exceed $1,000 so long as a Default or Event of Default shall not have occurred or be continuing) plus reasonable out-of-pocket expenses.
 
6.7             Insurance.   Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Required Purchasers may reasonably request.  Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Required Purchasers.  All property policies shall have a lender’s loss payable endorsement showing Agent as the sole lender loss payee and waive subrogation against Agent and shall provide that the insurer shall endeavor to give Agent at least thirty (30) days notice before canceling or declining to renew its policy.  All liability policies shall show, or have endorsements showing, Agent as an additional insured, and all such policies (or the loss payable and additional insured endorsements) shall provide that the insurer shall endeavor to give Agent at least thirty (30) days notice before canceling or declining to renew its policy.  At any Purchaser’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments.  Proceeds payable under any policy shall, at Required Purchasers’ option, following the occurrence and during the continuance of an Event of Default, be payable to either the Senior Lender on account of the Senior Debt, or Purchasers on account of the Obligations, as applicable in accordance with the Intercreditor Agreement.  If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Agent, Agent may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Agent deems prudent.
 
6.8           Operating Accounts.
 
(a)           Maintain its and its Subsidiaries’, if any, domestic depository, operating accounts and securities accounts with Senior Lender and Senior Lender’s affiliates (and upon payment in full of the Senior Debt, at financial institutions acceptable to Required Purchasers who have entered into Control Agreements in favor of Agent) with all excess domestic funds maintained at or invested through Senior Lender or an affiliate of Senior Lender (and upon payment in full of the Senior Debt, at financial institutions acceptable to Required Purchasers who have entered into Control Agreements in favor of Agent), which accounts shall represent at least one hundred percent (100%) of the dollar value of Borrower’s and Guarantor’s accounts at all financial institutions in the United States, and least sixty percent (60%) of the dollar value of Borrower’s and each Subsidiaries’ accounts at all financial institutions worldwide.  Any domestic Guarantor shall maintain all depository, operating and securities accounts with Senior Lender or an affiliate of Senior Lender (and upon payment in full of the Senior Debt, at financial institutions acceptable to Required Purchasers who have entered into Control Agreements in favor of Agent). Notwithstanding the foregoing, (A) EMEA shall be permitted to maintain its existing deposit accounts with (i) Standard Chartered Bank (the “ Standard Accounts ”), provided that the aggregate maximum balance of such Standard Accounts does not exceed Twenty Five Thousand Dollars ($25,000) at any time, and (ii) Commerzbank (the “ Commerzbank Accounts ”), provided that the aggregate maximum balance of such Commerzbank Accounts does not exceed One Million Dollars ($1,000,000) at any time; (B) no later than seventy-five (75) days after the Initial Closing Date (or such later date as Required Purchasers shall determine, in their sole but reasonable discretion), all accounts held by any of PEIRL, PEUSA, PEINC, and PELTD maintained at financial institutions other that Senior Lender or Senior
 
 
 
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Lender’s Affiliates shall have been (i) closed, with all proceeds in such transferred to a Collateral Account at Senior Lender or one of Senior Lender’s Affiliates; or (ii) subject to an account control agreement in favor of Agent and/or Senior Lender in accordance with the Intercreditor Agreement, in form and substance acceptable to Agent, in its reasonable discretion; and (C) no later than seventy-five (75) days after the Restatement Date (or such later date as Required Purchasers shall determine, in their sole but reasonable discretion), all accounts held by nLayer maintained at financial institutions other that Senior Lender or Senior Lender’s Affiliates shall have been (i) closed, with all proceeds in such transferred to a Collateral Account at Senior Lender or one of Senior Lender’s Affiliates; or (ii) subject to an account control agreement in favor of Agent and/or Senior Lender in accordance with the Intercreditor Agreement, in form and substance acceptable to Agent, in its reasonable discretion.
 
(b)           Provide Purchasers five (5) days prior-written notice before establishing any Collateral Account at or with any bank or financial institution other than Senior Lender or Senior Lender’s Affiliates.  For each Collateral Account that Borrower at any time maintains in the United States or the United Kingdom, Borrower shall cause the applicable bank or financial institution (other than Senior Lender) at or with which any such Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Agent’s and Purchasers’ Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Agent.  The provisions of the previous sentence shall not apply to the Standard Accounts, the Commerzbank Accounts, deposit accounts exclusively used for payroll, payroll Taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Purchasers by Borrower as such.
 
6.9           Financial Covenants.
 
Maintain at all times, to be tested and certified as of the last day of each month, unless otherwise noted, on a consolidated basis, unless otherwise noted:
 
 (a)            Liquidity .  Borrower shall maintain, at all times, unrestricted cash of at least Two Million and Five Hundred Thousand Dollars ($2,500,000).
 
(b)            Fixed Charge Coverage Ratio .  On a quarterly basis, as of the last day of each fiscal quarter of Borrower, measured on a trailing three month basis, Borrower shall maintain a ratio of (i) Cash Basis EBITDA for such period divided by (ii) Fixed Charges of at least 1.15:1.00.
 
(c)            Leverage Ratio .   On a quarterly basis, as of the last day of each fiscal quarter of Borrower set forth in the following table, measured on a trailing twelve month basis, Borrower shall maintain a Leverage Ratio for such period of at least the minimum ratio set forth in the table below opposite such date:
 
 
Date
Leverage Ratio
 
For the 12 month period ending June 30, 2012, through the 12 month period ending March 31, 2013
 
 
3.50:1.00
 
For the 12 month period ending June 30, 2013, and for the 12 month period ending September 30, 2013
 
 
3.25:1.00
 
   For the 12 month period ending December 31, 2013, and for the 12 month period ending each fiscal quarter thereafter
 
 
3.00:1.00
 
(d)     Minimum Adjusted EBITDA . As of the last day of each fiscal quarter of Borrower set forth in the following table, Borrower shall achieve Adjusted EBITDA of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:
 

Applicable Period
Applicable Amount
For the 12 month period
ending March 31, 2012
$8,700,000
 
 
 
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6.10             Protection and Registration of Intellectual Property Rights .
 
(a)           (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Purchasers in writing of material infringements of its Intellectual Property known to Borrower; and (iii) not allow any Intellectual Property material to Borrower’s business, taken as a whole, to be abandoned, forfeited or dedicated to the public without Required Purchasers’ written consent.
 
(b)           If Borrower (i) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for any Patent or the registration of any Trademark, then Borrower shall promptly provide written notice thereof to Purchasers and shall execute such intellectual property security agreements and other documents and take such other actions as Required Purchasers shall request in their good faith business judgment to perfect and maintain a first priority (subject only to Liens securing the Senior Debt) perfected security interest in favor of Agent and Purchasers in such property.  If Borrower decides to register any Copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Purchasers with at least fifteen (15) days prior written notice of Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Required Purchasers may request in their good faith business judgment to perfect and maintain a first priority (subject only to Liens securing the Senior Debt) perfected security interest in favor of Agent and Purchasers in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office.  Borrower shall promptly provide to Purchasers copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement necessary for Agent and Purchasers to perfect and maintain a first priority (subject only to Liens securing the Senior Debt) security interest in such property.
 
(c)           Provide written notice to Purchasers within ten (10) days of entering or becoming bound by any material Restricted License (other than over-the-counter software that is commercially available to the public).  Borrower shall take such steps as Required Purchasers reasonably requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Agent and Purchasers to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Agent and Purchasers to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Agent’s and each Purchaser’s rights and remedies under this Agreement and the other Note Documents.
 
6.11             Litigation Cooperation.   From the date hereof and continuing through the termination of this Agreement, make available to Purchasers, without expense to any Purchaser, Borrower and its officers, employees and agents and Borrower’s Books, to the extent that Required Purchasers may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Agent or any Purchaser with respect to any Collateral or relating to Borrower.
 
6.12             Creation/Acquisition of Subsidiaries.   Notwithstanding and without limiting the negative covenant contained in Section 7.3 hereof, in the event Borrower or any Subsidiary creates or acquires any Subsidiary, Borrower and such Subsidiary shall notify Purchasers not less than ten (10) Business Days prior to the creation or acquisition of such new Subsidiary and cause each such Subsidiary to, in Required Purchaser’s sole discretion, become a co-Borrower or Guarantor under the Note Documents and grant a continuing pledge and security interest in and to the assets of such Subsidiary (the description of such assets to be substantially the same as the Collateral described on Exhibit A hereto); and Borrower shall grant and pledge to Agent, for the benefit of the Secured Parties, a perfected security interest in the stock, units or other evidence of ownership of each Subsidiary.
 
6.13             Further Assurances.   Execute any further instruments and take further action as Required Purchasers reasonably requests to perfect or continue Agent’s and Purchasers’ Lien in the Collateral or to effect the purposes of this Agreement and/or any of the other Note Documents.  Borrower shall deliver to Required Purchasers, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental
 
 
 
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Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.
 
6.14             Post-Closing Requirements.  On or before May 11, 2012 (or such later date as Required Purchasers shall determine, in their sole discretion, Borrower shall deliver to Agent updated evidence of insurance for each Borrower and each Guarantor, in each case acceptable to Required Purchasers, in their reasonable discretion.
 
6.15             Observer Rights .
 
(a)           GTTI (and (i) EMEA, in the event EMEA commences regularly scheduled board meetings, and (ii) any of GTTI’s other Subsidiaries, to the extent any outside directors become members of such Board of Directors or similar governing body) shall allow a representative designated by Agent to attend in a non-voting observer capacity all meetings of the Board of Directors of GTTI (and EMEA and any of GTTI’s other Subsidiaries, if applicable) (each, a “ Board Observer ”); provided , however , that such party reserves the right to exclude the Board Observer from access to any material or meeting or portion thereof if  such Note Party reasonably believes upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege between such Note Party and its counsel, or if such potion of a meeting is an executive session limited solely to members of the Board of Directors and its legal counsel. Subject to the foregoing, GTTI, or EMEA or any of GTTI’s other Subsidiaries, if applicable, shall (i) give each Purchaser notice of all such meetings, at the same time as furnished to its respective directors, (ii) provide to each Purchaser all notices, documents and information furnished to the directors of each entity, whether at or in anticipation of a meeting, an action by written consent or otherwise, at the same time furnished to such directors (including with respect to meetings of an executive session in which the Board Observer is or was not in attendance), (iii) notify each Purchaser and permit each such Board Observer to participate by telephone in, emergency meetings of each such Board of Directors, or (iv) provide each Purchaser copies of the minutes of all such meetings at the time such minutes are furnished to the members of the applicable Board of Directors (including with respect to meetings of an executive session in which the Board Observer was not in attendance).  Borrower shall reimburse all reasonable out-of-pocket expenses incurred by the Board Observer in connection with attending any such meetings.
 
(b)           Board Observer will agree in writing, to hold in confidence and trust and to act in a fiduciary manner with respect to all information provided to the Board Observer in connection with Board Observer’s rights except to the extent in the public domain at the time of such provision, subsequently released into the public domain (through no fault of Board Observer), or otherwise required by law and any other regulatory process to which Board Observer is subject; provided that Board Observer may disclose information of a non-technical nature, including financial information, (i) to Board Observer’s partners, employees, members and affiliates, or (ii) to the extent necessary to assert any right or defend against any claim arising as a result of the transactions contemplated by this Agreement.  Notwithstanding the foregoing, except for summary financial information about any Note Party which Board Observer delivers to Board Observer’s partners, members and affiliates pursuant to Board Observer’s regular reporting practices, Board Observer will only disclose information provided to Board Observer in connection with Board Observers rights under this Agreement to those of Board Observer’s partners, members and affiliates who have been informed as to the confidential nature of such information and the terms of this Agreement.
 
(c)           The rights described in this Section shall continue until (i) Purchasers (and any of their respective Affiliates) hold Original Warrants, Additional Warrants or capital stock in an amount equal to less than 2% of the fully diluted shares of GTTI, and (ii) all Notes have been paid in full in cash.  The confidentiality provision of this Section will survive any such termination.
 
6.16             Senior Credit Enhancements .  If the Senior Lender receives any additional guaranty, or any other written credit enhancement after the Initial Closing Date, Borrower shall cause the same, as modified to preserve any cushions that may exist, to be simultaneously granted to Agent and Purchasers unless expressly waived by Required Purchasers, subject to the terms of the Intercreditor Agreement.
 
