-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WyB5DsKUnApEw7AXWaD+ECWGvDxktyiuYj/o6gj2A0GlGqhpHqyaRQp/VRnIvLB/ Dd+Th/IsxbVHejDSt+vVDw== 0000891092-07-003998.txt : 20070918 0000891092-07-003998.hdr.sgml : 20070918 20070918172527 ACCESSION NUMBER: 0000891092-07-003998 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20070912 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070918 DATE AS OF CHANGE: 20070918 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOAMERICA INC CENTRAL INDEX KEY: 0001101268 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 223693371 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29359 FILM NUMBER: 071123161 BUSINESS ADDRESS: STREET 1: C/O GOAMERICA, INC. STREET 2: 433 HACKENSACK AVENUE CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2019961717 MAIL ADDRESS: STREET 1: C/O GOAMERICA STREET 2: 401 HACKENSACK AVENUE CITY: HACKENSACK STATE: NJ ZIP: 07601 8-K 1 e28555_8k.txt FORM 8-K 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): September 12, 2007 GOAMERICA, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 0-29359 22-3693371 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 433 HACKENSACK AVENUE, HACKENSACK, NJ 07601 ------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 996-1717 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): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |X| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| 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. Merger Agreement with Hands On: As previously announced, GoAmerica, Inc. (the "Company" or "GoAmerica") executed a definitive merger agreement, dated as of September 12, 2007 (the "Merger Agreement"), with Hands On Video Relay Services, Inc. ("HOVRS"), pursuant to which HOVRS will become a wholly-owned subsidiary of the Company and the stockholders of HOVRS will receive up to $35 million in cash and up to 6.7 million shares of the Company's Common Stock. This acquisition will be financed by the issuances of GoAmerica Series A Preferred Stock and debt totaling $45 million to Clearlake Capital Group, pursuant to an Amended and Restated Stock Purchase Agreement and an Amended and Restated Second Lien Commitment Letter executed concurrently with the Merger Agreement and described below. Each HOVRS stockholder will be entitled to elect to receive either cash, GoAmerica Common Stock or a combination of cash and GoAmerica Common Stock in exchange for its HOVRS common or preferred stock. To the extent the HOVRS common and preferred stockholders elect to receive more than the available amount of stock or cash, the available stock or cash will be pro rated in accordance with procedures and formulas set forth in the Merger Agreement. The Merger Agreement provides that all HOVRS options that are vested immediately prior to the closing date must be exercised by that date, or else they will expire. The HOVRS stock issued on exercise of these options will be exchanged for a portion of the merger consideration. GoAmerica will assume certain HOVRS options that are not vested as of the closing date (up to a maximum of 220,498), which following the merger will become exercisable for the same number of shares of GoAmerica Common Stock as their holders would have received had they exercised their options immediately before the effectiveness of the merger. The parties executed a side letter, dated September 17, 2007 (the "Side Letter"), which amended the Merger Agreement to provide that HOVRS may, with GoAmerica's approval, grant options after the signing of the Merger Agreement to persons hired as employees of HOVRS after the date of the Merger Agreement. The Side Letter provides that any options so granted will not be counted toward the 220,498 maximum, and any options so granted will be assumed by GoAmerica. The proposed acquisition of HOVRS and the related equity issuances are subject to both GoAmerica and HOVRS stockholders' approval. The merger with HOVRS also is conditioned on consummation of GoAmerica's acquisition of the assets of Verizon's Telecommunications Relay Services ("TRS") business. The execution of the asset purchase agreement pertaining to the Verizon acquisition was announced on August 2, 2007. HOVRS is a privately held company headquartered in Rocklin, California, and a growing provider of video relay services. HOVRS also provides audio and video communications that allow deaf and hard-of-hearing people to communicate effectively and naturally with the hearing world by linking callers, via the Internet, to certified Video Interpreters, who interpret between the visual language of American Sign Language and the auditory language of a hearing person. HOVRS offers video relay services under the -2- "Hands On" brand and privately labeled for AT&T and Sprint, as well as community-based sign language interpreting services. Escrow Agreement: Pursuant to an Escrow Agreement to be executed at the closing of the HOVRS transaction, at the closing, a total of $5 million in cash will be deposited in an escrow fund with an independent escrow agent and an additional $200,000 will be held in a hold back fund controlled by a stockholder's agent, who will act as the agent of the former HOVRS stockholders for purposes of administering the escrow fund. The $5 million in escrow will secure the indemnification obligations of the former HOVRS stockholders to GoAmerica under the Merger Agreement. The $200,000 held in the hold back fund will be used to pay any out-of-pocket expenses of the stockholder's agent. The escrow fund will be released 12 months after the closing, to the extent there are then no claims against it. In the event there is any investigation pending by the Federal Communications Commission of HOVRS' marketing programs as of the 12th month following the closing, up to $2 million will be retained in the escrow fund after the initial 12 month period up to and through 24 months and, if a claim is brought within such time, until such claim is resolved. Lock-up and Registration Rights Agreement: At the closing of the merger, GoAmerica will enter into a Lock-Up and Registration Rights Agreement with all of the former HOVRS stockholders, pursuant to which they will o receive certain registration rights in the event that after the first anniversary of the closing of the transaction, GoAmerica shares of Common Stock maintain an average closing price of $20 or greater over any ninety day period; and o agree not to sell any GoAmerica Common Stock acquired in the merger during the first year following the closing of the merger, and not to sell GoAmerica stock in excess of the amounts allowed by SEC Rule 144 during the second year following the closing of the merger (which generally permits an individual to sell, during any three- month period, the greater of (1) 1% of GoAmerica's outstanding Common Stock or (2) the average weekly trading volume for GoAmerica's Common Stock as reported by NASDAQ). Support and Lock-up Agreement: A Support and Lock-Up Agreement was entered into on September 12, 2007, by and among GoAmerica and Ronald and Denise Obray, Edmond Routhier, Caymus Investment Group II, LLC, and Caymus Obray, LLC, stockholders representing more than 80% of the ownership of HOVRS. It provides that between signing of the Merger Agreement and consummation of the merger, such stockholders will not sell or otherwise transfer any direct or indirect interest in their shares of HOVRS, will not vote in favor of -3- any transaction involving HOVRS other than the transaction with GoAmerica, and will not otherwise frustrate or impede consummation of the merger. Transaction Financing: The acquisition of HOVRS will be financed through $5 million of committed equity financing and $40 million of committed senior debt financing, funded in each case by Clearlake Capital Group ("Clearlake Capital"). As previously announced on August 2, 2007, the transaction with Verizon will be financed through $35 million of committed equity financing and $30 million of committed senior debt financing, funded in each case by Clearlake Capital. Accordingly, Clearlake Capital's total financing commitment to GoAmerica, for both the HOVRS and Verizon transactions, is $110 million in debt and equity. Amended and Restated Stock Purchase Agreement: Concurrently with the execution of the HOVRS Merger Agreement, but subject to certain closing conditions, GoAmerica and one of the Clearlake Capital funds ("Clearlake") executed an amended and restated stock purchase agreement, dated as of September 12, 2007 (the "Amended and Restated Stock Purchase Agreement"), pursuant to which Clearlake agreed to purchase, in connection with the closing of the merger with HOVRS, an additional 967,118 shares of GoAmerica Series A Preferred Stock at a previously negotiated price of $5.17 per share. The Amended and Restated Stock Purchase Agreement amended and restated the stock purchase agreement between the parties dated as of August 1, 2007, pursuant to which Clearlake agreed to purchase 6,479,691 shares of Series A Preferred Stock at a price of $5.17 per share upon the closing of the acquisition of Verizon's TRS Division. Accordingly, the Amended and Restated Stock Purchase Agreement provides for the issuance of an aggregate of 7,446,809 shares of Series A Preferred Stock. As previously announced, Clearlake purchased 290,135 shares of Series A Preferred Stock from GoAmerica at a price of $5.17 per share pursuant to another stock purchase agreement between the parties, dated as of August 1, 2007. The issuances of Series A Preferred Stock under the Amended and Restated Stock Purchase Agreement, the purchase of assets from Verizon and the merger with HOVRS are subject to approval by GoAmerica's stockholders. Amended and Restated Investor Rights Agreements: As previously announced, GoAmerica and Clearlake executed an investor rights agreement, dated August 1, 2007 (the "Investor Rights Agreement"), pursuant to which GoAmerica granted Clearlake certain registration and other rights. On September 12, 2007, GoAmerica and Clearlake agreed on the form of a First Amended and Restated Investor Rights Agreement, to be entered into upon the closing of the Verizon transaction, unless the Verizon transaction closes concurrently with the HOVRS transaction, in which case the parties (including the former stockholders of HOVRS) will -4- execute a Second Amended and Restated Investor Rights Agreement, described below. The First Amended and Restated Investor Rights Agreement amends and restates the Investor Rights Agreement, and grants Clearlake rights to receive certain information about the Company. Clearlake agrees to keep such information confidential to the extent it constitutes material non-public information. Also on September 12, 2007, the Company, Clearlake and HOVRS agreed on the form of a Second Amended and Restated Investor Rights Agreement, which will be executed in connection with the closing of the acquisition of HOVRS. The Second Amended and Restated Investor Rights Agreement provides that the Common Stock of the Company to be issued to the former HOVRS stockholders in connection with the HOVRS acquisition will be included in the registration statements the Company is required to file pursuant to the Second Amended and Restated Investor Rights Agreement, to the extent described therein. In addition, the Second Amended and Restated Investor Rights Agreement provides that Clearlake and all of the holders of HOVRS capital stock immediately prior to the merger will take all necessary action to cause the Board of Directors of the Company after the closing of the HOVRS transaction to be comprised of up to eight directors, two of whom will be designated by Clearlake; provided that, if Clearlake at any time ceases to own at least 1,600,000 shares of Common Stock (as adjusted for stock dividends, splits, combinations or similar events, and including shares of Common Stock issuable upon conversion of the Series A Preferred Stock), then Clearlake will only be entitled to designate one director, and if Clearlake at any time ceases to own any Common Stock, then Clearlake will cease to be entitled to designate a director. It is also contemplated that the initial post-HOVRS acquisition Board of Directors will be comprised of three individuals designated by HOVRS. Credit Agreement and Amended and Restated Debt Commitment Letters: As previously announced, GoAmerica entered into a Credit Agreement, dated as of August 1, 2007 (the "Credit Agreement"), with the Lenders named therein and Clearlake Capital, as Administrative Agent and Collateral Agent, pursuant to which GoAmerica received a $1.0 million bridge loan, which may be increased to up to $3.5 million. On September 14, 2007, GoAmerica drew down another $1.75 million under the Credit Agreement. Interest on the loan is payable monthly, at the LIBO rate, plus 8%. Interest is payable in cash, except that a portion of the interest equal to 4% will be payable in kind in the form of additional loans. The loan will be repaid upon the closing of the Verizon transaction, and in any event not later than August 2, 2008. The loan is secured by substantially all of the assets of GoAmerica and its principal subsidiaries and the stock of such principal subsidiaries. GoAmerica and Clearlake Capital executed an amended and restated first lien commitment letter, dated September 12, 2007 (the "Amended and Restated First Lien Commitment Letter"), which amended and restated the first lien commitment letter, dated August 1, 2007, executed by the parties. The principal substantive change in the Amended and Restated First Lien Commitment Letter pertains to the description of the -5- capital expenditure covenant that will be contained in the definitive loan documents. Under the Amended and Restated First Lien Commitment Letter, GoAmerica agrees that the maximum amount of annual capital expenditures (excluding capitalized labor) will equal 30% of a plan agreed to by the parties. Pursuant to the Amended and Restated First Lien Commitment Letter, Clearlake commits to loan GoAmerica $30 million of senior debt to finance the purchase of the VRS business from Verizon, for the repayment of expenses and working capital purposes and for the repayment of certain of the Company's existing secured debt. The loan, which will close upon the closing of the Verizon transaction, will bear interest at the rate of LIBOR plus 700 basis points per annum, payable quarterly in arrears. The loan will be secured by the equity interests of GoAmerica's material subsidiaries and by substantially all of the assets of GoAmerica and such subsidiaries. GoAmerica's material subsidiaries will guarantee the repayment of the loan. These financial terms are the same as those contained in the first lien commitment letter executed in August 2007. GoAmerica and Clearlake Capital executed an amended and restated second lien commitment letter, dated September 12, 2007 (the "Amended and Restated Second Lien Commitment Letter"), pursuant to which Clearlake commits to provide $40 million of senior debt financing in connection with the acquisition of HOVRS. The loan, which will close upon the closing of the HOVRS Merger Agreement, will bear interest at the rate of LIBOR plus 900 basis points per annum, payable quarterly in arrears. The loan will be secured by the equity interests of GoAmerica's material subsidiaries and by substantially all of the assets of GoAmerica and such subsidiaries. Go America's material subsidiaries will guarantee the repayment of the loan. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. See Item 1.01 above. Item 5.03 Amendments to Articles of Incorporation or By-Laws; Change in Fiscal Year. On September 12, 2007, the Company's Board of Directors amended its By-laws to correct and clarify the stockholder vote required to approve various matters. Item 9.01. Financial Statements and Exhibits. (d) Exhibits The following exhibits are filed with this Current Report on Form 8-K: Exhibit 3.2 GoAmerica, Inc.'s By-laws, As Amended and Restated through September 12, 2007. Exhibit 10.1 Merger Agreement and Side Letter -6- Exhibit 10.2 Support and Lock-up Agreement Exhibit 10.3 Amended and Restated Stock Purchase Agreement Exhibit 10.4 Credit Agreement, dated as of August 1, 2007, among GoAmerica, Inc., the Lenders named therein and Clearlake Capital Group, L.P., as Administrative Agent and Collateral Agent, is incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on August 7, 2007. Exhibit 99.1 Amended and Restated First Lien Commitment Letter, dated September 12, 2007, between GoAmerica, Inc. and Clearlake Capital Group, L.P. Exhibit 99.2 Amended and Restated Second Lien Commitment Letter, dated September 12, 2007, between GoAmerica, Inc. and Clearlake Capital Group, L.P. Exhibit 99.3 Form of Escrow Agreement Exhibit 99.4 Form of Lock-up and Registration Rights Agreement Exhibit 99.5 Form of First Amended and Restated Investor Rights Agreement Exhibit 99.6 Form of Second Amended and Restated Investor Rights Agreement -7- 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. GOAMERICA, INC. By: /s/ Wayne D. Smith ---------------------------------- Wayne D. Smith Executive Vice President, General Counsel and Secretary Dated: September 18, 2007 -8- Exhibit Index Exhibit No. Description ----------- ----------- Exhibit 3.2 GoAmerica, Inc.'s By-laws, As Amended and Restated through September 12, 2007. Exhibit 10.1 Merger Agreement and Side Letter Exhibit 10.2 Support and Lock-up Agreement Exhibit 10.3 Amended and Restated Stock Purchase Agreement Exhibit 10.4 Credit Agreement, dated as of August 1, 2007, among GoAmerica, Inc., the Lenders named therein and Clearlake Capital Group, L.P., as Administrative Agent and Collateral Agent, is incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on August 7, 2007. Exhibit 99.1 Amended and Restated First Lien Commitment Letter, dated September 12, 2007, between GoAmerica, Inc. and Clearlake Capital Group, L.P. Exhibit 99.2 Amended and Restated Second Lien Commitment Letter, dated September 12, 2007, between GoAmerica, Inc. and Clearlake Capital Group, L.P. Exhibit 99.3 Form of Escrow Agreement Exhibit 99.4 Form of Lock-up and Registration Rights Agreement Exhibit 99.5 Form of First Amended and Restated Investor Rights Agreement Exhibit 99.6 Form of Second Amended and Restated Investor Rights Agreement -9- EX-3.2 2 e28555ex3_2.txt BY-LAWS Exhibit 3.2 BY-LAWS OF GOAMERICA, INC. (a Delaware corporation) (As Amended and Restated on September 12, 2007) ARTICLE I Stockholders SECTION 1. Annual Meetings. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year at such date and time, within or without the State of Delaware, as the Board of Directors shall determine. SECTION 2. Special Meetings. (a) Special meetings of stockholders for the transaction of such business as may properly come before the meeting may be called by order of the Board of Directors or by stockholders holding together at least a majority of all the shares of the Corporation entitled to vote at the meeting. (b) Notwithstanding the provisions of Section 2(a), immediately following the consummation of a public offering by the Corporation of any of its capital stock, special meetings of stockholders may be called only by the President, the Chairman of the Board of Directors (if any) or by order of a majority of the Board of Directors. (c) Any such meeting held pursuant to this Section 2 shall be held at such date and time, within or without the State of Delaware, as may be specified by such order. Whenever the directors shall fail to fix such place, the meeting shall be held at the principal executive office of the Corporation. SECTION 3. Notice of Meetings. Written notice of all meetings of the stockholders, stating the place, date and hour of the meeting and the place within the city or other municipality or community at which the list of stockholders may be examined, shall be mailed or delivered to each stockholder not less than 10 nor more than 60 days prior to the meeting. Notice of any special meeting shall state in general terms the purpose or purposes for which the meeting is to be held and the business transacted at any such meeting shall be limited to matters relating to the purpose or purposes set forth in the notice of meeting. SECTION 4. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. -2- SECTION 6. Quorum. Except as otherwise provided by law or the Corporation's Certificate of Incorporation, a quorum for the transaction of business at any meeting of stockholders shall consist of the holders of record of a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote at the meeting, present in person or by proxy. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time, until a quorum shall have been obtained. When a quorum is once present it is not broken by the subsequent withdrawal of any stockholder. SECTION 7. Organization. Meetings of stockholders shall be presided over by the Chairman, if any, or if none or in the Chairman's absence the Vice- Chairman, if any, or if none or in the Vice-Chairman's absence the President, if any, or if none or in the President's absence a Vice-President, or, if none of the foregoing is present, by a chairman to be chosen by the stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corporation, or in the Secretary's absence an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall appoint any person present to act as secretary of the meeting. SECTION 8. Voting; Proxies; Required Vote. (a) At each meeting of stockholders, every stockholder shall be entitled to vote in person or by proxy (but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period), and, unless the Certificate of Incorporation provides otherwise, shall have one vote for each share of stock entitled to vote registered in the name of such stockholder on the books of the Corporation on the applicable record date fixed pursuant to these By-laws. At all elections of directors the voting may but need not be by ballot and a plurality of the votes cast there shall be sufficient to elect. All other elections and questions presented to the stockholders at a meeting at which a quorum is present shall, unless otherwise provided by the Certificate of Incorporation, these By-laws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock of the Corporation which are present in person or by proxy and entitled to vote thereon. (b) Any action required or permitted to be taken at any meeting of stockholders may, except as otherwise required by law or the Certificate of Incorporation, be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of record of the issued and outstanding capital stock of the Corporation having a majority of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and the writing or writings are filed with the permanent records of the Corporation. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who -3- have not consented in writing. Notwithstanding the provisions of this Section 8(b), immediately following the consummation of a public offering by the Corporation of any of its capital stock, stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provision of law, the Certificate of Incorporation or these By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 8(b). (c) Where a separate vote by a class or classes, present in person or represented by proxy, shall constitute a quorum entitled to vote on that matter, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, unless otherwise provided in the Corporation's Certificate of Incorporation. SECTION 9. Inspectors. Unless otherwise required by law, the Board of Directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not so appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, and the validity and effect of proxies, and shall receive votes, ballot or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by such inspector or inspectors and execute a certificate of any fact found by such inspector or inspectors. SECTION 10. Nominating and Proposal Procedures. Without limiting any other notice requirements imposed by law, the Certificate of Incorporation or these By-laws, any nomination for election to the Board of Directors or other proposal to be presented by any stockholder at a stockholders' meeting (the "Proponent") will be properly presented only if written notice of the Proponent's intent to make such nomination or proposal has been personally delivered to and otherwise in fact received by the Secretary of the Corporation not later than (i) for the annual meeting, at least 150 days prior to the anniversary date of the prior year's annual meeting, or (ii) for any special meeting, the close of business on the tenth day after notice of such meeting is first given to stockholders; provided, -4- however, that nothing contained herein shall limit or restrict the right of any stockholder to present at a stockholders' meeting any proposal made by such stockholder in accordance with Rule 14a-8 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as it may hereafter be amended, or any successor rule. Such notice by the Proponent to the Corporation shall set forth in reasonable detail information concerning the nominee (in the case of a nomination for election to the Board of Directors) or the substance of the proposal (in the case of any other stockholder proposal), and shall include: (a) the name and residence address and business address of the stockholder who intends to present the nomination or other proposal or of any person who participates or is expected to participate in making such nomination and of the person or persons, if any, to be nominated and the principal occupation or employment and the name, type of business and address of the business, corporation or other organization in which such employment is carried on of each such stockholder, participant and nominee; (b) a representation that the Proponent is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present the nomination or other proposal specified in the notice; (c) a description of all arrangements or understandings between the Proponent and any other person or persons (naming such person or persons) pursuant to which the nomination or other proposal is to be made by the Proponent; (d) such other information regarding each proposal and each nominee as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nomination or other proposal been made by the Board of Directors; and (e) the consent of each nominee, if any, to serve as a director of the Corporation if elected. Within fifteen (15) days following the receipt by the Secretary of a notice of nomination or proposal pursuant hereto, the Secretary shall advise the Proponent in writing of any deficiencies in the notice and of any additional information the Corporation is requiring to determine the eligibility of the proposed nominee or the substance of the proposal. A Proponent who has been notified of deficiencies in the notice of nomination or proposal and/or of the need for additional information shall cure such deficiencies and/or provide such additional information within fifteen (15) days after receipt of the notice of such deficiencies and/or the need for additional information. The presiding officer of a meeting of stockholders may, in his or her sole discretion, refuse to acknowledge a nomination or other proposal presented by any person that does not comply with the foregoing procedure and, upon his or her instructions, all votes cast for such nominee or with respect to such proposal may be disregarded. -5- ARTICLE II Board of Directors SECTION 1. General Powers. The business, property and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors. SECTION 2. Qualification; Number; Term; Remuneration. (a) Each director shall be at least 18 years of age. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the entire Board shall be such number as may be fixed from time to time by action of the stockholders or Board of Directors, but in no event less than one, one of whom may be selected by the Board of Directors to be its Chairman. The use of the phrase "entire Board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. (b) Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified or until their earlier resignation or removal; provided, however, that, immediately following the consummation of a public offering by the Corporation of any of its capital stock, the Board of Directors of the Company shall be divided into three classes (as nearly equal in number as possible), which are hereby designated Class A, Class B and Class C, respectively. The term of office of the initial Class A Directors shall expire at the first annual meeting of stockholders or any special meeting in lieu thereof following such public offering, the term of office of the initial Class B Directors shall expire at the second annual meeting of stockholders or any special meeting in lieu thereof following such public offering, and the term of office of the initial Class C Directors shall expire at the third annual meeting of stockholders or any special meeting in lieu thereof following such public offering. At each annual meeting of stockholders or special meeting in lieu thereof after the initial classification of Directors, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders or special meeting in lieu thereof after their election and until their successors are duly elected and qualified. Upon the addition of any one or more new Directors to the Board of Directors, which new Director is not a successor to any then current Director, each such new Director shall be added in turn first to Class A, then to Class B, then to Class C, provided, however, that the addition of any new Director to one particular class may be modified if such modification serves to more evenly distribute the number of Directors in all such classes. (c) Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation -6- therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. SECTION 3. Quorum and Manner of Voting. Except as otherwise provided by law, a majority of the entire Board shall constitute a quorum. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting from time to time to another time and place without notice. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 4. Places of Meetings. Meetings of the Board of Directors may be held at any place within or without the State of Delaware, as may from time to time be fixed by resolution of the Board of Directors, or as may be specified in the notice of meeting. SECTION 5. Annual Meeting. Following the annual meeting of stockholders, the newly elected Board of Directors shall meet for the purpose of the election of officers and the transaction of such other business as may properly come before the meeting. Such meeting may be held without notice immediately after the annual meeting of stockholders at the same place at which such stockholders' meeting is held. SECTION 6. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as the Board of Directors shall from time to time by resolution determine. Notice need not be given of regular meetings of the Board of Directors held at times and places fixed by resolution of the Board of Directors. Where appropriate communication facilities are reasonably available, any or all Directors shall have the right to participate in all or any part of a meeting of the Board of Directors, or any Committee thereof, by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other. SECTION 7. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, President, Vice-Chairman or by a majority of the directors then in office. SECTION 8. Notice of Special Meetings. A notice of the place, date and time and the purpose or purposes of each special meeting of the Board of Directors shall be given to each director by mailing the same at least two days before the special meeting, or by telegraphing or telephoning the same or by delivering the same personally not later than the day before the day of the meeting. SECTION 9. Organization. At all meetings of the Board of Directors, the Chairman, if any, or if none or in the Chairman's absence or inability to act the President, or in the President's absence or inability to act any Vice- President who is a member of the Board of Directors, or in such Vice-President's absence or inability to act a chairman chosen by the directors, shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board of Directors when present, and, in the Secretary's absence, the presiding officer may appoint any person to act as secretary. -7- SECTION 10. Resignation; Removal. Any director may resign at any time upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares of stock outstanding and entitled to vote for the election of directors. SECTION 11. Vacancies. Unless otherwise provided in these By-laws, vacancies on the Board of Directors, whether caused by resignation, death, disqualification, removal, an increase in the authorized number of directors or otherwise, may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director, or at a special meeting of the stockholders, by the holders of shares entitled to vote for the election of directors. SECTION 12. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the directors consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. ARTICLE III Committees SECTION 1. Appointment. From time to time the Board of Directors, by a resolution adopted by a majority of the entire Board, may appoint any committee or committees for any purpose or purposes, to the extent lawful, which shall have powers as shall be determined and specified by the Board of Directors in the resolution of appointment. SECTION 2. Procedures, Quorum and Manner of Acting. Each committee shall fix its own rules of procedure, and shall meet where and as provided by such rules or by resolution of the Board of Directors. Except as otherwise provided by law, the presence of a majority of the then appointed members of a committee shall constitute a quorum for the transaction of business by that committee, and in every case where a quorum is present the affirmative vote of a majority of the members of the committee present shall be the act of the committee. Each committee shall keep minutes of its proceedings, and actions taken by a committee shall be reported to the Board of Directors. SECTION 3. Action by Written Consent. Any action required or permitted to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if all the members of the committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the committee. SECTION 4. Term; Termination. In the event any person shall cease to be a director of the Corporation, such person shall simultaneously therewith cease to be a member of any committee appointed by the Board of Directors. -8- ARTICLE IV Officers SECTION 1. Officers. The Corporation shall have as officers, a Chairman of the Board, a President, a Chief Financial Officer, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, one or more assistant secretaries, one or more assistant treasurers and such other officers as the Board may from time to time deem proper. Any two or more offices may be held by the same person except the offices of the President and Secretary. SECTION 2. Election of Officers. The officers of the Corporation shall be chosen by the Board of Directors. SECTION 3. Term of Office and Remuneration. The term of office of all officers shall be one year and until their respective successors have been elected and qualified, but any officer may be removed from office, either with or without cause, at any time by the Board of Directors. Any vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. The remuneration of all officers of the Corporation may be fixed by the Board of Directors or in such manner as the Board of Directors shall provide. SECTION 4. Resignation; Removal. Any officer may resign at any time upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Any officer shall be subject to removal, with or without cause, at any time by vote of a majority of the entire Board. SECTION 5. Chairman of the Board. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may from time to time be assigned by the Board of Directors. SECTION 6. President. The President shall have general management and supervision of the property, business and affairs of the Corporation and over its other officers; may appoint and remove assistant officers and other agents and employees, other than officers referred to in Section 1 of this Article IV; and may execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other obligations and instruments. SECTION 7. Vice-President. A Vice-President may execute and deliver in the name of the Corporation contracts and other obligations and instruments pertaining to the regular course of the duties of said office, and shall have such other authority as from time to time may be assigned by the Board of Directors or the President. -9- SECTION 8. Chief Financial Officer. (a) The Chief Financial Officer shall keep, or cause to be kept, the books and records of account of the Corporation. (b) The Chief Financial Officer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositories as may be designated from time to time by resolution of the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and the Board, whenever they request it, an account of all of his transactions as Chief Financial Officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed from time to time by the Board or as the President may from time to time delegate. SECTION 9. Treasurer. The Treasurer shall in general have all duties incident to the position of Treasurer and such other duties as may be assigned by the Board of Directors or the President. SECTION 10. Secretary. The Secretary shall in general have all the duties incident to the office of Secretary and such other duties as may be assigned by the Board of Directors or the President. SECTION 11. Assistant Officers. Any assistant officer shall have such powers and duties of the officer such assistant officer assists as such officer or the Board of Directors shall from time to time prescribe. ARTICLE V Books and Records SECTION 1. Location. The books and records of the Corporation may be kept at such place or places within or outside the State of Delaware as the Board of Directors or the respective officers in charge thereof may from time to time determine. The record books containing the names and addresses of all stockholders, the number and class of shares of stock held by each and the dates when they respectively became the owners of record thereof shall be kept by the Secretary as prescribed in the By-laws and by such officer or agent as shall be designated by the Board of Directors. SECTION 2. Addresses of Stockholders. Notices of meetings and all other corporate notices may be delivered personally or mailed to each stockholder at the stockholder's address as it appears on the records of the Corporation. -10- ARTICLE VI Certificates Representing Stock SECTION 1. Certificates; Signatures. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate, signed by or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificate form. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The name of the holder of record of the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the books of the Corporation. SECTION 2. Transfers of Stock. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, shares of capital stock shall be transferable on the books of the Corporation only by the holder of record thereof in person, or by duly authorized attorney, upon surrender and cancellation of certificates for a like number of shares, properly endorsed, and the payment of all taxes due thereon. SECTION 3. Fractional Shares. The Corporation may, but shall not be required to, issue certificates for fractions of a share where necessary to effect authorized transactions, or the Corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a stockholder except as therein provided. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. SECTION 4. Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate of stock in place of any certificate, theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Board of Directors may require the owner of any lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against -11- it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate. ARTICLE VII Dividends Subject always to the provisions of law and the Certificate of Incorporation, the Board of Directors shall have full power to determine whether any, and, if any, what part of any, funds legally available for the payment of dividends shall be declared as dividends and paid to stockholders; the division of the whole or any part of such funds of the Corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the stockholders as dividends or otherwise; and before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE VIII Ratification Any transaction, questioned in any law suit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or stockholder, non-disclosure, miscomputation, or the application of improper principles of practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the stockholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction. ARTICLE IX Indemnification SECTION 1. Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action or suit, whether or not by or in the right of the Corporation, or proceeding, whether civil, criminal, administrative or investigative -12- (collectively, a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss, including judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement, incurred, suffered or paid by or on behalf of such person, and expenses (including attorneys' fees) reasonably incurred by such person. SECTION 2. Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys' fees) incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this Article or otherwise. SECTION 3. Claims. The right to indemnification and payment of expenses under the Certificate of Incorporation, these By-laws or otherwise shall be a contract right. If a claim for indemnification or payment of expenses under this Article is not paid in full within sixty days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law. SECTION 4. Non-Exclusivity of Rights. The rights conferred on any person by this Article shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-laws, agreement, vote of stockholders or disinterested directors or otherwise. SECTION 5. Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit enterprise. SECTION 6. Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. -13- ARTICLE X Corporate Seal The corporate seal shall have inscribed thereon the name of the Corporation and the year of its incorporation, and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said corporate seal. ARTICLE XI Fiscal Year The fiscal year of the Corporation shall be that which is determined by the Board of Directors, and is subject to change by the Board of Directors. ARTICLE XII Waiver of Notice Whenever notice is required to be given by these By-laws or by the Certificate of Incorporation or by law, a written waiver thereof, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. ARTICLE XIII Bank Accounts, Drafts, Contracts, Etc. SECTION 1. Bank Accounts and Drafts. In addition to such bank accounts as may be authorized by the Board of Directors, the primary financial officer or any person designated by said primary financial officer, whether or not an employee of the Corporation, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as he may deem necessary or appropriate, payments from such bank accounts to be made upon and according to the check of the Corporation in accordance with the written instructions of said primary financial officer, or other person so designated by the Treasurer. -14- SECTION 2. Contracts. The Board of Directors may authorize any person or persons, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 3. Proxies; Powers of Attorney; Other Instruments. The Chairman, the President or any other person designated by either of them shall have the power and authority to execute and deliver proxies, powers of attorney and other instruments on behalf of the Corporation in connection with the rights and powers incident to the ownership of stock by the Corporation. The Chairman, the President or any other person authorized by proxy or power of attorney executed and delivered by either of them on behalf of the Corporation may attend and vote at any meeting of stockholders of any company in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, or otherwise as specified in the proxy or power of attorney so authorizing any such person. The Board of Directors, from time to time, may confer like powers upon any other person. SECTION 4. Financial Reports. The Board of Directors may appoint the primary financial officer or other fiscal officer and/or the Secretary or any other officer to cause to be prepared and furnished to stockholders entitled thereto any special financial notice and/or financial statement, as the case may be, which may be required by any provision of law. ARTICLE XIV Amendments The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the By-laws of the Corporation, subject, however, to any limitation thereof contained in these By-laws. By-laws adopted by the Board of Directors may be repealed or changed, and new By-laws made, by the stockholders, and the stockholders may prescribe that any By-law made by them shall not be altered, amended or repealed by the Board of Directors. The stockholders also shall have the power to adopt, amend or repeal the By-laws of the Corporation; provided, however, that, immediately following the consummation of a public offering by the Corporation of any of its capital stock, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the By-laws of the Corporation. -15- EX-10.1 3 e28555ex10_1.txt AGREEMENT Exhibit 10.1 EXECUTION VERSION AGREEMENT AND PLAN OF MERGER BY AND AMONG GOAMERICA, INC., a Delaware corporation ("Acquirer"), HOVRS ACQUISITION CORPORATION, a Delaware corporation ("HOVRS Merger Sub"), HANDS ON VIDEO RELAY SERVICES, INC., a Delaware corporation ("HOVRS") AND BILL M. MCDONAGH ("Stockholders' Agent") September 12, 2007 TABLE OF CONTENTS Page 1. Definitions................................................................2 2. The Merger................................................................12 2.1. The Merger.........................................................12 2.2. Closing; Effective Time............................................13 2.3. Effect of the Merger...............................................13 2.4. Organizational Documents...........................................13 2.5. Corporate Governance...............................................13 2.6. Merger Consideration; Effect on HOVRS Securities...................14 2.7. Cash / Stock Election and Election Procedure.......................16 2.8. Exchange Procedures................................................23 2.9. Lost, Stolen or Destroyed HOVRS Certificates.......................26 2.10. Tax Consequences...................................................26 2.11. Taking of Necessary Action; Further Action.........................26 3. Representations and Warranties of HOVRS...................................26 3.1. Organization, Standing and Power...................................27 3.2. Authority..........................................................27 3.3. Governmental Authorization.........................................28 3.4. Financial Statements...............................................28 3.5. Capital Structure..................................................28 3.6. Absence of Certain Changes.........................................29 3.7. Absence of Undisclosed Liabilities.................................30 3.8. Litigation.........................................................30 3.9. Restrictions on Business Activities................................30 3.10. Intellectual Property..............................................30 3.11. Interested Party Transactions......................................34 3.12. Minute Books.......................................................34 3.13. Complete Copies of Materials.......................................34 3.14. HOVRS Material Contracts...........................................34 3.15. Inventory..........................................................35 3.16. Accounts Receivable................................................35 3.17. Customers and Suppliers............................................35 3.18. Employees and Consultants..........................................36 3.19. Title to Property..................................................36 3.20. Environmental Matters..............................................36 3.21. Taxes ..........................................................38 3.22. Employee Benefit Plans.............................................39 3.23. Employee Matters...................................................42 3.24. Insurance..........................................................42 3.25. Compliance With Laws...............................................43 3.26. Brokers' and Finders' Fee..........................................43 3.27. Privacy Policies and Web Site Terms and Conditions.................43 3.28. International Trade Matters........................................43 3.29. Proxy Statement and Information Statement..........................43 3.30. No Other Representations...........................................44 3.31. Board Approval.....................................................44 4. Representations and Warranties of Acquirer................................44 4.1. Organization, Standing and Power...................................45 4.2. Authority..........................................................45 4.3. Governmental Authorization.........................................46 4.4. Financial Statements...............................................46 4.5. Capital Structure..................................................47 4.6. Absence of Certain Changes.........................................47 4.7. Absence of Undisclosed Liabilities.................................48 4.8. Litigation.........................................................48 4.9. Restrictions on Business Activities................................48 4.10. Intellectual Property..............................................49 4.11. Interested Party Transactions......................................52 4.12. Minute Books.......................................................52 4.13. Complete Copies of Materials.......................................52 4.14. Acquirer