 
7
NEGATIVE COVENANTS
 
Borrower shall not and shall not permit any Subsidiary to do any of the following without Required Purchasers’ prior written consent:
 
 
 
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7.1             Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn out or obsolete Equipment; (c) non-exclusive licenses and similar arrangements for the use of property of Borrower and/or its Subsidiaries in the ordinary course of business; and (d) in connection with Permitted Liens and Permitted Investments.
 
7.2             Changes in Business, Management, Ownership, or Business Locations.   (a) Engage in or permit any of its Subsidiaries, if any, to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i) have a change in both of GTTI’s Chief Executive Officer and Chief Financial Officer; or (ii) enter into any transaction or series of related transactions the result of which constitutes a Change of Control.
 
Borrower shall not, without at least thirty (30) days prior written notice to Purchasers: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Twenty-Five Thousand Dollars ($25,000) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization.  If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000) to a bailee, and Agent and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Required Purchasers, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Required Purchasers in their reasonable discretion.
 
7.3             Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock/shares or property of another Person, other than the nLayer Acquisition and Permitted Acquisitions.  A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.
 
7.4             Indebtedness.   Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.
 
7.5             Encumbrance.   Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority (subject only to Liens securing the Senior Debt) security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Agent and Purchasers) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein.
 
7.6             Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.
 
7.7             Distributions; Investments.   (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock/shares provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common stock/shares; (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock/share repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of One Hundred Thousand Dollars ($100,000) per fiscal year, and (iv) Borrower shall cause and direct Intercompany Borrowers to make regularly scheduled interest payments on the Secured Intercompany Note and otherwise comply therewith, in each case in accordance with the terms thereof; or (b) directly or indirectly make any Investment (including, without limitation, any additional Investment in any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.
 
 
 
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7.8             Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are (i) in the ordinary course of Borrower’s business, (ii) upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person and (iii) to the extent any such transaction or series of related transactions involves aggregate consideration greater than $200,000, disclosed in writing to Purchasers no later than promptly following the consummation thereof.
 
7.9             Subordinated Debt; nLayer Earnout.   (a) Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt; provided , however , that no such payment on any Subordinated Debt shall be made unless (i) at the time of any such payment and after giving effect thereto, no Default or Event of Default shall then have occurred or shall result therefrom, (ii) immediately prior to and after giving effect to such payment, Borrower shall be in pro forma compliance with the Financial Covenants set forth in Section 6.9, and (iii) solely with respect to any payment on any Subordinated Debt in excess of $10,000, Borrower has delivered to Purchasers written evidence, in reasonable form and detail, that such payment will be in compliance with all requirements of this Section 7.9 at the time of such payment; (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Purchasers; (c) make or permit any nLayer Earnout Payment, except under the terms of the Acquisition Agreement; provided , however , that no such nLayer Earnout Payment shall be made unless (i) at the time of any such payment and after giving effect thereto, no Default or Event of Default shall then have occurred or shall result therefrom, (ii) immediately prior to and after giving effect to such payment, Borrower shall be in pro forma compliance with the Financial Covenants set forth in Section 6.9, and (iii) Borrower has delivered to Purchasers written evidence, in reasonable form and detail, that such payment will be in compliance with all requirements of this Section 7.9 at the time of such payment, or (d) amend any provision in any document relating to nLayer Earnout Payments which would increase the amount thereof or otherwise materially and adversely affect the Purchasers.
 
7.10             Compliance.   Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Notes for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or non-exempt Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act (or, in the case of EMEA and PELTD, with all employment legislation in force in England and Wales (including, without limitation, the Employment Rights Act 1996) or violate any other law or regulation, if the violation could reasonably be expected to have a Material Adverse Effect, or permit any of its Subsidiaries to do so; (i) fail to comply in all material respects with and (ii) fail to procure all material licenses, permits, approvals and consents required by any applicable federal, state or local law, rule or regulation (including, without limitation, rules and regulations promulgated by the Federal Communications Commission and any similar state agency) for the operation of Borrower’s business in each jurisdiction wherein it is now conducted; fail to comply with any Securities Laws; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency; conduct, deal in or engage in or permit any Affiliate or agent of Borrower within its control to conduct, deal in or engage in any of the following activities: (i) conduct any business or engage in any transaction or dealing with any person blocked pursuant to Executive Order No. 13224 (“ Blocked Person ”), including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224, or (iii) engage in on conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or the USA Patriot Act.  Borrower shall deliver to Purchasers any certification or other evidence requested from time to time by Agent or any Purchaser, in its sole discretion, confirming Borrower's compliance with this Section 7.10.
 
7.11             Subsidiary Limitations .  Cash and Cash Equivalents held by Subsidiaries (other than Intercompany Borrowers) that are not a Note Party shall not at any time exceed Two Hundred Thousand Dollars ($200,000) in the aggregate for all such Subsidiaries.
 
 
 
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7.12             Amendments to Senior Loan Documents.   Agree to any modification to or amendment of, or consent to or obtain any waiver or forbearance with respect to, any Senior Loan Document unless expressly permitted by the terms of the Intercreditor Agreement.
 
7.13             Acquisition of Debt .  Purchase, redeem, prepay, tender for or otherwise acquire, directly or indirectly, any of the outstanding Notes or Senior Debt except upon the repurchase or prepayment of the Notes in accordance with the other terms of this Agreement, or the refinancing, repurchase or repayment of the Senior Debt in accordance with the Senior Loan Documents or the Intercreditor Agreement.  Borrower will promptly cancel all Notes or Senior Debt acquired by it or any of its Subsidiaries or Affiliates pursuant to any purchase, redemption, prepayment or tender for the Notes or Senior Debt pursuant to any provision of this Agreement or otherwise and no Notes or Senior Debt may be issued in substitution or exchange for any such Notes or Senior Debt.  For the avoidance of doubt, this Section 7.12 is not intended and shall not prevent Borrower from making (a) regularly scheduled payments of principal and interest pursuant to the Senior Loan Agreement, or (b) any prepayments of the Senior Debt not otherwise prohibited by this Agreement or the Intercreditor Agreement.
 
7.14             Antilayering .  Notwithstanding the foregoing, create or incur any Indebtedness (other than the Obligations) which is subordinated or junior in right of payment to any other Indebtedness of the Note Parties, unless such Indebtedness is also subordinated or junior in right of payment, in the same manner and to the same extent, to the Obligations.
 
 
8
EVENTS OF DEFAULT
 
Any one of the following shall constitute an event of default (an “ Event of Default ”) under this Agreement:
 
8.1             Payment Default.   Borrower fails to (a) make any payment of principal or interest on any Note on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable.  During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default;
 
8.2           Covenant Default.
 
(a)           Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.15 or 6.16 or violates any covenant in Section 7; or
 
(b)           Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any of the other Note Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided , however , that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Notes shall be purchased during such cure period).  Cure periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in clause (a) above;
 
8.3             Material Adverse Change.   A Material Adverse Change occurs;
 
8.4           Attachment; Levy; Restraint on Business.
 
(a)            (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary) on deposit or otherwise maintained with Agent, any Purchaser or any Affiliate thereof, or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any government agency, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided , however , no Notes shall be purchased during any ten (10) day cure period; or
 
 
 
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(b)           (i) any material portion of Borrower or any of its Subsidiaries’ assets are attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower or any of its Subsidiaries from conducting any material part of its business;
 
8.5             Insolvency.   (a) Borrower or any of its Subsidiaries are unable to pay their debts (including trade debts) as they become due or, taken as a whole, otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and not dismissed or stayed within thirty (30) days (but no Notes shall be purchased while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);
 
8.6             Other Agreements.   There is, under any agreement to which Borrower or any of its Subsidiaries are a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of the Dollar Equivalent of Two Hundred Thousand Dollars ($200,000); or (b) any default by Borrower or any of its Subsidiaries, the result of which could have a Material Adverse Effect;
 
8.7             Judgments.   One or more final judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least the Dollar Equivalent of Two Hundred Thousand Dollars ($200,000) shall be rendered against Borrower or any of its Subsidiaries and the same are not, within thirty (30) days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Notes will be purchased prior to the discharge, stay, or bonding of such judgment, order, or decree);
 
8.8             Misrepresentations.   Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Note Document or in any writing delivered to Agent or any Purchaser or to induce Agent or any Purchaser to enter into this Agreement or any other Note Document, and such representation, warranty, or other statement is incorrect in any material respect when made;
 
8.9             Subordinated Debt.   Any default or breach occurs under any agreement between either Borrower and any creditor of such Borrower that signed a subordination agreement with Agent, or any creditor that has signed a subordination agreement with Agent breaches any terms of the subordination agreement, in each case, that is not covered within the cure periods set forth for any such breach therein, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement;
 
8.10             Guaranty.   (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor, or (d) the liquidation, winding up, or termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Agent’s Lien in the collateral provided by any Guarantor or in the value of such collateral or (ii) a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations occurs with respect to any Guarantor;
 
8.11             Governmental Approvals.   Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal has, or could reasonably be expected to have, a Material Adverse Change;
 
8.12             Change of Control.   A Change of Control occurs; or
 
8.13             Cross-Default .  Any default or event of default occurs under the Secured Intercompany Note or any Debenture.
 
 
9
PURCHASER’S RIGHTS AND REMEDIES
 
 
 
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9.1             Rights and Remedies.   While an Event of Default occurs and continues Agent may (at the direction of the Required Purchasers), without notice or demand, do any or all of the following:
 
(a)           declare all Obligations immediately due and payable together with a Prepayment Premium (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Agent); provided that, no Prepayment Premium shall apply pursuant to this clause (a) if the only Event of Default giving rise to this clause (a) is a Change of Control as a result of a tender offer by a Person who is not an Affiliate of Borrower on the Initial Closing Date;
 
(b)           instruct Purchasers to stop purchasing Notes under this Agreement or under any other agreement between Borrower, Agent and Purchasers;
 
(c)           intentionally omitted;
 
(d)           intentionally omitted;
 
(e)           settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Agent considers advisable, notify any Person owing Borrower money of Agent’s security interest in such funds, and verify the amount of such account;
 
(f)           make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral.  Borrower shall assemble the Collateral if Agent requests and make it available as Agent designates.  Agent may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Agent a license to enter and occupy any of its premises, without charge, to exercise any of Agent’s rights or remedies;
 
(g)           apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Agent or any Purchaser owing to or for the credit or the account of Borrower;
 
(h)           ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral.  Agent is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Agent’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Agent’s benefit;
 
(i)           place a “hold” on any account maintained with Agent or Senior Lender and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;
 
(j)           demand and receive possession of Borrower’s Books;
 
(k)           exercise all rights and remedies available to Agent under the Note Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof); and
 
(l)           enforce each Debenture in accordance with its terms.
 
9.2             Power of Attorney.   Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to:  (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Agent or a third party as the Code
 
 
 
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permits.  Borrower hereby appoints Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Agent is under no further obligation to purchase Notes hereunder and do all acts and things necessary or expedient, as determined solely and exclusively by Agent, to protect or preserve, Agent’s rights and remedies under the Note Documents, as directed by Agent.  Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, being coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed.
 
9.3             Protective Payments.   If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Note Document, Agent or any Purchaser may obtain such insurance or make such payment, and all amounts so paid by Agent or such Purchaser are Costs and Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral.  Agent and Purchasers will make reasonable efforts to provide Borrower with notice of Agent or any such Purchaser obtaining such insurance at the time it is obtained or within a reasonable time thereafter.  No payments by Agent or any Purchaser are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default.
 
9.4             Application of Payments and Proceeds. Unless an Event of Default has occurred and is continuing, Agent and Purchasers may apply any funds in its possession, whether from Borrower account balances, payments, or proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, first, to Costs and Expenses, including without limitation, the reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Agent or any Purchaser in the exercise of its rights under this Agreement; second, to the interest due upon any of the Obligations; and third, to the principal of the Obligations and any applicable fees and other charges, in such order as Agent shall determine in its sole discretion.  Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Agent and Purchasers for any deficiency.  If an Event of Default has occurred and is continuing, Agent may apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Agent shall determine in its sole discretion.  Any surplus shall be paid to Borrower or to other Persons legally entitled thereto; Borrower shall remain liable to Agent and Purchasers for any deficiency.  If Agent, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Agent shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Agent of cash therefor.
 