Material Contracts........................................52 4.15. Inventory..........................................................53 4.16. Accounts Receivable................................................53 4.17. Customers and Suppliers............................................53 4.18. Employees and Consultants..........................................53 4.19. Title to Property..................................................54 4.20. Environmental Matters..............................................54 4.21. Taxes ..........................................................55 4.22. Employee Benefit Plans.............................................56 4.23. Employee Matters...................................................59 4.24. Insurance..........................................................59 4.25. Compliance With Laws...............................................60 4.26. Brokers' and Finders' Fee..........................................60 4.27. Privacy Policies and Web Site Terms and Conditions.................60 4.28. International Trade Matters........................................60 4.29. Proxy Statement and Information Statement..........................60 4.30. Board Approval.....................................................61 4.31. SEC Documents......................................................61 4.32. Issuance of Shares.................................................62 4.33. HOVRS Merger Sub...................................................62 4.34. No Other Representations...........................................62 5. Conduct Prior to the Effective Time.......................................63 5.1. Conduct of Business................................................63 5.2. No Solicitation....................................................66 v 6. Additional Agreements.....................................................67 6.1. Proxy Statement....................................................67 6.2. Preliminary Proxy Statement........................................68 6.3. HOVRS Stockholder Approval.........................................69 6.4. Acquirer Stockholder Approval......................................69 6.5. Access to Information..............................................69 6.6. Confidentiality....................................................70 6.7. Public Disclosure..................................................70 6.8. Regulatory Approval; Further Assurances............................70 6.9. HOVRS Options......................................................70 6.10. Form S-8 71 6.11. Issuance of Securities Exempt From Registration; Blue Sky Laws.....71 6.12. Escrow Agreement...................................................71 6.13. Listing of Additional Shares.......................................71 6.14. Tax Matters........................................................71 6.15. Clearlake..........................................................72 6.16. Expenses 72 6.17. Real Property Holding Corporation..................................72 6.18. Rule 144 Sales.....................................................72 6.19. Guaranty Releases..................................................72 6.20. Accountants' Letters...............................................73 6.21. Lock-up Agreement..................................................73 6.22. Radvision..........................................................73 6.23. Disclosure Schedule................................................73 7. Conditions to the Closing of the Merger...................................73 7.1. Conditions to Obligations of Each Party to Effect the Merger.......73 7.2. Additional Conditions to the Obligations of Acquirer...............75 7.3. Additional Conditions to Obligations of HOVRS......................75 8. Termination, Amendment and Waiver.........................................77 8.1. Termination........................................................77 8.2. Effect of Termination..............................................78 8.3. Amendment..........................................................78 8.4. Extension; Waiver..................................................78 9. Escrow and Indemnification................................................78 9.1. Escrow Fund........................................................78 9.2. Indemnification....................................................79 9.3. Escrow Period; Release From Escrow.................................81 9.4. Claims Upon Escrow Fund............................................82 9.5. Objections to Claims...............................................83 9.6. Claims by HOVRS Indemnitees........................................83 9.7. Resolution of Conflicts and Arbitration............................84 9.8. Stockholders' Agent................................................84 9.9. Actions of the Stockholders' Agent.................................86 vi 9.10. Third-Party Claims.................................................86 9.11. Tax Returns........................................................86 9.12. Tax Treatment of Indemnification Payments..........................87 10. General Provisions........................................................87 10.1. Notices ...........................................................87 10.2. Counterparts.......................................................88 10.3. Entire Agreement; Nonassignability; Parties in Interest............88 10.4. Severability.......................................................88 10.5. Remedies Cumulative................................................88 10.6. Governing Law......................................................88 10.7. Rules of Construction..............................................88 10.8. Enforcement........................................................89 10.9. Amendment; Waiver..................................................89 10.10. Attorneys' Fees....................................................89 10.11. Headings ..........................................................89 EXHIBIT 2.2 Form of Certificate of Merger EXHIBIT 2.5(a) Corporate Governance EXHIBIT 2.7(c)(i) Form of Lock-up and Registration Rights Agreement EXHIBIT 2.7(c)(ii) Form of Investment Representation Letter EXHIBIT 6.3 Form of Written Consent EXHIBIT 6.12 Form of Escrow Agreement EXHIBIT 7.2(f) Form of Legal Opinion of Counsel to HOVRS EXHIBIT 7.3(f) Form of Legal Opinion of Counsel to Acquirer EXHIBIT 7.3(h) Form of Amended and Restated Certificate of Incorporation vii AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of September 12, 2007 by and among GOAMERICA, INC., a Delaware corporation ("Acquirer"), HOVRS ACQUISITION CORPORATION, a Delaware corporation and a direct wholly owned subsidiary of Acquirer ("HOVRS Merger Sub"), HANDS ON VIDEO RELAY SERVICES, INC., a Delaware corporation ("HOVRS"), and BILL M. MCDONAGH, as the representative of the stockholders of HOVRS for purposes of this Agreement (the "Stockholders' Agent"). RECITALS A. The boards of directors of Acquirer and HOVRS each have determined that the strategic business combination pursuant to the terms and subject to the conditions set forth herein is in the best interests of their respective companies and stockholders. B. The boards of directors of each of Acquirer, HOVRS Merger Sub and HOVRS have approved this Agreement, and deem it advisable, fair and in the best interests of their respective stockholders that Acquirer acquire HOVRS through the statutory merger of HOVRS Merger Sub with and into HOVRS, pursuant to which HOVRS will become a wholly owned subsidiary of Acquirer (the "Merger"), upon the terms and conditions set forth herein and, in furtherance thereof, have approved the Merger, this Agreement and the other transactions contemplated hereby. C. Pursuant to the Merger, among other things, each issued and outstanding share of HOVRS common stock, $.001 par value ("HOVRS Common Stock"), shall be converted into a prorated share of the Common Merger Consideration (as defined below), and each issued and outstanding share of HOVRS Series A Preferred Stock, $.001 par value ("HOVRS Preferred Stock"), shall be converted into a prorated share of the Preferred Merger Consideration (as defined below). D. Acquirer and HOVRS desire to make certain representations, warranties, covenants and other agreements in this Agreement in connection with the Merger. E. Subsequent to the approval of this Agreement by the HOVRS board of directors and concurrently with the execution of this Agreement and as a condition to the willingness of the Acquirer to enter into this Agreement, Acquirer has entered into a Support and Lock-Up Agreement, pursuant to which each Key HOVRS Stockholder (as defined below) has agreed to retain ownership of the shares of HOVRS Common Stock and HOVRS Preferred Stock beneficially owned by such stockholder until the consummation of the Merger or the termination of this Agreement in accordance with its terms and to take certain actions to support consummation of the Merger, subject to and in accordance with the terms and conditions set forth therein. F. Subsequent to the approval of this Agreement by the Acquirer's board of directors and concurrently with the execution of this Agreement and as a condition to the willingness of HOVRS to enter into this Agreement, HOVRS has entered into a Voting Agreement with the Acquirer stockholders listed on Schedule I attached thereto, pursuant to which such stockholders have agreed to vote the shares of Acquirer Common Stock and Acquirer Preferred Stock beneficially owned by such stockholder in favor of the Merger, the issuance of the Acquirer Common Stock pursuant to this Agreement and such other matters as shall be required by Nasdaq in connection with the consummation of the Merger and to take certain actions to support consummation of the Merger, subject to and in accordance with the terms and conditions set forth therein. G. It is intended that the exchange of capital stock of HOVRS for Acquirer Common Stock in the Merger will qualify as a tax-free exchange of property for stock under the provisions of Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"). AGREEMENT NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following capitalized terms shall have the following meanings: "Applicable Laws" means, with respect to any Person, all laws, statutes, codes, orders, rules, regulations, policies or guidelines promulgated, or judgments, decisions or orders entered by, any Governmental Entity, relating to such Person and its Subsidiaries or their respective businesses, assets or properties. "Acquirer" shall have the meaning set forth in the preamble to this Agreement. "Acquirer Balance Sheet" shall have the meaning set forth in Section 4.7. "Acquirer Balance Sheet Date" shall have the meaning set forth in Section 4.6. "Acquirer Common Stock" shall mean the common stock, par value $.01, of Acquirer. "Acquirer Disclosure Schedule" shall have the meaning set forth in Section 4. "Acquirer Employee Plans" shall have the meaning set forth in Section 4.22(a). "Acquirer Financial Statements" shall have the meaning set forth in Section 4.4. "Acquirer Indemnified Party" and "Acquirer Indemnified Parties" shall have the meanings set forth in Section 9.2(b). "Acquirer Individuals" shall have the meaning set forth in Section 4.27(a)(ii). "Acquirer Intellectual Property" shall have the meaning set forth in Section 4.10(b). "Acquirer Material Contract" shall have the meaning set forth in Section 4.14. 2 "Acquirer Option Plans" shall mean, collectively, the GoAmerica Communications Corp. 1999 Stock Option Plan, the GoAmerica, Inc. 1999 Stock Plan, the GoAmerica, Inc. Employee Stock Purchase Plan and the GoAmerica, Inc. 2005 Equity Compensation Plan. "Acquirer Preferred Stock" shall mean the preferred stock, par value $.01, of Acquirer. "Acquirer Privacy Statements" shall have the meaning set forth in Section 4.27(a)(ii). "Acquirer Products" shall have the meaning set forth in Section 4.10(b)(ii). "Acquirer SEC Documents" shall have the meaning set forth in Section 4.31(a). "Acquirer SEC Financial Statements" shall have the meaning set forth in Section 4.31(b). "Acquirer's Current Facilities" shall have the meaning set forth in Section 4.20. "Acquirer's Facilities" shall have the meaning set forth in Section 4.20. "Acquirer Sites" shall mean all of Acquirer's public sites on the World Wide Web. "Acquirer Software" shall have the meaning set forth in Section 4.10(j). "Acquirer Stockholders Meeting" shall have the meaning set forth in Section 6.4. "Acquirer Transaction Proposal" shall have the meaning set forth in Section 5.2(c). "Acquirer Unapproved Marketing Programs" shall have the meaning set forth in Section 9.2(c). "Agent Certificate" shall have the meaning set forth in Section 9.6(a). "Agreement" shall have the meaning set forth in the preamble to this Agreement. "Assumed HOVRS Option" shall have the meaning set forth in Section 2.6(d)(ii). "Business Day" means any day on which banks are open to the public for conducting business and not authorized or required to close in the States of California and New Jersey. "Cash Consideration" shall mean the Common Cash Consideration and the Preferred Cash Consideration. 3 "Cash Threshold Percentage" shall mean the quotient, expressed as a percentage, of the Merger Cash divided by the Merger Consideration. "CERCLA" shall mean Comprehensive Environmental Response, Compensation and Liability Act of 1980. "Certificate" and "Certificates" shall mean a certificate or certificates representing shares of HOVRS Common Stock or HOVRS Preferred Stock. "Certificate of Merger" shall have the meaning set forth in Section 2.2. "Charter Documents" shall mean, with respect to any entity, such entity's certificate of incorporation, by-laws, certificate of formation, limited liability company agreement or other charter documents, as applicable. "Clearlake" shall mean CCP A, L.P., a Delaware limited partnership. "Closing" shall have the meaning set forth in Section 2.2. "Closing Date" shall have the meaning set forth in Section 2.2. "Closing Price" shall mean the closing price of the Acquirer Common Stock as reported on the Nasdaq Capital Market as of any specified date. "COBRA" shall have the meaning set forth in Section 3.22(e). "Code" shall have the meaning set forth in the recitals to this Agreement. "Common Cash Consideration" shall mean cash equal to the Common Per Share Price. "Common Cash Election" shall have the meaning set forth in Section 2.7(b)(ii). "Common Cash Election Shares" shall have the meaning set forth in Section 2.7(a). "Common Liquidation Preference" shall mean Eight Hundred Forty-Three Thousand Five Hundred Eighty-Eight Dollars ($843,588). "Common Liquidation Proceeds" shall mean the sum of (i) the Common Liquidation Preference plus (ii) the product of (A) the Shared Liquidation Proceeds multiplied by (B) a fraction, the numerator of which shall be the number of issued and outstanding shares of HOVRS Common Stock, and the denominator of which shall be the total number of issued and outstanding shares of HOVRS Common Stock and HOVRS Preferred Stock, in each case as of the Determination Date. "Common Merger Consideration" shall have the meaning set forth in Section 2.6(a). 4 "Common Non-Election" shall have the meaning set forth in Section 2.7(b)(ii). "Common Non-Election Shares" shall have the meaning set forth in Section 2.7(a). "Common Per Share Price" shall mean the quotient of the Common Liquidation Proceeds divided by the number of shares of HOVRS Common Stock that are issued and outstanding as of the Determination Date. "Common Stock Consideration" shall mean a number of share(s) of Acquirer Common Stock (or a fraction thereof) equal to the Common Per Share Price divided by the Closing Price as of the Determination Date. "Common Stock Election" shall have the meaning set forth in Section 2.7(b)(ii). "Common Stock Election Shares" shall have the meaning set forth in Section 2.7(a). "Communications Act" shall have the meaning set forth in Section 9.2(b). "Confidentiality Agreement" shall have the meaning set forth in Section 6.6. "Copyrights" shall have the meaning set forth in Section 3.10(a)(iii). "Damages" shall have the meaning set forth in Section 9.2(b). "Delaware Law" means the Delaware General Corporation Law. "Determination Date" shall mean the date that is one (1) Business Day preceding the Closing Date. "Dissenting Shares" shall mean the shares of HOVRS Common Stock or HOVRS Preferred Stock held by holders who have demanded and perfected their respective rights for appraisal of such shares with respect to the Merger in accordance with Delaware Law, and who, as of the Effective Time, have not effectively withdrawn or lost such rights to appraisal in accordance with Delaware Law. "Dissenting Stockholder" shall have the meaning set forth in Section 2.6(h). "Effective Time" shall have the meaning set forth in Section 2.2. "Election Deadline" shall have the meaning set forth in Section 2.7(c). "Election Form" shall have the meaning set forth in Section 2.7(b). "Environmental Laws" shall have the meaning set forth in Section 3.20(a)(i). "ERISA" shall mean Employee Retirement Income Security Act of 1974, as amended. 