9.5             Agent’s Liability for Collateral. So long as Agent complies with reasonable practices regarding the safekeeping of the Collateral in the possession or under the control of Agent, Agent shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person.  Borrower bears all risk of loss, damage or destruction of the Collateral.
 
9.6             No Waiver; Remedies Cumulative.   Agent’s and each Purchaser’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Note Document shall not waive, affect, or diminish any right of Agent and each Purchaser thereafter to demand strict performance and compliance herewith or therewith.  No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given.  Agent’s and each Purchaser’s rights and remedies under this Agreement and the other Note Documents are cumulative.  Agent and each Purchaser has all rights and remedies provided under the Code, by law, or in equity.  Agent’s and each Purchaser’s exercise of one right or remedy is not an election and shall not preclude Agent or any Purchaser from exercising any other right or remedy under this Agreement or any other Note Document or other right or remedy available at law or in equity, and Agent’s and each Purchaser’s waiver of any Event of Default is not a continuing waiver.  Agent’s and each Purchaser’s delay in exercising any remedy is not a waiver, election, or acquiescence.
 
9.7             Demand Waiver.   Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Agent on which Borrower is liable.
 
 
10
NOTICES
 
 
 
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All notices, consents, requests, approvals, demands, or other communication (collectively, “ Communication ”), (other than any notice, demand or other communication under the Debentures), by any party to this Agreement or any other Note Document must be in writing and be delivered or sent by facsimile at the addresses or facsimile numbers listed below.  Agent, any Purchaser or Borrower may change its notice address by giving the other party written notice thereof.  Each such Communication shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission (with such facsimile promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 10); (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below.  Requests for Additional Takedowns must be in writing and may be in the form of electronic mail, delivered to Purchasers by Borrower at the e-mail address of Purchasers provided below and shall be deemed to have been validly served, given, or delivered when sent (with such electronic mail promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 10).  Agent or Borrower may change its address, facsimile number, or electronic mail address by giving the other party written notice thereof in accordance with the terms of this Section 10.
 
If to Borrower:     c/o Global Telecom and Technology, Inc.
              8484 Westpark Drive, Suite 720
          McLean, Virginia 22102
Attn:  Richard D. Calder
Fax:  (703) 442-5595
Email: rick.calder@gt-t.net
 
with a copy to:      Kelley Drye & Warren, LLP
 
Washington Harbour, Suite 400
3050 K Street NW
Washington, D.C. 20007
Attn: Brad Mutschelknaus, Esquire
Fax: (202) 342-8451
Email: bmutschelknaus@kelleydrye.com
 
If to Agent:            BIA Digital Partners SBIC II LP
15120 Enterprise Court
Chantilly, Virginia 20151
Attn: Mr. Lloyd Sams
Fax:  (703) 227-9645
Email:  lsams@bia.com
 
with a copy to:      Proskauer Rose LLP
One International Place
Boston, Massachusetts 02110
Attn:  Steven Ellis, Esquire
Fax: (617) 526-9899
Email: sellis@proskauer.com
 
If to Purchasers:   BIA Digital Partners SBIC II LP,
at Agent address above.
 
and:                        Plexus Fund II, L.P.
    200 Providence Road, Suite 210
    Charlotte, North Carolina  28207
    Attn: Mr. Bob Anders
    Fax: 704-927-6255
    Email: banders@plexuscap.com

 
 
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11
CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
 
New York law governs the Note Documents regard to principles of conflicts of law.  Borrower, Agent and each Purchaser each submit to the exclusive jurisdiction of the State and Federal courts in the County of New York, State of New York; provided , however , that nothing in this Agreement shall be deemed to operate to preclude Agent or any Purchaser from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Agent or any Purchaser.  Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court.  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, AGENT SHALL SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE PURCHASER’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.
 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, EACH PURCHASER AND AGENT EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE NOTE DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 
12
GENERAL PROVISIONS
 
12.1             Termination.   Upon payment in full of the Obligations (other than inchoate liabilities), Agent shall release its liens and security interests in the Collateral and all rights therein shall revert to Borrower.
 
12.2             Successors and Assigns.   This Agreement binds and is for the benefit of the successors and permitted assigns of each party.  Borrower may not assign this Agreement or any rights, benefits or obligations under it or under any of the other Note Documents without Required Purchasers’ prior written consent (which may be granted or withheld in Required Purchasers’ discretion).  Each Purchaser has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, such Purchaser’s obligations, rights, and benefits under this Agreement and the other Note Documents (each, a “Note Transfer”); provided that, in absence of a Default or Event of Default by Borrower, any such Note Transfer shall require prior written consent of Borrower, not to be unreasonably withhold, delayed or conditioned, unless such Note Transfer is to another Purchaser or an Affiliate of any Purchaser; provided further that, as between BIA and Plexus (and their respective Affiliates), prior to effectuating any such Note Transfer to a third party other than BIA or Plexus (or their respective Affiliates), the Purchaser proposing to transfer its interests herein (the “Assignor”) shall offer the other Purchaser (the “Offeree”) a right to purchase some or all of such interests on terms and conditions substantially similar to the terms and conditions of the offer that the Assignor is prepared to accept from such third party with respect to such interests, which offer may be accepted or rejected by the Offeree in its sole discretion within ten (10) Business Days of receipt of any such offer.  Notwithstanding the foregoing, no purchaser, transferee, assignee, holder, or participant of, or in, any part of, or any interest in, any of the obligations, rights, or benefits under this Agreement and the other Note Documents shall be entitled to the benefits of Section 2.6 or Section 2.7 unless it has complied with such Purchaser’s obligations under those sections and Section 2.9.
 
12.3             Indemnification.   Borrower agrees to indemnify, defend and hold Agent, each Purchaser, and their respective directors, officers, employees, agents, or attorneys (each, an “ Indemnified Person ”) harmless against:  (a) all obligations, demands, claims, and liabilities (collectively, “ Claims ”) asserted by any other party in connection with the transactions contemplated by the Note Documents; and (b) all losses or expenses (including Costs and Expenses)  incurred, or paid by such Indemnified Person as a result of, following from, consequential to transactions between Agent, each Purchaser and Borrower contemplated by the Note Documents (including reasonable attorneys’ fees and expenses), except for Claims and/or losses caused by such Indemnified Person’s gross negligence or willful misconduct.
 
 
 
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12.4             Time of Essence.   Time is of the essence for the performance of all Obligations in this Agreement.
 
12.5             Correction of Note Documents.   Agent may correct patent errors and fill in any blanks in the Note Documents consistent with the agreement of the parties so long as Agent provides Borrower with written notice of such correction and allows Borrower at least ten (10) days to object to such correction.  In the event of such objection, such correction shall not be made except by an amendment signed by both Agent, each Purchaser and Borrower.
 
12.6             Severability of Provisions.   Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.
 
12.7             Amendments in Writing; Waiver; Integration.   No purported amendment or modification of any Note Document, or waiver, discharge or termination of any obligation under any Note Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought.  Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Note Document.  Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver.  The Note Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Note Documents merge into the Note Documents.
 
12.8             Counterparts.   This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.
 
12.9             Survival.   All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full and satisfied.  The obligation of Borrower in Section 12.3 to indemnify Agent and each Purchaser shall survive until the statute of limitations with respect to such claim or cause of action shall have run.
 
12.10             Confidentiality.   In handling any confidential information, Agent and each Purchaser shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Agent’s and each Purchaser’s respective Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Agent and each Purchaser, collectively, “ Purchaser Entities ”) in connection with their business with Borrower; (b) to prospective transferees or purchasers of any Notes or commitments to purchase Notes ( provided , however , Agent and each Purchaser shall use commercially reasonable efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Agent’s and each Purchaser’s regulators or as otherwise required in connection with Agent’s examination or audit; (e) as Agent or any Purchaser considers appropriate in exercising remedies under the Note Documents; and (f) to third-party service providers of Agent or any Purchaser so long as such service providers have executed a confidentiality agreement with Agent or such Purchaser, as applicable, with terms no less restrictive than those contained herein.  Confidential information does not include information that is either: (i) in the public domain or in Agent’s or any Purchaser’s possession when disclosed to such Person, or becomes part of the public domain after disclosure to such Person other than as a result of a breach by such Person or its Affiliates of their confidentiality obligations hereunder; or (ii) disclosed to Agent or any Purchaser by a third party if such Person does not know that the third party is prohibited from disclosing the information.
 
Purchaser Entities may use the confidential information for reporting purposes and the development and distribution of databases and market analyses so long as such confidential information is aggregated and anonymized prior to distribution, unless otherwise expressly permitted by Borrower.  The provisions of the immediately preceding sentence shall survive the termination of this Agreement.
 
12.11             Attorneys’ Fees, Costs and Expenses.   In any action or proceeding between Borrower and Purchaser arising out of or relating to the Note Documents, Agent and each Purchaser shall be entitled to recover its
 
 
 
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reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.
 
12.12             Right of Set Off.    Borrower hereby grants to Agent (for the benefit of the Secured Parties) and each Purchaser, a lien, security interest and right of set off as security for all Obligations to Agent and the Purchasers, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Agent or any entity under the control of Agent (including an Agent subsidiary) or in transit to any of them.  At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Agent and each Purchaser may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
 
12.13             Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Note Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
 
12.14             Captions.   The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
 
12.15             Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement.  In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.
 
12.16             Relationship.   The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement.  The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.
 
12.17             Third Parties.   Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any Persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any Person not an express party to this Agreement; or (c) give any Person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.
 
12.18             Borrower Liability.   Each Borrower hereby appoints the other as agent for the other for all purposes hereunder, including with respect to the purchase of Notes hereunder.  Each Borrower hereunder shall be jointly and severally obligated to repay all Notes purchased hereunder, regardless of which Borrower actually receives proceeds of said Notes, as if each Borrower hereunder directly received proceeds of all Notes.  Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law,   and (b) any right to require Agent or any Purchaser to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy.  Agent and each Purchaser may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any other Borrower’s liability.  Notwithstanding any other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Agent and each Purchaser under this Agreement) to seek contribution, indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise.  Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void.  If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such
 
 
 
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payment in trust for Agent (for the benefit of the Purchasers) and such payment shall be promptly delivered to Purchasers for application to the Obligations, whether matured or unmatured.
 
12.19       Intercreditor; Subordination.
 
(a)           Anything herein to the contrary notwithstanding, the liens and security interests securing the Obligations, the exercise of any right or remedy with respect hereto, and certain of the rights of Agent and each Purchaser hereof are subject to the provisions of the Intercreditor Agreement.  In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control;
 
(b)           Notwithstanding anything herein to the contrary, it is the understanding of the parties that the Liens with respect to the Collateral granted pursuant to this Agreement and the other Note Documents shall, prior to the Discharge of Senior Priority Obligations (as defined in the Intercreditor Agreement), be junior and subordinate (pursuant to the terms of the Intercreditor Agreement) in all respects to all Liens with respect to the Collateral securing any Senior Debt.
 
12.20         The Agent .
 
12.20.1      Appointment .  Each Purchaser hereby irrevocably designates and appoints the Agent as an agent of such Purchaser under this Agreement and the other Note Documents.  Each Purchaser irrevocably authorizes the Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Note Documents and to exercise such powers and perform such duties as are delegated to the Agent by the terms of this Agreement and the other Note Documents, together with such actions and powers as are reasonably incidental thereto.  Except as expressly set forth in Section 12.20.6, the provisions of this Section 12.20 are solely for the benefit of the Agent and the Purchasers, and no Note Party shall have rights as a third party beneficiary of any such provisions.
 
12.20.2      Agent in its Individual Capacity .  Each person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Purchaser as any other Purchaser and may exercise the same as though it were not the Agent, and such person and its Affiliates may accept deposits from, lend money to, act as financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, any Borrower or Affiliate thereof as if it were not the Agent hereunder and without duty to account therefor to the Purchasers.
 
12.20.3      Exculpatory Provisions .  The Agent shall not have any duties or obligations except those expressly set forth in the Note Documents.  Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Note Documents that the Agent is required to exercise in writing by the Required Purchasers; provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Note Documents or applicable legal requirements, and (c) except as expressly set forth in the Note Documents, the Agent shall not have any duty to disclose or shall be liable for the failure to disclose, any information relating to any Note Party or any Affiliates thereof that is communicated to or obtained by the person serving as the Agent or any of its Affiliates in any capacity.  The Agent shall not be liable to Purchasers for any action taken or not taken by it with the consent or at the request of the Required Purchasers.  The Agent shall not be deemed to have knowledge of any Default unless and until written notice thereof is given to the Agent by Borrower or a Purchaser, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Note Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Note Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Note Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 3 or elsewhere in any Note Document other than to confirm receipt of items required to be delivered to the Agent.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.
 
 
 
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12.20.4    Reliance by Agent .  The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent, or otherwise authenticated by a proper person.  The Agent also may rely upon any statement made to it orally and believed by it to be made by a proper person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the purchasing of the Notes, that by its terms must be fulfilled to the satisfaction of a Purchaser, the Agent may presume that such condition is satisfactory to such Purchaser unless the Agent shall have received written notice to the contrary from such Purchaser prior to the purchase of the Note.  The Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other advisors selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or advisors.
 
12.20.5 Delegation of Duties .  The Agent may perform any and all of its duties and exercise its rights and powers by or through, or delegate any and all such rights and powers to, any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Affiliates of the Agent and any such sub-agent, and shall apply, without limiting the foregoing, to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Agent.
 
12.20.6    Successor Agent .  The Agent may resign as such at any time upon at least 30 days’ prior notice to the Purchasers and Borrower.  Upon any such resignation, the Required Purchasers shall have the right, in consultation with Borrower, to appoint a successor Agent from among the Purchasers.  If no successor shall have been so appointed by the Required Purchasers and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Purchasers, appoint a successor Agent, which successor shall be a commercial banking institution organized under the laws of the United States (or any State thereof) or a United States branch or agency of a commercial banking institution, in each case, having combined capital and surplus of at least $500,000,000; provided that if such retiring Agent is unable to find a commercial banking institution that is willing to accept such appointment and which meets the qualifications set forth above, the retiring Agent’s resignation shall nevertheless thereupon become effective and the retiring (or retired) Agent shall be discharged from its duties and obligations under the Note Documents (except that in the case of any Collateral held by Agent on behalf of the Purchasers under the Note Documents, the retiring Agent shall continue to hold such Collateral until such time as a successor agent is appointed), and the Purchasers shall assume and perform all of the duties of the Agent under the Note Documents until such time, if any, as the Required Purchasers appoint a successor Agent.  Upon the acceptance of its appointment as the Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring (or retired) Agent shall be discharged from its duties and obligations under the Note Documents.  After the Agent’s resignation hereunder, the provisions of this Section 12.20, Section 11, Section 12.3, and Section 12.12 shall continue in effect for the benefit of the retiring Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.
 
12.20.7    Non-Reliance on Agent and Other Purchasers .  Each Purchaser acknowledges that it has, independently and without reliance upon Agent or any other Purchaser or any of their respective Affiliates and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Purchaser further represents and warrants that it has reviewed each document made available to it in connection with this Agreement and has acknowledged and accepted the terms and conditions applicable to the recipients thereof.  Each Purchaser also acknowledges that it will, independently and without reliance upon the Agent or any other Purchaser or any of their respective Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Note Document or related agreement or any document furnished hereunder or thereunder.
 
12.20.8     Indemnification .  The Purchasers severally agree to indemnify the Agent in its capacity as such and each of its Related Persons (to the extent not reimbursed by a Note Party and without limiting the obligation of the Note Parties to do so), ratably according to their respective outstanding Notes in effect on the date on which indemnification is sought under this Section 12.20.8 (or, if indemnification is sought after the date upon which the Notes shall have been paid in full, ratably in accordance with such outstanding Notes as in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, fines, penalties, actions, claims,
 
 
 
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suits, litigations, investigations, inquiries or proceedings, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Notes) be imposed on, incurred by or asserted against the Agent or Related Person in any way relating to or arising out of, this Agreement, any of the other Note Documents or any documents contemplated by or referred to herein or therein, or any of the other transactions contemplated hereby or thereby or any action taken or omitted by the Agent or Related Person under or in connection with any of the foregoing (IN ALL CASES, WHETHER OR NOT CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE AGENT OR RELATED PERSON); provided that no Purchaser shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, claims, suits, litigations, investigations, inquiries or proceedings, costs, expenses or disbursements that are found by a final and nonappealable judgment of a court of competent jurisdiction to have directly resulted solely and directly from the Agent’s or Related Party’s, as the case may be, fraud, gross negligence or willful misconduct.  The agreements in this Section 12.20.8 shall survive the payment of the Notes and all other amounts payable hereunder.
 
12.20.9    Specific Rights Regarding Collateral .
 
(a)           Agent and each Secured Party hereby appoint each other Secured Party as agent for the purpose of perfecting Agent's security interest in assets which, in accordance with the UCC in any applicable jurisdiction, can be perfected by possession or control.  Should any Secured Party (other than Agent) obtain possession or control of any such assets, such Secured Party shall notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver such assets to Agent or in accordance with Agent's instructions or transfer control to Agent in accordance with Agent's instructions.  Each Secured Party agrees that it will not have any right individually to enforce or seek to enforce any Note Document or to realize upon any Collateral for the Obligations unless instructed to do so by Agent (or consented to by Agent, as provided in subsection (c) below), it being understood and agreed that such rights and remedies may be exercised only by Agent.
 
(b)           Without limiting the generality of the powers of Agent, as set forth above, Agent is hereby authorized to act as collateral agent for each Purchaser and each other Secured Party pursuant to each of the Note Documents.  In such capacity, Agent has the right to exercise all rights and remedies available under the Note Documents, the UCC and other applicable law.  Agent, as agent for all Secured Parties, shall be entitled at any such sale, with the consent of Required Lenders, to offset any of the Obligations against the purchase price payable by Agent at such sale or to otherwise consent to a reduction of the Obligations as consideration to the applicable Note Party in connection with such sale.  Agent shall have the authority to take such other actions (either directly or through one or more acquisition vehicles) as it may deem necessary or desirable, and as may be approved by Required Purchasers, to consummate a sale of the type described in the immediately preceding sentences.  Agent shall have the authority, with the consent of Required Purchasers, to accept non-cash consideration in connection with the sale or other disposition of the Collateral, whether the purchaser is Agent, an entity formed by Agent as described above or any other Person.
 
(c)           Anything in this Agreement or any other Note Document to the contrary notwithstanding, each Secured Party hereby agrees with each other Secured Party and with Agent that no Secured Party shall take any action to protect or enforce its rights against any Note Party arising out of this Agreement or any other Note Document (including exercising any rights of set-off) without first obtaining the prior written consent of the Agent, it being the intent of Purchasers and the other Secured Parties that any such action to protect or enforce rights against any Note Party under this Agreement and the other Note Documents shall be taken in concert and at the direction or with the consent of Agent.
 
12.20.10    Return of Payments; Sharing of Payments .
 
(a)           If Agent pays an amount to a Purchaser under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from Borrower and such related payment is not received by Agent, then Agent will be entitled to recover such amount from such Purchaser on demand without setoff, counterclaim or deduction of any kind, together with interest accruing on a daily basis at the federal funds rate.
 
(b)           If Agent determines at any time that any amount received by Agent under this Agreement must be returned to Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Note Document, Agent will not be
 
 
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required to distribute any portion thereof to any Purchaser.  In addition, each Purchaser will repay to Agent on demand any portion of such amount that Agent has distributed to such Purchaser, together with interest at such rate, if any, as Agent is required to pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.
 
(c)           If any Purchaser shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Note (other than pursuant to the terms of Section 2.7) in excess of its pro rata share of payments entitled pursuant to this Agreement, such Purchaser shall repay to Agent on demand the amount of such excess.  If under any applicable bankruptcy, insolvency or other similar law, any Purchaser receives a secured claim in lieu of a setoff to which this clause (c) applies, such Purchaser shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of Purchasers entitled under this clause (c) to share in the benefits of any recovery on such secured claim.
 
12.21       Amendment and Restatement .
 
Effective as of the Restatement Date, each Note Party hereby agrees to become a borrower, guarantor and obligor under, and to bind itself to, the Existing Note Purchase Agreement and Note Documents to which the Note Parties are bound generally (in each case, as modified and restated hereby), and, in such capacity, to assume and bind itself to all Obligations of the Note Parties thereunder (as modified and restated hereby).  The terms, conditions, agreements, covenants, representations and warranties set forth in and relating to the Existing Note Purchase Agreement are hereby amended, restated, replaced and superseded in their entirety (except as provided in the preamble to this Agreement) by the terms, conditions, agreements, covenants, representations and warranties set forth in this Agreement.  This Agreement does not extinguish the obligations, including, without limitation, obligations for the payment of money, outstanding under the Existing Note Purchase Agreement or discharge or release the obligations, which shall continue, as modified and restated hereby, without interruption and in full force and effect.  Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Existing Note Purchase Agreement, which shall remain in full force and effect, except in each case as amended, restated, replaced and superseded hereby or by instruments executed in connection herewith.  Nothing expressed or implied in this Agreement shall be construed as a release or other discharge of any Note Party from any of their obligations or liabilities under the Note Documents, except in each case as amended, restated, replaced and superseded hereby or by instruments executed in connection herewith.  Each Note Party hereby ratifies, confirms and reaffirms any and all grants of security interests and pledges previously granted under the Existing Note Purchase Agreement and/or any Note Document by such Note Party, as applicable.  Each Note Party hereby confirms and agrees that the Existing Note Purchase Agreement and each Note Document to which it is a party is, and shall continue to be, in full force and effect and is hereby amended, restated, replaced and superseded hereby or by instruments executed in connection herewith, except that on and after the date hereof all references in any such Note Document to “the Agreement”, “thereto”, “thereof” “thereunder” or words of like import referring to the Existing Note Purchase Agreement shall mean the Existing Note Purchase Agreement as amended, restated, replaced and superseded by this Agreement.
 
 
13
DEFINITIONS
 
13.1          Definitions.   As used in the Note Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative.  As used in this Agreement, the following capitalized terms have the following meanings:
 
Account ” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.
 
Account Debtor ” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.
 
Acquisition ” is (a) the purchase or other acquisition by Borrower of all or substantially all of the assets of any other Person, or (b) the purchase or other acquisition (whether by means of merger, consolidation, or otherwise) by Borrower of all or substantially all of the stock or other equity interest of any other Person.
 
 
 
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Acquisition Agreement ” is the Purchase Agreement defined in the recitals hereto.
 
Additional Notes ” is defined in Section 2.1.5(a) of this Agreement.
 
Additional Takedown ” is defined in Section 2.1.5(b)(ii) of this Agreement.
 
Additional Warrant ” means (i) the Initial Plexus Warrant, as evidenced by that certain Common Stock Warrant, dated as of the Restatement Date, by and between GTTI and the Plexus, and (ii) each other Common Stock Warrant issued to Plexus by GTTI in connection with the purchase of Additional Notes hereunder (pursuant to Sections 2.2(b)(ii) and 3.3(b) herein), as each may be amended, restated, supplemented or otherwise modified from time to time in accordance with their terms.  For avoidance of doubt, “Additional Warrant” shall include, if applicable, any Put Note (as defined in each Additional Warrant) executed in connection therewith
 
Adjusted EBITDA ” is the sum of (i) EBITDA, plus , (ii) to the extent deducted from the calculation of Net Income and not otherwise added back to the calculation of EBITDA, any non-cash compensation paid to officers or directors of Borrower or any of its Subsidiaries, plus (iii) additional one-time adjustments acceptable to Required Purchasers, including transaction costs and expenses arising in connection with this Agreement, the Senior Debt or the Packet Exchange Acquisition, the nLayer Acquisition, any Permitted Acquisition and the consummation of the transactions contemplated by each thereof.
 
Affiliate ” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.
 
Agent ” is defined in the preamble hereof, and shall include any of its permitted successors and assigns in such capacity.
 
Agreement ” is defined in the preamble hereof.
 