5 "ERISA Affiliate" shall have the meaning set forth in Section 3.22(a). "Escrow Agent" shall mean the escrow agent named in the Escrow Agreement. "Escrow Agreement" shall have the meaning set forth in Section 6.12. "Escrow Cash" shall mean Five Million Dollars ($5,000,000). "Escrow Fund" shall mean the Escrow Cash, plus all interest earned thereon while held by the Escrow Agent. "Escrow Period" shall have the meaning set forth in Section 9.3(a). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder. "Exchange Agent" shall mean a bank or trust company designated by Acquirer and reasonably satisfactory to HOVRS, which shall manage and disburse the Exchange Fund in accordance herewith. "Exchange Fund" shall have the meaning set forth in Section 2.8(a). "FCC" means the U.S. Federal Communications Commission. "FCC Investigation" shall have the meaning set forth in Section 9.2(b). "FCC Letter" shall have the meaning set forth in Section 9.2(c). "FCC Subpoena" shall have the meaning set forth in Section 9.2(b). "Final Allocation" shall have the meaning set forth in Section 2.7(d). "GAAP" means generally accepted accounting principles in the United States as in effect from time to time. "Governmental Entity" shall mean any court, administrative agency or commission or other governmental authority or instrumentality. "Hazardous Materials" shall have the meaning set forth in Section 3.20(a)(ii). "HIPAA" shall have the meaning set forth in Section 3.22(e). "Holdback Cash" shall mean Two Hundred Thousand Dollars ($200,000). "Holdback Fund" shall mean the Holdback Cash, plus all interest earned thereon while held by the Stockholders' Agent for the benefit of the HOVRS Stockholders. "HOVRS" shall have the meaning set forth in the preamble to this Agreement. 6 "HOVRS Balance Sheet" shall have the meaning set forth in Section 3.7. "HOVRS Balance Sheet Date" shall have the meaning set forth in Section 3.6. "HOVRS Common Stock" shall have the meaning set forth in the recitals to this Agreement. "HOVRS' Current Facilities" shall have the meaning set forth in Section 3.20(b). "HOVRS Disclosure Schedule" shall have the meaning set forth in Section 3. "HOVRS Employee Plans" shall have the meaning set forth in Section 3.22(a). "HOVRS' Facilities" shall have the meaning set forth in Section 3.20(b). "HOVRS Financial Statements" shall have the meaning set forth in Section 3.4(a). "HOVRS Indemnified Party" and "HOVRS Indemnified Parties" shall have the meanings set forth in Section 9.2(c). "HOVRS Information Statement" shall have the meaning set forth in Section 6.3. "HOVRS Intellectual Property" shall have the meaning set forth in Section 3.10(c). "HOVRS Material Contract" shall have the meaning set forth in Section 3.14. "HOVRS Merger Sub" shall have the meaning set forth in the preamble to this Agreement. "HOVRS Option Plan" shall have the meaning set forth in Section 3.5(b). "HOVRS Preferred Stock" shall have the meaning set forth in the recitals to this Agreement, and for all purposes under this Agreement, shall be treated on an as-if converted basis. "HOVRS Privacy Statements" means, collectively, any and all of HOVRS' privacy policies published on the HOVRS Sites or otherwise made available by HOVRS regarding the collection, retention, use and distribution of the personal information of individuals, including, without limitation, from visitors of any of the HOVRS Sites ("Individuals"). "HOVRS Products" shall have the meaning set forth in Section 3.10(c)(ii). "HOVRS Securities" shall mean HOVRS Common Stock, HOVRS Preferred Stock and HOVRS Stock Options. "HOVRS Sites" shall mean all of HOVRS' public sites on the World Wide Web. 7 "HOVRS Software" shall have the meaning set forth in Section 3.10(k). "HOVRS Stock Options" shall have the meaning set forth in Section 2.6(d)(i). "HOVRS Stockholders" means the holders of the HOVRS Common Stock and the HOVRS Preferred Stock, collectively. "HOVRS Transaction Proposal" shall have the meaning set forth in Section 5.2(a). "HOVRS Unapproved Marketing Programs" shall have the meaning set forth in Section 9.2(b). "HOVRS Unvested Options" shall have the meaning set forth in Section 2.6(d)(ii). "HOVRS Vested Options" shall have the meaning set forth in Section 2.6(d)(i). "Intellectual Property" shall have the meaning set forth in Section 3.10(a). "International Trade Law" shall mean U.S. statutes, laws and regulations applicable to international transactions, including, but not limited to, the Export Administration Act, the Export Administration Regulations, the Foreign Corrupt Practices Act, the Arms Export Control Act, the International Traffic in Arms Regulations, the International Emergency Economic Powers Act, the Trading with the Enemy Act, the U.S. Customs laws and regulations, the Foreign Asset Control Regulations, and any regulations or orders issued thereunder. "Issued Patents" shall have the meaning set forth in Section 3.10(a)(i). "Investment Representation Letter" shall have the meaning set forth in Section 2.7(c)(ii). "JAMS" shall mean Judicial Arbitration and Mediation Services. "Key HOVRS Stockholders" shall mean Ronald Obray, Denise Obray, Edmond Routhier, Caymus Investment Group II, LLC and Caymus Obray, LLC. "knowledge" shall mean such party's actual knowledge after reasonable inquiry of officers, directors and other key employees of such party reasonably believed to have knowledge of such matters. "Lock-up Agreement" shall have the meaning set forth in Section 2.7(c)(i). "Material Adverse Effect" shall mean, with respect to any entity or group of entities, any event, change or effect that is materially adverse to the financial condition, properties, assets, liabilities, business, operations or results of operations of such entity and its Subsidiaries, taken as a whole; provided, however, that a Material Adverse Effect shall not include any condition, change, situation or set of circumstances or effect relating to or resulting 8 from (A) any change in Applicable Law, (B) an announcement of the transactions contemplated hereunder, (C) with respect to HOVRS any action taken by Acquirer that is not contemplated hereunder or approved in advanced by HOVRS, (D) with respect to Acquirer, any action taken by HOVRS that is not contemplated hereunder or approved in advance by Acquirer, (E) changes generally affecting the telecommunications industries in which the party or its Subsidiaries operate (except with respect to changes that disproportionately affect the party or its Subsidiaries relative to other participants in the industries in which the party and its Subsidiaries operate), (F) changes in economic conditions in the United States (except with respect to changes that disproportionately affect the party or its Subsidiaries relative to other participants in the telecommunications industries in which the party and its Subsidiaries operate), or (G) any attack on, or by, outbreak or escalation of hostilities or acts of terrorism involving, the United States, or any declaration of war by the United States Congress or any hurricane, earthquake or other natural disaster that does not disproportionately affect the party or its Subsidiaries relative to other participants in the telecommunications industries in which the party and its Subsidiaries operate. "Merger" shall have the meaning set forth in the recitals to this Agreement. "Merger Cash" shall mean Thirty Five Million Dollars ($35,000,000), minus the amount by which the Transaction Expenses of HOVRS exceed One Million Dollars ($1,000,000) in the aggregate. "Merger Consideration" shall mean the sum of (i) the Merger Cash plus (ii) value of 6,700,000 shares of Acquirer Common Stock (as adjusted for any stock splits, share dividends, combinations, reclassifications or the like that occur after the date of this Agreement with respect to such shares) based upon the Closing Price of Acquirer Common Stock on the Determination Date. "Minimum Cash Election" shall mean, for each HOVRS Stockholder, an election to receive at a minimum Cash Consideration equal to such holder's pro rata portion of the Escrow Cash, which pro rata shall be derived by multiplying Five Million Two Hundred Thousand Dollars ($5,200,000) by a fraction, (i) the numerator of which shall be the number of HOVRS Common Stock or HOVRS Preferred Stock, as the case may be, held by such holder, and (ii) the denominator of which shall be the total number of HOVRS Common Stock or HOVRS Preferred Stock issued and outstanding as of the Determination Date. "NASD" shall have the meaning set forth in Section 4.2. "New Certificates" shall have the meaning set forth in Section 2.8(a). "Officer" shall have the meaning set forth in Rule 16a-1(f) promulgated under the Exchange Act. "Officer's Certificate" shall have the meaning set forth in Section 9.4. "Option Exchange Ratio" means the quotient of the Common Cash Consideration divided by the Closing Price as of the Determination Date. 9 "Outside Date" shall have the meaning set forth in Section 8.1(b). "Patents" shall have the meaning set forth in Section 3.10(a)(ii). "Patent Applications" shall have the meaning set forth in Section 3.10(a)(ii). "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. "Preferred Cash Consideration" shall mean cash equal to the Preferred Per Share Price. "Preferred Cash Election" shall have the meaning set forth in Section 2.7(b)(i). "Preferred Cash Election Shares" shall have the meaning set forth in Section 2.7(a). "Preferred Liquidation Preference" shall mean One Million Five Hundred Thousand Dollars ($1,500,000). "Preferred Liquidation Proceeds" shall mean the sum of (i) the Preferred Liquidation Preference plus (ii) the product of (A) the Shared Liquidation Proceeds multiplied by (B) a fraction, the numerator of which shall be the number of issued and outstanding shares of HOVRS Preferred Stock, and the denominator of which shall be the total number of issued and outstanding shares of HOVRS Common Stock and HOVRS Preferred Stock, in each case as of the Determination Date. "Preferred Merger Consideration" shall have the meaning set forth in Section 2.6(b). "Preferred Non-Election" shall have the meaning set forth in Section 2.7(b)(i). "Preferred Non-Election Shares" shall have the meaning set forth in Section 2.7(a). "Preferred Per Share Price" shall mean the quotient of the Preferred Liquidation Proceeds divided by the number of shares of HOVRS Preferred Stock that are issued and outstanding as of the Determination Date. "Preferred Stock Consideration" shall mean a number of shares of Acquirer Common Stock (or a fraction thereof) equal to the Preferred Per Share Price divided by the Closing Price as of the Determination Date. "Preferred Stock Election" shall have the meaning set forth in Section 2.7(b)(i). "Preferred Stock Election Shares" shall have the meaning set forth in Section 2.7(a). "Preliminary Proxy Statement" shall have the meaning set forth in Section 6.2. 10 "Proxy Statement" shall have the meaning set forth in Section 6.1. "Public Software," as used in Section 3.10(m), shall have the meaning set forth in such section. "Public Software," as used in Section 4.10(l), shall have the meaning set forth in such section. "Requested Confidential Exhibits" shall have the meaning set forth in Section 4.31(a). "RCRA" shall mean Resource Conservation and Recovery Act. "Reserved Escrow Amount" shall have the meaning set forth in Section 9.3(b). "Reserved Escrow Period" shall have the meaning set forth in Section 9.3(b). "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933 as amended, and the rules and regulations of the SEC thereunder. "Shared Liquidation Proceeds" shall mean the Merger Consideration (valued at the Closing Price as of the Determination Date), minus the Preferred Liquidation Preference and the Common Liquidation Preference. "Stock Consideration" shall mean the Common Stock Consideration and the Preferred Stock Consideration. "Stock Threshold Percentage" shall mean the quotient, expressed as a percentage, of (i) the market value of 6,700,000 shares of Acquirer Common Stock (as adjusted for any stock splits, share dividends, combinations, reclassifications or the like that occur after the date of this Agreement with respect to such shares) based upon the Closing Price as of the Determination Date divided by (ii) the Merger Consideration. "Stockholders' Agent" shall mean have the meaning set forth in the preamble to this Agreement. "Subsidiary" shall mean any Person of which any other Person directly or indirectly owns, beneficially or of record, at least 50% of the outstanding equity or financial interests of such entity. "Surviving Corporation" shall have the meaning set forth in Section 2.1. "Tax" (and, with correlative meaning, "Taxes") shall mean all taxes, charges, duties, fees, levies or other assessments, all of which are in the nature of a tax, imposed by or payable to any governmental authority, including any income, gross receipts, capital gains, net worth, license, payroll, employment, excise, severance, stamp, business, occupation, premium, 11 windfall profits, environmental (including Taxes under section 59A of the Code), capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible, production, sales, use, transfer, registration, ad valorem, or value added tax, any alternative or add-on minimum tax, any estimated tax, in each case including any interest, penalty, or addition thereto, whether disputed or not. "Tax Representation Letter" shall have the meaning set forth in Section 6.14. "Tax Return" shall mean any return, declaration, report, claim for refund, information return or statement or other documents relating to Taxes, including any schedule or attachment thereto, and any amendment thereof, to be filed (whether on a mandatory or elective basis) with any governmental authority responsible for the imposition or collection of Taxes. "Terminated" shall have the meaning set forth in Section 9.3(b). "Termination Date" shall have the meaning set forth in Section 9.2(a). "Third Party Acquirer Intellectual Property" shall have the meaning set forth in Section 4.10(c). "Third Party HOVRS Intellectual Property" shall have the meaning set forth in Section 3.10(d). "Trademarks" shall have the meaning set forth in Section 3.10(a)(iv). "Transaction Expenses" shall mean the amount paid or payable by either HOVRS or the Acquirer to third parties for services rendered in connection with this Agreement and the transactions contemplated hereby (including without limitation fees payable for investment banking, legal, accounting and appraisal services). "Unresolved Claim Amount" shall have the meaning set forth in Section 9.3(a). "Verizon Agreement" shall mean the Asset Purchase Agreement dated as of August 1, 2007, by and between MCI Communications Services, Inc., a Delaware corporation, as seller, and Acquisition 1 Corp., a Delaware corporation and wholly owned subsidiary of Acquirer. "Written Consent" shall have the meaning set forth in Section 6.3. 2. The Merger. 2.1. The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and in accordance with Delaware Law, HOVRS Merger Sub shall be merged with and into HOVRS, which shall be the surviving corporation (the "Surviving Corporation") in the Merger, and the separate existence of HOVRS Merger Sub shall thereupon cease. 12 2.2. Closing; Effective Time. The closing of the transactions contemplated hereby (the "Closing") shall take place as soon as practicable, but no later than five (5) Business Days, after the satisfaction or waiver of each of the conditions set forth in Sections 7.1, 7.2 and 7.3 hereof, or at such other time as the parties hereto may agree (the "Closing Date"). The Closing shall take place at the offices of Orrick Herrington & Sutcliffe, LLP, 405 Howard Street, The Orrick Building, San Francisco, California, at 10:00 a.m. PDT, or at such other location or time as the parties hereto may agree. At the Closing, the parties hereto shall cause the Merger to be consummated by filing the certificate of merger relating to the Merger, in the form attached hereto as Exhibit 2.2 (the "Certificate of Merger"), with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of Delaware Law (the time of the completion of such filing with the Secretary of State of Delaware, or such later time as may be agreed in writing by the parties and specified in the Certificate of Merger, being the "Effective Time"). 2.3. Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of HOVRS and HOVRS Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of HOVRS and HOVRS Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. 2.4. Organizational Documents. At the Effective Time, (i) the certificate of incorporation of the Surviving Corporation shall be amended to be the certificate of incorporation of HOVRS Merger Sub as in effect immediately prior to the Effective Time, and as so amended, such certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or pursuant to Delaware Law, and (ii) the bylaws of HOVRS Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or pursuant to Delaware Law. 2.5. Corporate Governance. (a) Acquirer shall take all appropriate action so that the individuals listed on Exhibit 2.5 hereto shall be appointed to the positions with Acquirer set forth thereon, in each case, effective as of the Effective Time. Except as provided in the first sentence of this Section 2.5, Officer and other key management positions with Acquirer and its Subsidiaries, shall be filled effective as of the Effective Time at the discretion of the Chief Executive Officer of Acquirer, subject to approval, to the extent required by Applicable Laws or Acquirer's by-laws, by Acquirer's board of directors after the Effective Time. After the Effective Time, changes in Officer and other key management positions at Acquirer and its Subsidiaries shall be made in accordance with Applicable Laws and Acquirer's by-laws as in effect from time to time. (b) As of the Effective Time, the board of directors of Acquirer shall cause the number of directors that shall constitute the full board of directors of Acquirer to be eight (8) and the number of directors that shall constitute each committee of the board of directors of Acquirer in full to be at least three (3). The members of the board of directors of Acquirer, the class of the board of directors of Acquirer to which each such member shall be appointed or elected, and the 13 party by whom each such member shall be deemed to have been designated, at the Effective Time shall be as provided in Exhibit 2.5 attached hereto. Prior to the Effective Time, the director designees identified on Exhibit 2.5 shall, by majority vote, designate the eighth member of the board of directors of Acquirer to be appointed or elected as of the Effective Time pursuant to this Section 2.5(b) and, upon delivery of such designation to the board of directors of Acquirer and HOVRS, Exhibit 2.5 shall be deemed amended to include the name of such designee. Such eighth member of the board of directors of Acquirer to be so designated shall qualify as an "independent director" with respect to Acquirer within the meaning of Rule 4200(a)(15) of the Marketplace Rules of The NASDAQ Stock Market LLC. (c) Subject to the approval of its stockholders at the Acquirer Stockholders Meeting, Acquirer shall undertake commercially reasonable efforts to eliminate its classified board structure. If such stockholder approval is obtained, the director designees identified on Exhibit 2.5 shall all be of the same class and shall all serve one-year terms. If such stockholder approval is not obtained, the director designees shall serve in the classes noted on Exhibit 2.5 for terms expiring at such time as the terms of directors of the relevant class expire in the normal course consistent with Acquirer's past practices. 2.6. Merger Consideration; Effect on HOVRS Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Acquirer, HOVRS Merger Sub, HOVRS or the holders of any of the following securities: (a) Conversion of HOVRS Common Stock. Each share of HOVRS Common Stock issued and outstanding immediately prior to the Effective Time shall become and be converted into, as provided in and subject to the limitations set forth in this Agreement, the right to receive at the election of the holder thereof as provided in Section 2.7 either (i) the Common Cash Consideration, or (ii) the Common Stock Consideration. The Common Cash Consideration and the Common Stock Consideration are sometimes referred to herein collectively as the "Common Merger Consideration." (b) Conversion of HOVRS Preferred Stock. Each share of HOVRS Preferred Stock issued and outstanding immediately prior to the Effective Time shall become and be converted into, as provided in and subject to the limitations set forth in this Agreement, the right to receive at the election of the holder thereof as provided in Section 2.7 either (i) the Preferred Cash Consideration, or (ii) the Preferred Stock Consideration. The Preferred Cash Consideration and the Preferred Stock Consideration are sometimes referred to herein collectively as the "Preferred Merger Consideration." (c) Cancellation of HOVRS Common Stock and HOVRS Preferred Stock Owned by HOVRS. Each share of HOVRS Common Stock and HOVRS Preferred Stock (and each other security of HOVRS) that is held by HOVRS or is owned by any direct or indirect wholly owned subsidiary of HOVRS immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof. 14 (d) HOVRS Options. (i) Vested Options. HOVRS shall take all action required under the HOVRS Option Plan reasonably necessary so that on the Determination Date all outstanding stock options (the "HOVRS Stock Options") granted under the HOVRS Option Plan or pursuant to any employment or other agreement that are vested or become vested as a result of the Merger in accordance with its terms or any other agreement (the "HOVRS Vested Options") shall be exercised in accordance with the terms of the HOVRS Option Plan; provided, however, that any such HOVRS Vested Options that are not exercised on or prior to the Determination Date shall be cancelled and become null and void and of no further force or effect as of the Effective Time. Shares issued upon exercise of the HOVRS Vested Options shall be treated for all purposes of this Agreement as outstanding shares of HOVRS Common Stock. (ii) Unvested Options. At the Effective Time, Acquirer shall assume each HOVRS Stock Option that is outstanding and not vested in accordance with its terms immediately prior to the Closing (the "HOVRS Unvested Options") together with the option agreement representing each such HOVRS Stock Option (each, an "Assumed HOVRS Option"). Each Assumed HOVRS Option shall thereafter be exercisable for such number of shares of Acquirer Common Stock as equals the number of shares of HOVRS Common Stock subject to such HOVRS Unvested Option multiplied by the Option Exchange Ratio (rounded down to the nearest whole number). The exercise price per share of each such Assumed HOVRS Option shall be equal to the exercise price per share set forth in the option agreement for such Assumed HOVRS Option divided by the Option Exchange Ratio (rounded up to the next whole cent). The determination of the number of shares of Acquirer Common Stock subject to each Assumed HOVRS Option, as well as the exercise price for such option shall each be determined in compliance with the "ratio test" and the "spread test" of the Treasury Regulations under Section 424 of the Code. Except as set forth above, the terms of the HOVRS Unvested Options shall remain unchanged. (e) Capital Stock of HOVRS Merger Sub. At the Effective Time, each share of common stock of HOVRS Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. Each stock certificate of HOVRS Merger Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation. (f) Adjustments. The number of shares of Acquirer Common Stock issuable in the Merger shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Acquirer Common Stock, HOVRS Common Stock or HOVRS Preferred Stock), reorganization, recapitalization or other like change with respect to Acquirer Common Stock and HOVRS Securities occurring after the date hereof and prior to the Effective Time. (g) Fractional Shares. No fraction of a share of Acquirer Common Stock shall be issued, but in lieu thereof any HOVRS Stockholder that would otherwise be entitled to a fraction of a share of Acquirer Common Stock (after aggregating all fractional shares of Acquirer Common Stock to be received by such holder) shall receive from Acquirer an amount of cash 15 (rounded to the nearest whole cent) equal to the product of (i) such fraction, multiplied by (ii) the Closing Price as of the Determination Date. The fractional share interests of each HOVRS Stockholder shall be aggregated, so that no HOVRS Stockholder shall receive cash in respect of fractional share interests in an amount greater than the value of one full share of Acquirer Common Stock. Payment to HOVRS Stockholders of such cash in lieu of fractional shares of Acquirer Common Stock otherwise issuable hereunder shall be made to the HOVRS Stockholders by Acquirer at such time as Acquirer is required to deliver Common Merger Consideration or Preferred Merger Consideration, as the case may, to such holder, provided that the HOVRS Stockholder has delivered to Acquirer such holder's Certificates in accordance with Section 2.8(b) or complied with the provisions of Section 2.9. (h) Dissenters' Rights. Notwithstanding any provision of this Agreement to the contrary, Dissenting Shares, if any, shall not be converted into or exchangeable for a right to receive Common Merger Consideration or Preferred Merger Consideration but shall instead be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to Delaware Law (and at the Effective Time, such Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and such holder shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 262 of Delaware Law), unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost rights to appraisal under Delaware Law. HOVRS shall give Acquirer prompt notice of any demand received by HOVRS to require HOVRS to purchase shares of HOVRS Common Stock or HOVRS Preferred Stock, and Acquirer shall have the right to participate in all negotiations and proceedings with respect to such demand. HOVRS agrees that, except with the prior written consent of Acquirer, or as required under the Delaware Law, it will not voluntarily make any payment with respect to, or settle or offer to settle, any such purchase demand. Each holder of Dissenting Shares ("Dissenting Stockholder") who, pursuant to the provisions of Delaware Law, becomes entitled to payment of the fair value for shares of HOVRS Common Stock or HOVRS Preferred Stock shall receive payment therefor (but only after the value therefor shall have been agreed upon or finally determined pursuant to such provisions). If, after the Effective Time, any Dissenting Shares shall lose their status as Dissenting Shares, Acquirer shall issue and deliver, upon surrender by such stockholder of a Certificate or Certificates representing shares of HOVRS Common Stock or HOVRS Preferred Stock (or compliance with Section 2.9), as the case may be, Common Merger Consideration or Preferred Merger Consideration, as applicable and to which such stockholder would otherwise have been entitled as of the Effective Time under this Section 2.6, without interest thereon, less such stockholder's pro rata portion of the Escrow Cash and the Holdback Cash, which shall be withheld and deposited respectively in the Escrow Fund pursuant to Section 9.1 hereof and the Holdback Fund pursuant to Section 9.8(d). 2.7. Cash / Stock Election and Election Procedure. (a) Definitions. As used in this Section 2.7, the following terms shall have the meanings set forth below: "Common Cash Election Shares" means shares of HOVRS Common Stock as to which a Common Cash Election has been made. 16 "Common Stock Election Shares" means shares of HOVRS Common Stock as to which a Common Stock Election has been made. "Common Non-Election Shares" means shares of HOVRS Common Stock as to which no election has been made (or as to which an Election Form has not been properly completed and returned in a timely fashion). "Preferred Cash Election Shares" means shares of HOVRS Preferred Stock as to which a Preferred Cash Election has been made. "Preferred Stock Election Shares" means shares of HOVRS Preferred Stock as to which a Preferred Stock Election has been made. "Preferred Non-Election Shares" means shares of HOVRS Preferred Stock as to which no election has been made (or as to which an Election Form has not been properly completed and returned in a timely fashion). (b) Election and Election Form. The Exchange Agent shall mail an election form and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to Certificates shall pass, only upon proper delivery of such Certificates to the Exchange Agent in such form as to which HOVRS and Acquirer shall mutually agree (the "Election Form"), together with a copy of the HOVRS Information Statement, to each holder of record of HOVRS Common Stock, HOVRS Preferred Stock and HOVRS Stock Options. The Cash Election and Stock Election to be made in the Election Form shall be stated as a percentage (in whole numbers) of the aggregate value of the Merger Consideration allocable to such HOVRS Stockholder in respect of such holder's ownership of issued or issuable HOVRS Common Stock or HOVRS Preferred Stock, and the sum of the Cash Election percentage and Stock Election percentage for each HOVRS Stockholder shall equal one hundred percent (100%). Each Election Form shall permit: (i) the holder of record of HOVRS Preferred Stock (A) to elect to receive Preferred Cash Consideration for all or a portion of such holder's shares of HOVRS Preferred Stock (a "Preferred Cash Election"); (B) to elect to receive Preferred Stock Consideration for all or a portion of such holder's shares of HOVRS Preferred Stock (a "Preferred Stock Election"); or (C) to make no election (by failing to return an Election Form or otherwise) with respect to the receipt of Preferred Cash Consideration or Preferred Stock Consideration (a "Preferred Non-Election"); and (ii) the holder of record of HOVRS Common Stock (A) to elect to receive Common Cash Consideration for all or a portion of such holder's shares of HOVRS Common Stock (each a "Common Cash Election" and together with the Preferred Cash Election, collectively the "Cash Election"); (B) to elect to receive Common Stock Consideration for all or a portion of such holder's shares of HOVRS Common Stock (each a "Common Stock Election" and together with the Preferred Stock Elections, collectively the "Stock Election"); or (C) to make no election (by failing to return an Election Form or otherwise) with respect to the receipt of the Common Cash Consideration or the Common Stock Consideration (a "Common Non-Election"). 17 Notwithstanding the foregoing or any other provision hereof to the contrary: (w) each HOVRS Stockholder that makes a Preferred Non-Election (by failing to return an Election Form or otherwise) with respect to any HOVRS Preferred Stock held thereby shall be deemed to have made a Preferred Cash Election with respect to a percentage of such shares equal to the Cash Threshold Percentage and to have made a Preferred Stock Election with respect to the balance of such shares; (x) each HOVRS Stockholder that makes a Common Non-Election (by failing to return an Election Form or otherwise) with respect to any HOVRS Preferred Stock held thereby shall be deemed to have made a Common Cash Election with respect to a percentage of such shares equal to the Cash Threshold Percentage and to have made a Common Stock Election with respect to the balance of such shares; and (y) each HOVRS Stockholder shall be required to make a Minimum Cash Election for purposes of allocating such holder's pro rata portion of the Escrow Cash to the Escrow Fund in satisfaction of the obligations under Section 2.8(g) hereof and the Holdback Cash to the Holdback Fund and in satisfaction of the obligations under Section 9.8(d) hereof. If a HOVRS Stockholder fails to make the Minimum Cash Election, the Exchange Agent shall reapportion such holder's cash / stock allocation to satisfy such requirement. (c) Delivery of Election Form. To be effective, a properly completed Election Form shall be submitted to the Exchange Agent on or before 5:00 p.m., San Francisco, local time, on a date specified in the HOVRS Information Statement and letter of transmittal which date shall be no later than five (5) Business Days prior to the scheduled Closing Date to be mutually agreed upon by the parties, which date shall be publicly announced by Acquirer as soon as practicable prior to such date (the "Election Deadline"), accompanied by an executed counterpart of the Lock-up and Registration Rights Agreement, substantially in the form attached here to as Exhibit 2.7(c)(i) (the "Lock-up Agreement"), and an executed Investment Representation Letter, substantially in the form of Exhibit 2.7(c)(ii) (the "Investment Representation Letter"), from HOVRS Stockholders that make a Stock Election, and the Certificates as to which such Election Form is being made or by an appropriate guarantee of delivery of such Certificates, as set forth in the Election Form, from a member of any registered national securities exchange or a commercial bank or trust company in the United States (provided that such Certificates are in fact delivered to the Exchange Agent by the time required in such guarantee of delivery; failure to deliver shares of HOVRS Common Stock or HOVRS Preferred Stock, as the case may be, covered by such guarantee of delivery within the time set forth on such guarantee shall be deemed to invalidate any otherwise properly made election, unless otherwise determined by Acquirer, in its sole discretion). If a holder of HOVRS Securities either (i) does not submit a properly completed Election Form in a timely fashion or (ii) revokes the holder's Election Form prior to the Election Deadline (without later submitting a properly completed Election Form prior to the Election Deadline), the shares of HOVRS Common Stock or HOVRS Preferred Stock held by such holder shall be designated Common 18 Non-Election Shares or Preferred Non-Election Shares. All Election Forms shall automatically be revoked, and all Certificates returned, if the Exchange Agent is notified in writing by Acquirer and HOVRS that this Agreement has been terminated. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election has been properly or timely made and to disregard immaterial defects in any Election Form, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive. Neither Acquirer nor the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form. (d) Determination of Cash and Stock Allocation. Immediately following the close of business on the Determination Date, upon consultation with HOVRS and Acquirer, the Exchange Agent shall determine the allocation of the Merger Consideration to the HOVRS Common Stock and HOVRS Preferred Stock in accordance with Section 2.7(e) below, and the Exchange Agent's determination shall be final and binding (the "Final Allocation"). (e) Cash/Stock Allocation of the Merger Consideration. The Merger Consideration shall be allocated among the holders of shares of HOVRS Common Stock and HOVRS Preferred Stock as follows in this Section 2.7(e); provided that for purposes of the cash/stock allocation calculations only, and without actually converting into a right to receive Merger Consideration and without contravening in any manner the provisions of Section 2.6(h), Dissenting Shares (if any) shall be treated as Common Non-Election Share or Preferred Non-Election Shares, as the case may be; provided further, that for purposes of the cash/stock allocation calculations set forth below, references to Cash Election, Cash Election Shares, Cash Consideration and the like shall be inclusive of the Escrow Cash and the Holdback Cash, and the setting aside of such amounts for purposes of the Escrow Fund and the Holdback Fund shall be disregarded for purposes of this Section 2.7(e). (i) Elections Satisfied Without Proration. If the percentage of the HOVRS Stockholders that make Stock Elections is equal to the Stock Threshold Percentage and the percentage of the HOVRS Stockholders that make Cash Elections is equal to the Cash Threshold Percentage, then at the Effective Time each share of HOVRS Common Stock and each share of HOVRS Preferred Stock shall convert into a right to receive Merger Consideration, as follows: (A) all Common Cash Election Shares shall be converted into the right to receive Common Cash Consideration; (B) subject to Section 2.6(g) hereof, all Common Stock Election Shares shall be converted into the right to receive Common Stock Consideration; (C) all Preferred Cash Election Shares shall be converted into the right to receive Preferred Cash Consideration; (D) subject to Section 2.6(g) hereof, all Preferred Stock Election Shares shall be converted into the right to receive Preferred Stock Consideration; (F) a percentage of the Common Non-Election Shares held by each HOVRS Stockholder equal to the Cash Threshold Percentage shall be converted into 19 the right to receive Common Cash Consideration, and the balance of each such holder's Common Non-Election Shares, subject to Section 2.6(g), shall be converted into the right to receive Common Stock Consideration; and (G) a percentage of the Preferred Non-Election Shares held by each HOVRS Stockholder equal to the Cash Threshold Percentage shall be converted into the right to receive Preferred Cash Consideration, and the balance of each such holder's Preferred Non-Election Shares, subject to Section 2.6(g), shall be converted into the right to receive Preferred Stock Consideration. (ii) Elections Satisfied With Proration. (A) Excess Cash Elections. If HOVRS Stockholders make Cash Elections whereby they elect to receive Cash Consideration that in the aggregate exceeds the amount of cash available in the Exchange Fund, assuming the inclusion of the Escrow Cash in the Exchange Fund and the Holdback Cash in the Holdback Fund for calculation purposes only (such that there is a shortage of Cash Consideration available to satisfy the Cash Elections), then at the Effective Time each share of HOVRS Common Stock and HOVRS Preferred Stock shall convert into a right to receive Merger Consideration, as follows: (1) subject to Section 2.6(g), all Common Stock Election Shares shall be converted into the right to receive Common Stock Consideration, and all Preferred Stock Election Shares shall be converted into the right to receive Preferred Stock Consideration; (2) all Common Cash Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in cash equal to or less than the Cash Threshold Percentage shall be converted into the right to receive Common Cash Consideration; (3) all Preferred Cash Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in cash equal to or less than the Cash Threshold Percentage shall be converted into the right to receive Preferred Cash Consideration; (4) a percentage of the Common Non-Election Shares held by a HOVRS Stockholder equal to the Cash Threshold Percentage shall be converted into the right to receive Common Cash Consideration, and the balance of each such holder's Common Non-Election Shares, subject to 20 Section 2.6(g), shall be converted into the right to receive Common Stock Consideration; (5) a percentage of the Preferred Non-Election Shares held by a HOVRS Stockholder equal to the Cash Threshold Percentage shall be converted into the right to receive Preferred Cash Consideration, and the balance of each such holder's Preferred Non-Election Shares, subject to Section 2.6(g), shall be converted into the right to receive Preferred Stock Consideration; and after giving effect to the allocations in clauses (1)-(5) immediately above, the unallocated cash in the Exchange Fund (for purposes of this Section 2.7(e)(ii)(A), the "Unallocated Cash") and the aggregate market value of the unallocated Acquirer Common Stock in the Exchange Fund, determined by reference to the Closing Price as of the Determination Date (for purposes of this Section 2.7(e)(ii)(A), the "Unallocated Stock") shall be allocated, whereby (6) Common Cash Election Shares and Preferred Cash Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in cash greater than the Cash Threshold Percentage shall be converted into the right to receive Merger Consideration as follows: (x) each such HOVRS Stockholder will receive Common Cash Consideration in respect of a number of the Common Cash Election Shares held thereby equal to the product obtained by multiplying (a) the number of Common Cash Election Shares held by such HOVRS Stockholder by (b) a fraction, the numerator of which is equal to the Unallocated Cash and the denominator of which is equal to the sum of the Unallocated Cash plus the Unallocated Stock, and the balance of the Common Cash Election Shares held by such HOVRS Stockholder shall be converted into the right to receive Common Stock Consideration; and (y) each such HOVRS Stockholder will receive Preferred Cash Consideration in respect of a number of the Preferred Cash Election Shares held thereby equal to the product obtained by multiplying (a) the number of Preferred Cash Election Shares held by such HOVRS Stockholder by (b) a fraction, the numerator of which is equal to the Unallocated Cash and the denominator of which is equal to the sum of the Unallocated Cash plus the Unallocated Stock, and the balance of the Preferred Cash Election Shares held by such HOVRS Stockholder shall be converted into the right to receive Preferred Stock Consideration. 21 (B) Excess Stock Elections. If HOVRS Stockholders make Stock Elections whereby they elect to receive Stock Consideration having an aggregate value that exceeds the aggregate value of the shares of Acquirer Common Stock in the Exchange Fund, in each case based upon the Closing Price as of the Determination Date (such that there is a shortage of Stock Consideration available to satisfy the elections by such stockholders), then at the Effective Time each share of HOVRS Common Stock and HOVRS Preferred Stock shall convert into a right to receive Merger Consideration, as follows: (1) all Common Cash Election Shares shall be converted into the right to receive Common Cash Consideration, and all Preferred Cash Election Shares shall be converted into the right to receive Preferred Cash Consideration; (2) subject to Section 2.6(g), all Common Stock Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in Acquirer Common Stock equal to or less than the Stock Threshold Percentage shall be converted into the right to receive Common Stock Consideration; (3) subject to Section 2.6(g), all Preferred Stock Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in Acquirer Common Stock equal to or less than the Stock Threshold Percentage shall be converted into the right to receive Preferred Stock Consideration; (4) subject to Section 2.6(g), a percentage of the Common Non-Election Shares held by a HOVRS Stockholder equal to the Stock Threshold Percentage shall be converted into a right to receive Common Stock Consideration, and the balance of each such holder's Common Non-Election Shares shall be converted into the right to receive Common Cash Consideration; (5) subject to Section 2.6(g), a percentage of the Preferred Non-Election Shares held by a HOVRS Stockholder equal to the Stock Threshold Percentage shall be converted into a right to receive Preferred Stock Consideration, and the balance of each such holder's Preferred Non-Election Shares shall be converted into the right to receive Preferred Cash Consideration; and 22 after giving effect to the allocations in clauses (1)-(5) immediately above, the unallocated cash in the Exchange Fund (for purposes of this Section 2.7(e)(ii)(B), the "Unallocated Cash") and the aggregate market value of the unallocated Acquirer Common Stock in the Exchange Fund, determined by reference to the Closing Price as of the Determination Date (for purposes of this Section 2.7(e)(ii)(B), the "Unallocated Stock") shall be allocated, whereby (6) subject to Section 2.6(g), Common Stock Election Shares and Preferred Stock Election Shares held by a HOVRS Stockholder that elects to receive a percentage of its allocable portion of the Merger Consideration in Acquirer Common Stock greater than the Stock Threshold Percentage shall be converted into the right to receive Merger Consideration as follows: (x) each such HOVRS Stockholder will receive the Common Stock Consideration in respect of a number of the Common Stock Election Shares held thereby equal to the product obtained by multiplying (a) the number of Common Stock Election Shares held by such HOVRS Stockholder by (b) a fraction, the numerator of which is equal to the Unallocated Stock and the denominator of which is equal to the sum of the Unallocated Cash plus the Unallocated Stock, and the balance of the Common Stock Election Shares held by such HOVRS Stockholder shall be converted into the right to receive Common Cash Consideration; and (y) each such HOVRS Stockholder will receive the Preferred Stock Consideration in respect of a number of the Preferred Cash Election Shares held thereby equal to the product obtained by multiplying (a) the number of Preferred Stock Election Shares held by such HOVRS Stockholder by (b) a fraction, the numerator of which is equal to the Unallocated Stock and the denominator of which is equal to the sum of the Unallocated Cash plus the Unallocated Stock, and the balance of the Preferred Stock Election Shares held by such HOVRS Stockholder shall be converted into the right to receive Preferred Cash Consideration. 2.8. Exchange Procedures. (a) On or before the Closing Date, for the benefit of the holders of Certificates, (i) Acquirer shall cause to be delivered to the Exchange Agent, for exchange in accordance with this Section 2, certificates ("New Certificates") representing 6,700,000 shares of Acquirer Common Stock (as adjusted for any stock splits, share dividends, combinations, reclassifications or the like that occur after the date of this Agreement with respect to such shares) issuable pursuant to this Section 2, and (ii) Acquirer shall deliver or cause to be delivered 23 to the Exchange Agent the Merger Cash minus the Escrow Cash and the Holdback Cash (the combination of (i) and (ii) above, hereinafter referred to as, the "Exchange Fund"). (b) At the Closing, or as soon thereafter as is reasonably practicable, each HOVRS Stockholder shall deliver or cause to be delivered to the Exchange Agent the Certificate(s) representing the shares of HOVRS Common Stock and HOVRS Preferred Stock beneficially owned by such HOVRS Stockholder. Upon proper surrender of a Certificate for exchange and cancellation to the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor, as applicable, (i) subject to delivery by the surrendering HOVRS Stockholder to the Exchange Agent of an executed copy of the Lock-up Agreement and a completed and executed Investment Representation Letter, a New Certificate representing shares of Acquirer Common Stock (if any) equal to the Stock Consideration to which such former holder of HOVRS Common Stock or HOVRS Preferred Stock shall have become entitled pursuant to this Agreement, (ii) a check or wire transfer of immediately available funds in an amount equal to the Cash Consideration to which such former holder of HOVRS Common Stock or HOVRS Preferred Stock shall have become entitled pursuant to this Agreement (of which the amount of such holder's Minimum Cash Election shall be or shall have been deposited in the Escrow Fund and the Holdback Fund), and/or (iii) a check representing the amount of cash (if any) payable in lieu of a fractional share of Acquirer Common Stock which such former holder has the right to receive in respect of the Certificate surrendered pursuant to this Agreement, and the Certificate so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.8(b), each Certificate (other than Certificates representing treasury stock) shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration provided in Section 2.6 and any unpaid dividends and distributions thereon as provided in paragraph (c) of this Section 2.8. No interest shall be paid or accrued on any cash constituting Merger Consideration (including any cash in lieu of fractional shares) and any unpaid dividends and distributions payable to holders of Certificates. (c) No dividends or other distributions with a record date after the Effective Time with respect to Acquirer Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender such Certificate in accordance with this Section 2.8. After the surrender of a Certificate in accordance with this Section 2.8, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of Acquirer Common Stock represented by such Certificate. (d) The Exchange Agent and Acquirer, as the case may be, shall not be obligated to deliver cash and/or a New Certificate or New Certificates representing shares of Acquirer Common Stock to which a holder of HOVRS Common Stock or HOVRS Preferred Stock would otherwise be entitled as a result of the Merger until such holder surrenders the Certificate or Certificates representing the shares of HOVRS Common Stock or HOVRS Preferred Stock for exchange as provided in this Section 2.8, or, an appropriate affidavit of loss and indemnity agreement, together with an executed copy of the Lock-up Agreement and an executed Investment Representation Letter. If any New Certificates evidencing shares of Acquirer Common Stock are to be issued in a name other than that in which the Certificate evidencing HOVRS Common Stock or HOVRS Preferred Stock surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the Certificate so 24 surrendered shall be properly endorsed or accompanied by an executed form of assignment separate from the Certificate and otherwise in proper form for transfer, and that the Person requesting such exchange pay to the Exchange Agent any transfer or other tax required by reason of the issuance of a New Certificate for shares of Acquirer Common Stock in any name other than that of the registered holder of the Certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (e) Any portion of