Applicable Laws ” are all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
 
Automatic Takedown ” is defined in Section 2.1.5(b)(iii).
 
BIA ” is BIA Digital Partners SBIC II, LP, a Delaware limited partnership.
 
Borrower ” is defined in the preamble hereof.
 
Borrower’s Books ” are all Borrower’s books and records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.
 
Borrowing Resolutions ” are, with respect to any Person, those resolutions adopted by such Person’s Board of Directors or other appropriate body and delivered by such Person to Agent approving the Note Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying that (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Note Documents to which it is a party, (b) that attached as Exhibit A to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Note Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Note Documents on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Agent and each Purchaser may conclusively rely on such certificate unless and until such Person shall have delivered to Agent a further certificate canceling or amending such prior certificate.
 
 
 
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Business Day ” is any day that is not a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the State of New York.
 
Capital Expenditures ” means, with respect to any Person for any period, the sum of (a) the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed, plus (b) to the extent not covered by clause (a), the aggregate of all expenditures by such Person and its Subsidiaries during such period to acquire by purchase or otherwise the business or capitalized assets or the capital stock of any other Person.
 
Cash Basis EBITDA ” is, for any period of measurement, Adjusted EBITDA minus (a) unfinanced Capital Expenditures; minus (b) Taxes actually paid in cash and minus (c) other cash distributions approved by Required Purchasers, in its reasonable discretion, on a case-by-case basis, including any non-recurring cash expenses related to the nLayer Acquisition and the Packet Exchange Acquisition.
 
Cash Equivalents ” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (c) Senior Lender’s certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.
 
Cash Interest Portion ” is defined in Section 2.3(a).
 
Change of Control ” is when:
 
(i)           any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “ option right ”)), directly or indirectly, of (i) 40% or more of the equity interests of GTTI entitled to vote for members of the board of directors or equivalent governing body on a fully-diluted basis (and taking into account all such equity interests that such “person” or “group” has the right to acquire pursuant to any option right);
 
(ii)           a majority of the members of the board or directors of GTTI do not constitute Continuing Directors; or
 
(iii)           any Note Party fails at any time to own, directly or indirectly, 100% of the equity interests of each Subsidiary thereof (if any) free and clear of all Liens (other than the Liens in favor of the Senior Lender or Agent and Purchasers hereunder), except where such failure is as a result of a transaction permitted by this Agreement.
 
Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank or International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted or issued.
 
 
 
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Charter ” means the Second Amended and Restated Certificate of Incorporation of GTTI, dated as of October 16, 2006, as the same may be amended, modified, restated, or supplemented from time to time in accordance with its terms and with this Agreement.
 
Claims ” is defined in Section 12.3.
 
Closing Date” is defined in Section 3.2.
 
Code ” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided , that, to the extent that the Code is used to define any term herein or in any Note Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further , that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Agent’s and Purchasers’ Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “ Code ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 
Collateral ” is any and all properties, rights and assets of Borrower described on Exhibit A and for the purposes of this Agreement. The term “Collateral” shall also include the Secured Intercompany Note.  Notwithstanding any other provision of this Agreement to the contrary, Collateral shall not include, and no security interest shall be granted in, more than 65% of the equity interests in any direct or indirect foreign subsidiary of any Borrower.
 
Collateral Account ” is any Deposit Account, Securities Account, or Commodity Account.
 
Commitment Amount ” is defined in Section 2.1.5(a).
 
Commitment Fee ” is defined in Section 2.4(b).
 
Commitment Termination Date ” is December 31, 2012, which date may be extended with the consent of Agent and Purchasers in their sole discretion.
 
Commodity Account ” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.
 
Communication ” is defined in Section 10.
 
Compliance Certificate ” is that certain certificate in the form attached hereto as Exhibit B.
 
Contingent Obligation ” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case directly or indirectly guaranteed, endorsed, co made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.
 
Continuing Director ” is (a) any member of the board of directors of GTTI who was a director on the Initial Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Initial Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the board of directors in office at the Initial Closing Date in an actual or threatened election contest relating to the
 
 
 
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election of the directors of GTTI and whose initial assumption of office resulted from such contest or the settlement thereof.
 
Control Agreement ” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Agent pursuant to which Agent (for the benefit of the Secured Parties) obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.
 
Copyrights ” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
 
Costs and Expenses ” are all audit fees and expenses, and reasonable costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Note Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings), whether incurred by a Purchaser or Agent.
 
Debentures ” means the debentures securing the Secured Intercompany Note, between Borrower and Intercompany Borrowers, dated as of the date hereof, as may be amended, restated, or otherwise modified in accordance with the terms hereof and thereof.
 
Default ” means any event which with notice or passage of time or both, would constitute an Event of Default.
 
Default Rate ” is defined in Section 2.3(b).
 
Deferred Revenue ” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.
 
Deposit Account ” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.
 
Dollars ,” “ dollars ” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.
 
Dollar Equivalent ” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Required Purchasers at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.
 
Domestic Subsidiary ” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District of Columbia.
 
EBITDA ” shall mean, for any period of measurement, (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense, plus (f) non-cash stock compensation expense and non-cash warrant expense, plus (g) at Required Purchasers’ discretion, other non-cash one-time charges reasonably acceptable to and approved by Required Purchasers, on a case-by-case basis.
 
EMEA ” is GTT -EMEA, LTD ., a private limited liability company incorporated and registered in England and Wales with   registration number 03580993 and whose registered office is located at 35 Vine Street, London EC3N 2AA.
 
 
 
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Equipment ” is all “ equipment ” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
 
Equity Documents ” means the Original Warrants, the Additional Warrants and the Charter.
 
ERISA ” is the Employee Retirement Income Security Act of 1974, and its regulations.
 
Excluded Taxes ” are, with respect to Agent and any Purchaser (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which it is organized or in which its principal office is located or in which its applicable lending office does business, (b) any branch profits Taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which it is located, (c) in the case of any Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement or designates a new lending office, (d) any Taxes imposed or any “withholding payment” payable to a recipient as a result of the failure of such recipient to satisfy the applicable requirements set forth in FATCA, (e) in the case of any U.S. Lender, any withholding tax that is properly withheld on amounts payable made to such U.S. Lender by a foreign Borrower at the time such U.S. Lender becomes a party to this Agreement or designates a new lending office, and (f) any U.S. federal backup withholding Taxes imposed as a result of payments under this Agreement (other than any backup withholding Taxes imposed as the result of a change in law after the date any Purchaser or other Lender becomes a party to this Agreement).
 
Existing Note Purchase Agreement ” is defined in the recitals hereto.
 
Existing Subordinated Noteholders ” are Richard D. Calder, Eric A. Swank, Universal Telecommunications, Inc., Hackman Family Trust, Howard E. Janzen, the Spitfire Fund, L.P., Theodore B. Smith, III, Saunwin Domestic Equities Fund, LLC, and Goldman Sachs & Co. Cust. FBO Philip H. Geier, Jr. IRA.
 
Event of Default ” is defined in Section 8.
 
FATCA ” means Sections 1471 through 1474, inclusive, of the IRC, and any current or future regulations thereunder or official interpretations thereof.
 
First Anniversary ” is the date that is 366 days after the Initial Closing Date.
 
Fixed Charges ” are, for any period of measurement, the sum of Borrower’s (a) cash interest payments made on all Indebtedness, plus (b) any regularly scheduled principal payments on outstanding Indebtedness ( including , without limitation, principal amortization and prepayments of the Term Loan (as defined in the Senior Loan Agreement) but excluding payments of principal on the Revolving Line that do not result in a permanent reduction of the Revolving Line), plus (c) principal amortization of and interest payments on capitalized leases.  For avoidance of doubt, nLayer Earnout Payments shall not be included in Fixed Charges.
 
Foreign Currency ” means lawful money of a country other than the United States.
 
Foreign Lender ” means each Lender that is not a U.S. Lender.
 
Foreign Subsidiary ” means any Subsidiary which is not a Domestic Subsidiary.
 
Fourth Anniversary ” is the date that is 365 days after the Third Anniversary
 
GAAP ” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
 
 
 
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General Intangibles ” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other Tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.
 
Governmental Approval ” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
 
Governmental Authority ” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, Taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.
 
GTTA ” is defined in the preamble.
 
GTTI ” is defined in the preamble.
 
Guarantors ” are any present or future guarantor of the Obligations, including, without limitation, GTT Global Telecom Government Services, LLC and TEK Channel Consulting, LLC.
 
Guarantees” are the Amended and Restated Guarantees of even date executed by the Guarantors in favor of Agent and any additional guaranty which may previously have been entered into or which may be executed after the date of this Agreement with respect to the Obligations hereunder.
 
Indebtedness ” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.  For avoidance of doubt, nLayer Earnout Payments shall not be included in Indebtedness.
 
Indemnified Person ” is defined in Section 12.3.
 
Indemnified Taxes ” means Taxes other than Excluded Taxes.
 
Initial Additional Takedown ” is defined in Section 2.1.5(b)(i) of this Agreement.
 
Initial Closing Date ” is June 6, 2011.
 
Initial Plexus Warrant ” is defined in Section 2.2(b)(i).
 
Insolvency Proceeding ” is any proceeding by or against any Person under the United States Bankruptcy Code or the UK Insolvency Act 1986, or under any other bankruptcy or insolvency law in any jurisdiction, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
 
Intellectual Property ” means all of Borrower’s right, title, and interest in and to the following:
 
(a)           its Copyrights, Trademarks and Patents;
 
(b)           any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;
 
(c)           any and all source code;
 
(d)           any and all design rights which may be available to a Borrower;
 
 
 
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(e)           any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and
 
(f)           all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
 
Intercompany Borrowers ” are EMEA, PEIRL and PELTD, in their capacity as borrowers under the Secured Intercompany Note.
 
Intercreditor Agreement ” is that certain Second Amended and Restated Intercreditor Agreement, dated as of the Restatement Date, by and among the Senior Lender, Agent and Purchasers and acknowledged by Borrower, as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.
 
Interest Expense ” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Notes and other Indebtedness of Borrower and its Subsidiaries, if any, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).
 
Interest Payment Date ” is defined in Section 2.3(f).
 
Inventory ” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.
 
Investment ” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.
 
IP Agreement   is any Trademark Security Agreement executed and delivered by US Borrower or any Guarantor to Agent, including, without limitation, the Trademark Security Agreement delivered by each US Borrower and each Guarantor on the Initial Closing Date.
 
IRC ” means the Internal Revenue Code of 1986, as amended.
 
Lender ” means any Purchaser or any assignee, transferee, or holder of, or participant in, any of any Purchaser’s rights under this Agreement.
 
Leverage Ratio ” is, for any period of measurement, the sum of Borrower’s Indebtedness ( less unrestricted cash of Borrower (if any) in excess of $2,500,000 in the aggregate) divided by Adjusted EBITDA; provided , however , that solely for the purposes of calculating the Leverage Ratio as of any date of determination, the EBITDA component used in the calculation of Adjusted EBITDA shall be an amount equal to the product of (x) EBITDA for the six (6) month period prior to any such date of determination, times (y) 2; provided , further , that solely for the purposes of calculating the Leverage Ratio for the fiscal quarter ending June 30, 2012, EBITDA attributable to nLayer shall equal $727,000 for the three month period ending March 31, 2012.
 
Lien ” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.
 
Material Adverse Change ” is (a) a material impairment in the perfection or priority of Agent’s and Purchasers’ Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the
 
 
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business, operations, or condition (financial or otherwise) of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.
 
Maturity Date ” is June 6, 2016.
 
Net Income ” means, as calculated on a consolidated basis for Borrower and its Subsidiaries, if any,  for any period as at any date of determination, the net profit (or loss), exclusive of any extraordinary gains, after provision for Taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.
 
nLayer ” is defined in the preamble hereto.
 
nLayer Acquisition ” is defined in the recitals hereto.
 
nLayer Earnout Payments ” means cash payments made by a Note Party pursuant to earn out liabilities incurred in connection with the nLayer acquisition, which payments shall not exceed $6,000,000 in the aggregate.
 
Note ” or “ Notes ” are defined in Section 2.1.5(a) of this Agreement, and also refer to each promissory note to be executed by Borrower in favor of each Purchaser in the form of Exhibit C appropriately completed, which shall be in the amount purchased by such Purchaser pursuant to this Agreement (including the Existing Note Purchase Agreement).
 
Note Documents ” are, collectively, this Agreement, the Equity Documents, the Intercreditor Agreement, each Debenture, each Guaranty, each Security Agreement, the Perfection Certificates, the IP Agreement, the Notes, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of Agent or any Purchaser in connection with this Agreement, all as amended, restated, or otherwise modified.
 
Note Party ” or “ Note Parties ” are Borrower and each Guarantor.
 
Obligations ” are Borrower’s obligation to pay when due any debts, principal, interest, Costs and Expenses and other amounts Borrower owes Agent or any Purchaser now or later, whether under this Agreement, the Note Documents, or otherwise, including, without limitation, all obligations relating to performance of Borrower’s duties under the Note Documents.
 
Operating Documents ” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of such Person’s state of formation on a date that is no earlier than 30 days prior to the Restatement Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.
 
Original Notes ” is defined in Section 2.1.5(a) of this Agreement.
 
Original Purchaser ” is defined in the recitals hereto.
 
Original Warrants ” means (i) that certain Common Stock Warrant, dated as of the Initial Closing Date, by and between GTTI and the Original Purchaser, as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms, and (ii) that certain Common Stock Warrant, dated as of the November 9, 2011, by and between GTTI and the Original Purchaser, as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.  For avoidance of doubt, “Original Warrants” shall include, if applicable, any Put Note (as defined in the Original Warrants) executed in connection therewith.
 
Other Taxes ” means all present or future stamp or documentary Taxes or any other excise or property Taxes, changes or similar levies arising from any payment made hereunder or under any other Note Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Note Document.
 
 
 
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Packet Exchange Acquisition ” means the acquisition by GTTI of stock of PEUSA, PEINC PEIRL and PELTD, which acquisition occurred on the Initial Closing Date.
 
Packet Exchange Subordinated Noteholder ” means Zero Assets Holding Co., Inc.
 
Patents ” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
 
Payment ” means all checks, wire transfers and other items of payment received by Agent or any Purchaser (including proceeds of Accounts and payment of all the Obligations in full) for credit to outstanding Notes or, if the balance of the Notes has been reduced to zero, for credit to its Deposit Accounts.
 
Perfection Certificate ” is defined in Section 5.1.
 
Performance Pricing Period ” is, provided no Event of Default has occurred and is continuing, the period (i) commencing on the first (1 st ) day of the month following the Subject Month in which Borrower reports, for such Subject Month that Borrower has maintained its Leverage Ratio (as calculated on a trailing twelve month basis) in an amount equal to or less than 2.00:1.00, as confirmed by Required Purchasers, in good faith (the “ Performance Pricing Threshold ”); and (ii) terminating on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first (1 st ) day of the month following the Subject Month in which Borrower fails to maintain the Performance Pricing Threshold, as determined by Required Purchasers, in their reasonable discretion.  Upon the termination of a Performance Pricing Period, Borrower must maintain the Performance Pricing Threshold each consecutive day for a complete Subject Month Ratio (as calculated on a trailing twelve month basis), as determined by Required Purchasers, in good faith, prior to entering into a subsequent Performance Pricing Period.  Borrower shall give Purchasers prior-written notice of Borrower’s intention to enter into any such Performance Pricing Period.
 
PEIRL ” is PACKETEXCHANGE (IRELAND) LTD. , a company incorporated and existing under the laws of Ireland with registered number 372202 and whose registered address is at 24-26 City Quay, Dublin 2 Ireland .
 
PELTD ” is PACKETEXCHANGE (EUROPE) LTD. , a company incorporated and registered under the laws of England and Wales   with registration number 05164474 and whose registered office is located at Fourth Floor, 2 – 4 Great Eastern Street, London EC2A 3NT changing to 35 Vine Street, London EC3N 2AA.
 
Permitted Acquisition ” is, after the Initial Closing Date, any Acquisition disclosed to Purchasers and agreed to by Required Purchasers, provided that each of the following shall be applicable to any such Acquisition:
 
(a)           no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition;
 
(b)           the entity or assets acquired in such Acquisition are in the same or similar line of Business as Borrower is in as of the date hereof;
 
(c)           the pro forma organizational structure of Borrower and its Subsidiaries shall be reasonably satisfactory to Required Purchasers;
 
(d)           Borrower shall have provided Purchasers evidence and reasonably detailed calculations satisfactory to Required Purchasers, in its sole discretion, that, after giving effect to such Acquisition, the net effect of such Acquisition shall be EBITDA accretive to Borrower on a pro forma basis for the 12 month period ended one year after the proposed date of consummation of such proposed Acquisition;
 
(e)           Borrower shall remain a surviving entity after giving effect to such Acquisition; if, as a result of such Acquisition, a new Subsidiary of Borrower is formed or acquired, Borrower shall cause such new Subsidiary to comply with the requirements of Section 6.12;
 
 
 
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(f)           Borrower shall provide Purchasers with: (i) written notice of the proposed Acquisition at least ten (10) Business Days prior to the anticipated closing date of the proposed Acquisition, (ii) drafts of the acquisition agreement and all other material documents relative to the proposed Acquisition at least five (5) Business Days prior to the anticipated closing date of the proposed Acquisition, and (iii) fully executed copies of the acquisition agreement and all other material documents relative to the proposed Acquisition promptly after the closing date of the proposed Acquisition;
 
(g)           the total cash payable and liabilities assumed by Borrower (either directly or indirectly) for all such Acquisitions may not exceed Three Million Dollars ($3,000,000) in the aggregate per annum;
 
(h)           after giving effect to such acquisition, the Note Parties shall be in pro forma compliance with the Financial Covenants set forth in Section 6.9; and
 
(i)           the entity or assets acquired in such Acquisition shall not be subject to any Lien other than the first-priority Liens granted in favor of Agent and Purchasers and Permitted Liens, including, without limitation, purchase money Liens existing on Equipment when acquired, so long as the Lien is confined to the property and improvements and the proceeds of the Equipment.
 
 “ Permitted Indebtedness ” is:
 
(a)           Borrower’s Indebtedness to Purchasers and Agent under this Agreement and the other Note Documents;
 
(b)           Indebtedness existing on the Initial Closing Date and shown on the Perfection Certificate;
 
(c)           Subordinated Debt, if any;
 
(d)           (i) unsecured Indebtedness (i) of any Note Party owed to any other Note Party; and (ii) of Subsidiaries that are not a Note Party owed to any Note Party in an aggregate amount for all such Indebtedness, together with Investments permitted in connection with clause (h) of the definition of “Permitted Investments”, not to exceed Five Hundred Thousand Dollars ($500,000) in any fiscal year and only so long as such Indebtedness is evidenced by a promissory note pledged to Agent or Senior Lender, as applicable in accordance with the Intercreditor Agreement;
 
(e)           unsecured Indebtedness to trade debtors incurred in the ordinary business, in a manner consistent with past practices;
 
(f)           Indebtedness secured by Permitted Liens;
 
(g)           Senior Debt;
 
(h)           any refinancing of the Senior Debt, in an amount equal to the greater of (i) the Senior Debt Cap (as defined in the Intercreditor Agreement as of the Initial Closing Date) and (ii) and the amount equal to the Company’s most recently reported quarterly annualized Adjusted EBITDA multiplied by 1.75 (such amount, the “ Senior Debt Basket ”), and otherwise subject to the Intercreditor Agreement (or, with respect to any replacement of the Senior Debt, on intercreditor terms that are no less favorable to Purchasers than those that exist in the Intercreditor Agreement as in effect on the Restatement Date);
 
(i)           secured intercompany indebtedness evidenced by the Secured Intercompany Note and secured by the Debentures; and
 
(j)           extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (i) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.
 
Permitted Investments ” are:
 
 
 
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(a)           Investments shown on the Perfection Certificate and existing on the Initial Closing Date;
 
(b)           Cash Equivalents;
 
(c)           Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower’s business;
 
(d)           Cash Investments (i) by Borrower in Subsidiaries that are Guarantors which have executed a Security Agreement; (ii) by Borrower in Subsidiaries that are not Guarantors, not to exceed an aggregate amount of Five Hundred Thousand Dollars ($500,000) per annum and (iii) by Subsidiaries in other Subsidiaries that are not Guarantors, not to exceed an aggregate amount per annum of Five Hundred Thousand Dollars ($500,000); provided that no Default or Event of Default shall exist at the time of such Investment or result therefrom.
 
(e)           Investments by EMEA in Global Telecom & Technology Deutschland GmbH in an aggregate amount not to exceed One Million Dollars ($1,000,000) per annum;
 
(f)           Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s board of directors; and
 
(g)           Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; and
 
(h)           Cash Investments (i) by any Note Party in any other Note Party; (ii) other than the Secured Intercompany Note, by any Note Party in any Subsidiary that is not a Note Party, in an aggregate amount for all such Investments in such Subsidiaries, together with Indebtedness permitted in connection with clause (d) of the definition of “Permitted Indebtedness”, not to exceed Two Hundred Thousand Dollars ($200,000) in any fiscal year, (iii) by Subsidiaries that are not a Note Party in Guarantors or in Borrower, and (iv) in the Intercompany Borrowers in connection with the Secured Intercompany Note.
 
Permitted Liens ” are:
 
(a)           Liens existing on the Initial Closing Date and shown on the Perfection Certificate or arising under this Agreement and the other Note Documents, including related to the Senior Debt;
 
(b)           Liens for Taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder or any other Applicable Law;
 
(c)           purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;
 
(d)           Liens incurred in the extension, renewal or refinancing of the Indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase;
 
(e)           leases or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or Intellectual Property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit granting Agent or Purchasers a security interest;
 
 
- 44 -

 
 
(f)           Liens in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions, provided that Agent and Purchasers have a perfected security interest in the amounts held in such deposit and/or securities accounts; and
 
(g)           Liens arising from (i) Permitted Indebtedness, including the Senior Debt and the Secured Intercompany Note, and (ii) orders, judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7.
 
Person ” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
 
Pledge Agreement ” is that certain Amended and Restated Pledge Agreement, dated as of the Restatement Date, by and between Borrower and Agent.
 
Plexus ” means Plexus Fund II, L.P., a Delaware limited partnership.
 
PIK Interest ” is defined in Section 2.3(a).
 
Prepayment Premium ” is with respect to any prepayment pursuant to Section 2.1.5(d) or remittance of proceeds pursuant to Sections 6.4 or Section 6.7, whether before or after an Event of Default, (i) four percent (4%) of the amount prepaid if such prepayment occurs at any time after the Initial Closing Date but on or before the First Anniversary; (ii) three percent (3%) of the amount prepaid if such prepayment occurs at any time after First Anniversary but on or before the Second Anniversary; (iii) two percent (2%) of the amount prepaid if such prepayment occurs at any time after the Second Anniversary but on or before the Third Anniversary; (iv) one percent (1%) of the amount prepaid if such prepayment occurs at any time after the Third Anniversary but on or before the Fourth Anniversary; and (v) zero percent (0%) of the amount prepaid if such prepayment is made at any time thereafter.
 
Processing Fee ” is defined in Section 2.4(a).
 
Purchaser ” and “ Purchasers ” are defined in the preamble hereof, and shall include any Lender and any permitted successors and assigns thereof.
 
Purchaser Entities ” is defined in Section 12.10.
 
Registered Organization ” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.
 
Related Person ” is, with respect to any person, (a) each Affiliate of such person and each of the officers, directors, partners, trustees, employees, affiliates, shareholders, advisors, agents, attorneys-in-fact and controlling persons of each of the foregoing, and (b) if such person is the Agent, each other person designated, nominated or otherwise mandated by or assisting the Agent pursuant to Section 12.20.5 or any comparable provision of any Note Document.
 
Required Purchasers ” means Purchasers holding more than 50% of the outstanding principal amount of all Notes held by all Purchasers; provided, however, that so long as each of BIA (or its Affiliates) and Plexus (and its Affiliates) holds 65% of the Notes each such Purchaser held on the Restatement Date, “Required Lenders” shall be deemed to include both BIA and Plexus.
 
Requirement of Law ” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
 
Responsible Officer ” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.
 
 
- 45 -

 
 
Restatement Date ” is defined in the preamble hereto.
 
Restricted License ” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with Agent’s or any Purchaser’s right to sell any Collateral.
 
Revolving Line ” is as defined in the Senior Loan Agreement as in effect on the date hereof.
 
Second Anniversary ” is the date that is 365 days after the First Anniversary.
 
Secured Intercompany Note ” is that certain Secured Intercompany Note, with an original principal amount equal to $7,500,000.00, dated as of the Initial Closing Date, by and between Borrower, as holder thereunder, and the Intercompany Borrowers, collectively, jointly and severally, as borrowers thereunder, as the same may be amended, restated, or otherwise modified from time to time with written consent of Required Purchasers.
 
SEC ” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.
 
Secured Parties ” means Agent and each Purchaser.
 
Securities Account ” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.
 
Securities Laws ” means the Securities Act of 1933, the Securities Exchange Act of 1934, and Sarbanes-Oxley, each as amended.
 
Security Agreement ” is any Security Agreement executed and delivered by any Guarantor to Agent, including, without limitation, each Amended and Restated Security Agreement delivered by each Guarantor on the Restatement Date.
 
Senior Debt ” is “Senior Priority Obligations” as such term is defined in the Intercreditor Agreement as in effect on the date hereof.
 
Senior Lender ” is “Senior Creditor” as such term is defined in the Intercreditor Agreement.
 
Senior Loan Agreement ” is “Senior Credit Agreement” as such term is defined in the Intercreditor Agreement.
 
Senior Loan Documents ” is as defined in the Intercreditor Agreement.
 
Subject Month ” is the latest calendar month for which Borrower has timely delivered the reports and schedules required pursuant to Section 6.2(a) hereof.
 
Subordinated Debt ” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Purchasers (pursuant to a subordination, intercreditor, or other similar agreement in form and substance reasonably satisfactory to Required Purchasers entered into between Agent and the other creditor), on terms reasonably acceptable to Required Purchasers.
 
Subsidiary ” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower or Guarantor.
 
 
 
- 46 -

 
 
SVB Syndication ” is the successful syndication of not less than $7,000,000 of additional term debt, to be incurred by the Borrower as additional Senior Debt pursuant to the Senior Credit Agreement.
 
Takedown ” is defined in Section 2.1.5(b)(ii).
 
Tax ” or “ Taxes ” means all present or future Taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
 
Third Anniversary ” is the date that is 365 days after the Second Anniversary.
 
Trademarks ” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
 
Transfer ” is defined in Section 7.1.
 
“US Borrower” is, singly and collectively, jointly and severally, each Borrower other than EMEA, PEIRL, and PELTD.
 
U.S. Lender” means any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the IRC.
 
WBS ” is defined in the preamble.
 
[Signature page follows.]
 

 
- 47 -

 


IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the Restatement Date.
 

 
BORROWER:
 

 
GLOBAL TELECOM & TECHNOLOGY, INC .
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer

PACKETEXCHANGE, INC.
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
WBS CONNECT, LLC
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  CEO and President of the Sole Managing Member
 
PACKETEXCHANGE (USA), INC.
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
NLAYER COMMUNICATIONS, INC.
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 

 
 

Amended and Restated Note Purchase Agreement


 
 

 

AGENT AND PURCHASER:
 

 
BIA DIGITAL PARTNERS SBIC II LP , as Agent and as a Purchaser
 
By:  BIA Digital Partners II LLC
Its:  General Partner

By: /s/ Lloyd Sams
Name: Lloyd Sams
Title:   Managing Principal
 
 
 

Amended and Restated Note Purchase Agreement


 
 

 

PURCHASER:
 

 
PLEXUS FUND II, L.P. , as a Purchaser
 
By:  Plexus Fund II GP, LLC
Its:  General Partner

By: /s/ Robert R. Anders, Jr.
Name: Robert R Anders, Jr.
Title: Manager
 
 

 
 

 

Amended and Restated Note Purchase Agreement


 
 

 

Schedule 2.1.5


Original Notes
 

 
Purchaser
 
Notes purchased at the Initial Closing Date (original principal amount)
 
 
Notes Purchased at Subsequent Closing Date (original principal amount)
 
 
Total Original Notes (original principal amount)
BIA DIGITAL PARTNERS SBIC II LP
$7,500,000.00
$1,000,000.00
$8,500,000.00


 
Additional Notes
 
 
 

 
Purchaser
 
Commitment to Purchase Additional Notes at the Initial Additional Takedown (original principal amount)
 
 
Commitment to purchase Notes at Additional Takedowns (original principal amount)
 
 
Total Commitment to Purchase Additional Notes (original principal amount)
PLEXUS FUND II, L.P.
$6,000,000
$2,000,000
$8,000,000.00

 

 
 

 


EXHIBIT A – COLLATERAL DESCRIPTION
 
The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:
 
All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and
 
all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.
 


 

  1
 

 

EXHIBIT B


COMPLIANCE CERTIFICATE

TO:                 BIA DIGITAL PARTNERS, AS AGENT
TO:                 EACH PURCHASER PARTY TO THE NOTE PURCHASE AGREEMENT                                                                                                                          Date:  ________________________________

FROM:                 GLOBAL TELECOM & TECHNOLOGY, INC. et al.

The undersigned authorized officer of Global Telecom and Technology, Inc. ( a “ Borrower ”) certifies that under the terms and conditions of the Amended and Restated Note Purchase Agreement between Borrower, Agent and the financial institutions from time to time party thereto as Purchasers (the “ Agreement ”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided , however , that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided , further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) each Borrower, and each of its respective Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state, national and local Taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against any Borrower or any of its respective Subsidiaries, if any, relating to unpaid employee payroll or benefits of which any Borrower has not previously provided written notification to Purchasers.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
 
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Monthly financial statements with Compliance Certificate
Monthly within 30 days
Yes   No
Annual financial statement (CPA Audited) + CC
FYE within150 days
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
Projections
FYE within 45 days and as amended or updated
Yes   No
 
 
The following Intellectual Property was registered and/or the following Governmental Approvals were obtained after the Initial Closing Date (if no registrations or approvals, state
“None”)
____________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
       
Maintain as indicated:
     
Minimum Liquidity (certified monthly)
$2,500,000
$_______
Yes   No
Minimum Fixed Charge Coverage Ratio (tested quarterly, on a T3M basis)
1.15:1.00
_____:1.0
Yes   No
Leverage Ratio (certified quarterly beginning with quarter ending June 30, 2012)
See Note Purchase Agreement
_____:1.0
Yes   No
Minimum Adjusted EBITDA
See Note Purchase Agreement
 
Yes   No
 
 
 
1

 

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)
 
 
 
 

 
 
GLOBAL TELECOM & TECHNOLOGY, INC. et al.
 
 
By:  ____________________________________________                                                    
Name:  __________________________________________                                                       
Title:  ___________________________________________
 




  2
 

 

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Note Purchase Agreement, the terms of the Note Purchase Agreement shall govern.

Dated:    ____________________

I.            Liquidity (Section 6.9(a))
 
Required:      Maintain unrestricted cash of at least Two Million Five Hundred Thousand Dollars ($2,500,000).

Actual:

A.
Aggregate value of the unrestricted cash of Borrower
$__________           
 

Is line A equal to or greater than $2,500,000?

  __________  No, not in compliance                                                                                        __________  Yes, in compliance


  3
 

 

II.            Fixed Charge Coverage Ratio. (Section 6.9(b))

Required:      Maintain on a quarterly basis, as of the last day of each fiscal quarter of Borrower, measured on a trailing three month basis, a ratio of (i) Cash Basis EBITDA for such period divided by (ii) Fixed Charges of at least 1.15:1.00

Actual:   All amounts measured on a trailing three month basis:

A.
EBITDA
 
$__________
B.
Unfinanced Capital Expenditures
 
$__________
C.
Taxes actually paid in cash
 
$__________
D.
Other cash distributions approved by Required Purchasers, in its sole discretion, on a case-by-case basis
 
$__________
E.
 
CASH BASIS EBITDA (line A minus line B minus line C minus line D)
$__________
F.
 
Fixed Charges
$__________
G.
FIXED CHARGE COVERAGE RATIO (line E divided by line F, expressed as a ratio)
__________:1.00
 
Is line G equal to or greater than 1.15:1:00?

  __________  No, not in compliance                                                                                        __________  Yes, in compliance


  1
 

 

III.            Leverage Ratio. (Section 6.9(c))

Required:      Maintain on a quarterly basis, as of the last day of each fiscal quarter of Borrower beginning with the fiscal quarter ending March 31, 2012, measured on a trailing twelve month basis, a ratio of (i) the sum of Borrower’s Indebtedness ( less unrestricted cash of Borrower (if any) in excess of $2,500,000 in the aggregate)   divided by (ii) Adjusted EBITDA for such period of at least the ratio set forth in the Note Purchase Agreement with respect to any such period; provided , however , that solely for the purposes of calculating the Leverage Ratio as of any date of determination, the EBITDA component used in the calculation of Adjusted EBITDA shall be an amount equal to the product of (x) EBITDA for the six (6) month period prior to any such date of determination, times (y) 2.

Actual: All amounts measured on a trailing three month basis:

A.
Adjusted EBITDA (calculated in using annualized EBITDA as set forth above) 1
$__________
 
B.
 
Borrower’s Indebtedness
$__________
C.
Unrestricted cash of Borrower (if any) in excess of $2,500,000 in the aggregate
 
$__________
D.
NET LEVERAGE (line B minus line C)
  
$__________
E.
LEVERAGE COVERAGE RATIO (line D divided by line A, expressed as a ratio)
__________ :1.00
 


__________ No, not in compliance                                                                                      __________ Yes, in compliance

 
 
 
 
 
 


 
1   For the purposes of calculating the Leverage Ratio for the fiscal quarter ending June 30, 2012, EBITDA attributable to nLayer shall equal $727,000 for the three month period ending March 31, 2012.
 

  2
 

 

IV.            Minimum Adjusted EBITDA. (Section 6.9(d))

Required:      Achieve on a quarterly, as of the last day of each fiscal quarter of Borrower set forth in Section 6.9(d) of the Note Purchase Agreement, Adjusted EBITDA of at least the amount specified for such period therein.

A.
EBITDA
$__________
 
B.
To the extent deducted from the calculation of Net Income and not added back to the calculation of EBITDA, non-cash compensation paid to officers and directors
 
$__________
 
C.
ADJUSTED EBITDA (line A plus line B)
$__________
 
 
 

__________ No, not in compliance                                                                                  __________ Yes, in compliance



3
 

 

Schedule 5.14

See attached
 
 
 

 
4

EXHIBIT 10.6

 NOTE

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.


THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE NOTE PURCHASE AGREEMENT (AS SUCH TERM IS DEFINED BELOW) AND ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SECOND AMENDED AND RESTATED INTERCREDITOR AGREEMENT (THE “ INTERCREDITOR AGREEMENT ”) DATED AS OF APRIL 30, 2012 AMONG SILICON VALLEY BANK, AS SENIOR LENDER, THE SUBORDINATED CREDITORS PARTY THERETO, AND BIA DIGITAL PARTNERS SBIC II LP, AS AGENT FOR THE SUBORDINATED CREDITORS,  AND ACKNOWLEDGED BY THE BORROWER (AS SUCH TERM IS DEFINED BELOW) AS THE SAME  MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AS PERMITTED UNDER THE INTERCREDITOR AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.


 
$6,000,000      April 30, 2012
                                                                                                       
 

 
FOR VALUE RECEIVED, intending to be legally bound hereby, GLOBAL TELECOM & TECHNOLOGY, INC ., a Delaware corporation (“ GTTI ”), GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC. , a Virginia corporation (“ GTTA ”), WBS CONNECT, LLC, a Colorado limited liability company (“ WBS ”), PACKETEXCHANGE, INC. , a Delaware corporation (“ PEI ”) PACKETEXCHANGE (USA), INC ., a Delaware corporation (“ PEIUSA ”) and NLAYER COMMUNICATIONS, INC. (“ nLayer ” and together with GTTI, GTTA, WBS, PEI and PEIUSA, individually and collectively, jointly and severally, the “ Borrower ”), hereby promise to pay to the order of PLEXUS FUND II, L.P. , a Delaware limited partnership or its registered assigns (the “ Note Purchaser ”) at the office of the Note Purchaser initially located at 200 Providence Road, Suite 210, Charlotte, North Carolina  28207 (or such other address as the Note Purchaser may specify in writing to Borrower), the principal sum of SIX MILLION DOLLARS ($6,000,000), or such lesser amount as shall equal the aggregate unpaid principal amount of this Note, on the dates specified in the Note Purchase Agreement and to pay interest on such principal amount on the dates and at the rates (including, if applicable, the Default Rate) specified in the Note Purchase Agreement.  All payments due to the Note Purchaser under this Note shall be made at the place, in the type of money and funds and in the manner specified in the Note Purchase Agreement.

As used in this Note, “Note Purchase Agreement” shall mean the Amended and Restated Note Purchase Agreement dated as of the date hereof, among Borrower, the other Note Parties signatory thereto, the financial institutions identified therein as Purchasers, and BIA Digital Partners SBIC II LP, as agent for the Purchasers (in such capacity, “ Agent ”) as amended, supplemented and/or modified from

 
-1-

 

 time to time.  Capitalized terms that are used herein and not defined herein shall have the meaning given to such terms in the Note Purchase Agreement.

This Note may be voluntarily prepaid, and is subject to mandatory prepayment, in accordance with the provisions applicable to prepayments set forth in the Note Purchase Agreement.

This Note shall be construed and interpreted in accordance with the laws of the State of New York (excluding the laws applicable to conflicts or choice of law).  If any of the terms of this Note, or any agreement or instrument securing payment hereof, shall be declared invalid by any court of competent jurisdiction, such invalidity shall not affect any of the other terms hereof or such other instrument.

This Note is one of the Notes referred to in the Note Purchase Agreement.  The holder of this Note is entitled to all of the benefits under the Note Purchase Agreement and the other Note Documents including certain security provided thereunder and, upon the occurrence of certain events or conditions, payment of the Default Rate of interest.  In addition, in case an Event of Default shall occur, the principal of, and accrued interest and fees, if any, on this Note shall become due and payable in the manner and with the effect provided in the Note Purchase Agreement.

Borrower hereby waives presentment for payment, demand, and, except for notices specifically required by the Note Purchase Agreement, notice of nonpayment, notice of protest, and protest of this Note, and all other notices or demands in connection with the delivery, acceptance, performance, default, dishonor, or enforcement of the payment of this Note.

This Note was issued with original issue discount (as defined in § 1273(a) of the Code and Regulation § 1-1273-1 promulgated thereunder). The Note Purchaser can obtain the information described in Regulation § 1. 1275-3 promulgated under the Code by writing to: Global Telecom and Technology, Inc., 8484 Westpark Drive, Suite 720, McLean, Virginia 22102, Attention:  Chief Financial Officer.


[Signature Page to Follow]

 
-2-

 


IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the date first above written.

GLOBAL TELECOM & TECHNOLOGY, INC .
 
By:   /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
By: /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
PACKETEXCHANGE, INC.
 
 
By:  /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
PACKETEXCHANGE (USA), INC.
 
 
By:  /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
WBS CONNECT, LLC
 
 
By: /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  CEO and President of the Sole Managing Member
 
 
NLAYER COMMUNICATIONS, INC.
 
 
By:    /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 










Note
(Plexus Fund II, LP)


EXHIBIT 10.7

 
AMENDED AND RESTATED NOTE

THIS AMENDED AND RESTATED NOTE (“ NOTE ”) HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.


THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE NOTE PURCHASE AGREEMENT (AS SUCH TERM IS DEFINED BELOW) AND ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SECOND AMENDED AND RESTATED INTERCREDITOR AGREEMENT (THE “ INTERCREDITOR AGREEMENT ”) DATED AS OF APRIL 30, 2012 AMONG SILICON VALLEY BANK, AS SENIOR LENDER, THE SUBORDINATED CREDITORS PARTY THERETO, AND BIA DIGITAL PARTNERS SBIC II LP, AS AGENT FOR THE SUBORDINATED CREDITORS, AND ACKNOWLEDGED BY THE BORROWER (AS SUCH TERM IS DEFINED BELOW) AS THE SAME  MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AS PERMITTED UNDER THE INTERCREDITOR AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.



$8,500,000
April 30, 2012
 
 
FOR VALUE RECEIVED, intending to be legally bound hereby, GLOBAL TELECOM & TECHNOLOGY, INC ., a Delaware corporation (“ GTTI ”), GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC. , a Virginia corporation (“ GTTA ”), WBS CONNECT, LLC, a Colorado limited liability company (“ WBS ”), PACKETEXCHANGE, INC. , a Delaware corporation (“ PEI ”), PACKETEXCHANGE (USA), INC ., a Delaware corporation (“ PEIUSA ”) and NLAYER COMMUNICATIONS, INC. , an Illinois corporation (“ nLayer ” and together with GTTI, GTTA, WBS, PEI and PEIUSA, individually and collectively, jointly and severally, the “ Borrower ”), hereby promise to pay to the order of BIA DIGITAL PARTNERS SBIC II LP , a Delaware limited partnership or its registered assigns (the “ Purchaser ”) at the office of the Purchaser initially located at 15120 Enterprise Court, Chantilly, VA 20151 (or such other address as the Purchaser may specify in writing to Borrower), the principal sum of EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000), or such lesser amount as shall equal the aggregate unpaid principal amount of this Note, on the dates specified in the Note Purchase Agreement and to pay interest on such principal amount on the dates and at the rates (including, if applicable, the Default Rate) specified in the Note Purchase Agreement.  All payments due to the Purchaser under this Note shall be made at the place, in the type of money and funds and in the manner specified in the Note Purchase Agreement.

As used in this Note, “Note Purchase Agreement” shall mean the Amended and Restated Note Purchase Agreement dated as of the date hereof, among Borrower, the other Note Parties signatory thereto, the financial institutions identified therein as Purchasers and BIA Digital Partners SBIC II LP, as agent for the Purchasers (in such capacity the “ Agent ”), as amended, supplemented and/or modified from

 

 
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time to time.  Capitalized terms that are used herein and not defined herein shall have the meaning given to such terms in the Note Purchase Agreement.

This Note may be voluntarily prepaid, and is subject to mandatory prepayment, in accordance with the provisions applicable to prepayments set forth in the Note Purchase Agreement.

This Note shall be construed and interpreted in accordance with the laws of the State of New York (excluding the laws applicable to conflicts or choice of law).  If any of the terms of this Note, or any agreement or instrument securing payment hereof, shall be declared invalid by any court of competent jurisdiction, such invalidity shall not affect any of the other terms hereof or such other instrument.

The holder of this Note is entitled to all of the benefits under the Note Purchase Agreement and the other Note Documents including certain security provided thereunder and, upon the occurrence of certain events or conditions, payment of the Default Rate of interest.  In addition, in case an Event of Default shall occur, the principal of, and accrued interest and fees, if any, on this Note shall become due and payable in the manner and with the effect provided in the Note Purchase Agreement.

Borrower hereby waives presentment for payment, demand, and, except for notices specifically required by the Note Purchase Agreement, notice of nonpayment, notice of protest, and protest of this Note, and all other notices or demands in connection with the delivery, acceptance, performance, default, dishonor, or enforcement of the payment of this Note.

This Note was issued with original issue discount (as defined in § 1273(a) of the Code and Regulation § 1-1273-1 promulgated thereunder). The Purchaser can obtain the information described in Regulation § 1. 1275-3 promulgated under the Code by writing to: Global Telecom and Technology, Inc., 8484 Westpark Drive, Suite 720, McLean, Virginia 22102, Attention:  Chief Financial Officer.

This Note is the Amended and Restated Note referred to in Section 2.1.5(a) of the Note Purchase Agreement. This Note amends and restates the indebtedness evidenced by (i) that certain Note, dated June 6, 2011, previously issued by Borrowers (other than nLayer) in favor of Purchaser (the “ Initial Takedown Note ”), and (ii) that certain Note, dated September 19, 2011, previously issued by Borrowers (other than nLayer) in favor of Purchaser (the “ Subsequent Takedown Note ,” together with the Initial Takedown Note, the “ Prior Notes ”).  This Note evidences a continuation of, and not a repayment and reborrowing, termination or novation of, the indebtedness heretofore outstanding under the Prior Notes.


[Signature Page to Follow]


 
 
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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the date first above written.

 
GLOBAL TELECOM & TECHNOLOGY, INC .
 
 
By: /s/ Richard D. Calder, Jr.
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
   
GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.
 
 
By:  /s/ Richard D. Calder, Jr.                                                                
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
PACKETEXCHANGE, INC.
 
 
By:  /s/ Richard D. Calder, Jr.                                             
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
PACKETEXCHANGE (USA), INC.
 
 
By:     /s/ Richard D. Calder, Jr.  
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
WBS CONNECT, LLC
 
 
By:  /s/ Richard D. Calder, Jr.                                                              
Name:  Richard D. Calder, Jr.
Title:  CEO and President of the Sole Managing Member
 
 
NLAYER COMMUNICATIONS, INC.
 
 
By:  /s/ Richard D. Calder, Jr.                                                               
Name:  Richard D. Calder, Jr.
Title:  President and Chief Executive Officer
 
 
 
 



Amended and Restated Note
(BIA Digital Partners SBIC II LP)
EXHIBIT 99.1

 
GTT Acquires nLayer Communications, Inc.
 
Accelerates Drive to Strengthen Service Portfolio and Increase Global Network Footprint

McLean, VA, May 1, 2012 — Global Telecom & Technology, Inc. (“GTT”) (GTLT:OTCBB), a global network operator delivering managed data services to large enterprise, government and carrier customers in over 80 countries worldwide, today announced the acquisition of privately-held, Chicago-based nLayer Communications, Inc.

“Adding the nLayer business continues our strategic path to create a company able to supply a broad portfolio of data networking services around the world, to both wholesale and enterprise customers” states Rick Calder, President and Chief Executive Officer of Global Telecom & Technology. “The combination of our existing global footprint with the state of the art nLayer IP/MPLS backbone will enhance and expand our service portfolio. We will continue to grow the nLayer network to strengthen our capabilities as a world-class IP Transit player and Ethernet transport provider.

"Our goal is to provide a solution-oriented networking portfolio that will allow our customers to better meet the business challenges that face them. This acquisition accelerates our established growth curve towards becoming a more asset-based network solution provider, capable of delivering complex, integrated network solutions. The ability to provide robust, scalable and secure private networking services at Internet economics will further enhance the connectivity options available to our customers.”

“nLayer is excited to join with GTT to collectively drive growth in the global IP Transit and Ethernet markets,” said Jordan Lowe, President of nLayer who will remain extensively involved in the business. “We believe that our combination will deliver significant benefits to our customers. The integration of the networks will further enhance and add greater value to our IP Transit proposition, as well as increasing the availability of end-to-end Ethernet transport services”. Richard Steenbergen, founder and CTO at nLayer, will assume the same role at GTT, and will be responsible for running the network integration and ensuring the continuation of the renowned engineering excellence and service quality associated with the nLayer services.

About Global Telecom & Technology

GTT is a global network operator delivering managed data services to large enterprise, government and carrier customers in over 80 countries worldwide. GTT provides customers with innovative connectivity solutions by utilizing our own network assets - linking over 100 Points of Presence across North America, Europe and Asia - and extending them through our 800 partners worldwide. Our Network as a Service proposition delivers flexible, reliable and scalable network infrastructure, capable of both public and secure private networking. We simplify network deployment by removing the complexity of multi-vendor solutions while offering the cost efficiencies of a single partner. For over 14 years GTT has provided world class project management, rapid service implementation and global 24/7 end-to-end solution monitoring and support. GTT is headquartered in the Washington, DC metro region with offices in London, Dusseldorf and Denver. For more information visit the GTT website at www.gt-t.net.

For GTT Media Inquiries, please contact:
Michelle Reilly
Director, Marketing Operations
1.703.442.5582
michelle.reilly@gt-t.net
 
For GTT Investor Relations Inquiries, please contact:
Nazir Rostom
1.703.442.5586
nazir.rostom@gt-t.net