the Exchange Fund that remains unclaimed by the former HOVRS Stockholders for six (6) months after the Effective Time (as well as any interest or proceeds from any investment thereof) shall be delivered by the Exchange Agent to Acquirer. Any former HOVRS Stockholder who has not theretofore complied with Section 2.8(b) shall thereafter look only to Acquirer for the Merger Consideration deliverable in respect of each share of HOVRS Common Stock or HOVRS Preferred Stock such stockholder holds as determined pursuant to this Agreement, in each case without any interest thereon. If outstanding Certificates for shares of HOVRS Common Stock or HOVRS Preferred Stock are not surrendered or the payment for them is not claimed prior to the date on which such shares of Acquirer Common Stock or cash would otherwise escheat to or become the property of any Governmental Entity, the unclaimed items shall, to the extent permitted by abandoned property and any other Applicable Law, become the property of Acquirer (and to the extent not in its possession shall be delivered to it), free and clear of all claims or interest of any Person previously entitled to such property. Neither the Exchange Agent nor any party to this Agreement shall be liable to any holder of shares of HOVRS Common Stock or HOVRS Preferred Stock represented by any Certificate for any consideration paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Acquirer and the Exchange Agent shall be entitled to rely upon the stock transfer books of HOVRS to establish the identity of those Persons entitled to receive the Merger Consideration specified in this Agreement, which books shall be conclusive with respect thereto. In the event of a dispute with respect to ownership of any shares of HOVRS Common Stock or HOVRS Preferred Stock represented by any Certificate, Acquirer and the Exchange Agent shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto. (f) Acquirer (through the Exchange Agent, if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of HOVRS Common Stock or HOVRS Preferred Stock such amounts as Acquirer is required to deduct and withhold under Applicable Law. Any amounts so deducted and withheld shall be treated for all purposes of this Agreement as having been paid to the holder of HOVRS Common Stock or HOVRS Preferred Stock in respect of which such deduction and withholding was made by Acquirer. (g) As of the Closing, and subject to and in accordance with the provisions of Section 9.1 hereof, Acquirer shall deliver, or cause to be delivered, the Escrow Cash to the Escrow Agent and the Holdback Cash to the Stockholders' Agent. The property comprising the Escrow Fund shall be beneficially owned by the HOVRS Stockholders and shall be held in escrow and shall be available to compensate Acquirer for certain Damages during the Escrow Period as provided in Section 9. The property comprising the Holdback Fund shall be beneficially owned by the HOVRS Stockholders and shall be held in escrow and shall be 25 available to the Stockholders' Agent for any reasonable and documented expenses incurred in the course of defending any indemnification claim made against the Escrow Fund during the Escrow Period as provided in Section 9.2(b) or pursuing any indemnification claim as provided in Section 9.2(c). To the extent not used for such purposes, the property comprising the Escrow Fund shall be released to the HOVRS Stockholders based upon their respective allocable portion as provided in Section 9.3, the Final Allocation and pursuant to the terms and conditions of the Escrow Agreement. 2.9. Lost, Stolen or Destroyed HOVRS Certificates. In the event that any Certificate representing HOVRS Common Stock or HOVRS Preferred Stock shall have been lost, stolen or destroyed and such securities represent a right to receive Acquirer Common Stock, as determined pursuant to the Final Allocation, Acquirer shall, upon delivery of an affidavit of that fact by the holder of such Certificate, issue irrevocable instructions to the Exchange Agent to issue share certificates representing the shares of Acquirer Common Stock to be issued to the owner of, and in exchange for, such lost, stolen or destroyed HOVRS Common Stock or HOVRS Preferred Stock, provided, however, that Acquirer may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed HOVRS Common Stock or HOVRS Preferred Stock to provide Acquirer with an indemnity agreement against any claim that may be made against Acquirer, the Surviving Corporation or the Exchange Agent with respect to the HOVRS Common Stock or HOVRS Preferred Stock alleged to have been lost, stolen or destroyed. 2.10. Tax Consequences. The parties hereto agree to treat the exchange of the HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger and the corresponding issuance of Acquirer Preferred Stock to Clearlake in order to raise capital as integrated steps in a single transaction by Acquirer to acquire HOVRS and raise capital and, therefore, the parties hereto intend that the exchange of HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger will qualify as a tax-free exchange of property for stock under Section 351 of the Code (and any comparable provisions of applicable state or local tax laws). Acquirer agrees (and shall cause the Surviving Corporation after the Effective Time) to report and treat the transactions described in this Agreement in a manner consistently therewith except as otherwise may be required by a taxing authority. 2.11. Taking of Necessary Action; Further Action. Each of Acquirer and HOVRS will take all such reasonable and lawful action as may be necessary or desirable in order to effectuate the Merger in accordance with this Agreement as promptly as possible. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of HOVRS and HOVRS Merger Sub, the officers and directors of HOVRS and HOVRS Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement. 3. Representations and Warranties of HOVRS. HOVRS represents and warrants to Acquirer that the statements contained in this Section 3 are true and correct, except as disclosed in a document of even date herewith and delivered by HOVRS to Acquirer on the date hereof referring to the representations and warranties in this Agreement (the "HOVRS Disclosure 26 Schedule") (it being understood and agreed that the disclosure set forth in a specific section or subsection of the HOVRS Disclosure Schedule shall qualify the representations and warranties set forth in the corresponding section and subsection of this Section 3 (whether or not a specific cross-reference is included therein) if and to the extent that it is reasonably apparent on the face of such disclosure that such disclosure applies to such other section or subsection). 3.1. Organization, Standing and Power. HOVRS is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. HOVRS has the corporate power to own its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified and in good standing could reasonably be expected to have a Material Adverse Effect on HOVRS. HOVRS has delivered a true and correct copy of its Charter Documents, each as amended to date, to Acquirer. HOVRS is not in violation of any of the provisions of its Charter Documents. Except as set forth on Section 3.1 of the HOVRS Disclosure Schedule, HOVRS does not own directly or indirectly any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. 3.2. Authority. HOVRS has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of HOVRS subject only to the approval of the Merger by the HOVRS Stockholders as contemplated by Section 6.3. The affirmative vote of the holders of a majority of the shares of the HOVRS Common Stock and HOVRS Preferred Stock voting together as a class, and the affirmative vote of the holders of a majority of the shares of the HOVRS Preferred Stock voting separately as a class, are the only votes of the holders of HOVRS' capital stock necessary under Delaware Law to approve this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by HOVRS and constitutes the valid and binding obligation of HOVRS enforceable against HOVRS in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally, and is subject to general principles of equity. The execution and delivery of this Agreement by HOVRS do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any material obligation or loss of any material benefit under (a) any provision of the Charter Documents of HOVRS, as amended; or (b) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to HOVRS or any of its properties or assets, in the case of clause (b), except for such conflicts, violations, defaults, rights of termination, cancellation or acceleration as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on HOVRS. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to HOVRS in connection with the execution and delivery of this Agreement by HOVRS or the consummation by HOVRS of the transactions contemplated hereby, except for (a) the filing of the Certificate of Merger as provided in Section 2.2; (b) filings required under the Exchange Act; (c) such filings as may be required 27 under applicable state securities laws and the securities laws of any foreign country; (d) the consents set forth on Schedule 3.2 of the HOVRS Disclosure Schedule; and (e) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, could not reasonably be expected to have a Material Adverse Effect on HOVRS and could not reasonably be expected to prevent, or materially alter or delay, any of the transactions contemplated by this Agreement. 3.3. Governmental Authorization. HOVRS has obtained each federal, state, county, local or foreign governmental consent, license, permit, grant or other authorization of a Governmental Entity (a) pursuant to which HOVRS currently operates or holds any interest in any of its properties; or (b) that is required for the operation of HOVRS' business or the holding of any such interest and all of such authorizations are in full force and effect except where the failure to obtain or have any such authorizations could not reasonably be expected to have a Material Adverse Effect on HOVRS. 3.4. Financial Statements. (a) HOVRS has delivered or made available to Acquirer the audited financial statements of HOVRS for each of the fiscal years ended December 31, 2004, 2005 and 2006, respectively, and unaudited financial statements of HOVRS on a consolidated basis as at and for the six-month periods ended June 30, 2007 (collectively, the "HOVRS Financial Statements"). The HOVRS Financial Statements have been prepared in accordance with GAAP (except that the unaudited financial statements do not contain footnotes and are subject to normal recurring year-end audit adjustments, the effect of which will not, individually or in the aggregate, be materially adverse) applied on a consistent basis throughout the periods presented and consistent with each other. The HOVRS Financial Statements fairly present the consolidated financial condition, operating results and cash flow of HOVRS as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments and the absence of footnotes in the case of the unaudited HOVRS Financial Statements. (b) HOVRS maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements of HOVRS and to maintain accountability for assets; (iii) access to HOVRS' assets is permitted only in accordance with management's authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. HOVRS is not a party to or otherwise involved in any "off-balance sheet arrangements" (as defined in Item 303 of Regulation S-K under the Exchange Act). 3.5. Capital Structure. (a) The authorized capital stock of HOVRS consists of 15,000,000 shares of HOVRS Common Stock, of which there are 8,037,670 shares issued and outstanding as of the close of business on the date hereof, and 1,724,138 shares of HOVRS Preferred Stock, all of which are issued and outstanding as of the close of business on the date hereof. All outstanding shares of HOVRS Common Stock and HOVRS Preferred Stock have been duly authorized, 28 validly issued, fully paid and are nonassessable and to the knowledge of HOVRS are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the Charter Documents or any agreement to which HOVRS is a party or by which it is bound. (b) As of the close of business on the date hereof, there are 1,724,138 shares of HOVRS Common Stock reserved for issuance upon the conversion of the outstanding shares of HOVRS Preferred Stock. As of that same date, there are 1,051,330 shares of HOVRS Common Stock reserved for issuance under the Hands On Video Relay Services, Inc. 2004 Stock Plan, as amended (the "HOVRS Option Plan"), of which (i) 405,772 shares are subject to vested outstanding options, (ii) 585,900 shares are subject to unvested outstanding options, and (iii) 59,658 shares are reserved for future option grants. As of that same date, there are no outstanding options to purchase shares of HOVRS Preferred Stock. HOVRS has delivered or made available to Acquirer true and complete copies of each form of agreement or stock option plan evidencing an option to purchase HOVRS Common Stock. Section 3.5(b) of the HOVRS Disclosure Schedule lists every outstanding option to purchase shares of HOVRS Common Stock, and for each such option sets forth the name of the optionee, the number of shares of HOVRS Common Stock subject to purchase upon the exercise of the option, the applicable exercise price per share and the shares vested as of the date designated thereon.(1) (c) Except for the rights created pursuant to or disclosed in this Agreement or as set forth in Section 3.5 to the HOVRS Disclosure Schedule, there are no other options, warrants, calls, rights, commitments or agreements of any character to which HOVRS is a party or by which it is bound, obligating HOVRS to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of HOVRS Common Stock or HOVRS Preferred Stock, or obligating HOVRS to grant, extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Except as contemplated hereunder, there are no other contracts, commitments or agreements relating to voting, purchase or sale of HOVRS' capital stock (a) between or among HOVRS and any of its stockholders; and (b) to the knowledge of HOVRS, between or among any of HOVRS' stockholders. 3.6. Absence of Certain Changes. Except as disclosed in Section 3.6 of the HOVRS Disclosure Schedule, since December 31, 2006 (the "HOVRS Balance Sheet Date"), HOVRS has conducted its business in the ordinary course consistent with past practice and there has not occurred (a) any change, event or condition (whether or not covered by insurance) that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect on HOVRS; (b) any acquisition, sale or transfer of any material asset of HOVRS other than in the ordinary course of business and consistent with past practice; (c) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by HOVRS or any revaluation by HOVRS of any of its assets; (d) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of HOVRS or any direct or indirect redemption, purchase or other acquisition by HOVRS of any of its shares of capital stock; (e) the - -------- (1) HOVRS to provide missing information. 29 execution by HOVRS of any HOVRS Material Contract (as defined in Section 3.14), other than in the ordinary course of business and as provided to Acquirer, or any material amendment or termination of, or default under, any HOVRS Material Contract to which HOVRS is a party or by which it is bound; (f) any amendment or change to the Charter Documents; (g) any increase in or modification of the compensation or benefits payable or to become payable by HOVRS to any of its directors or employees, other than in the ordinary course of business consistent with past practice; or (h) any negotiation or agreement by HOVRS to do any of the things described in the preceding clauses (a) through (g) (other than negotiations with Acquirer and its representatives regarding the transactions contemplated by this Agreement). At the Effective Time, there will be no accrued but unpaid dividends on shares of HOVRS' capital stock. 3.7. Absence of Undisclosed Liabilities. HOVRS has no material obligations or material liabilities of any nature (matured or unmatured, fixed or contingent) other than (a) those set forth or adequately provided for in the balance sheet of HOVRS as of the HOVRS Balance Sheet Date (the "HOVRS Balance Sheet"); (b) those incurred in the ordinary course of business and not required to be set forth in the HOVRS Balance Sheet under GAAP; (c) those incurred in the ordinary course of business since the HOVRS Balance Sheet Date and consistent with past practice; and (d) those incurred in connection with the execution of this Agreement. 3.8. Litigation. Section 3.8 of the HOVRS Disclosure Schedule identifies private or governmental action, suit, proceeding, claim and arbitration and, to the knowledge of HOVRS, investigation, that is pending or, to the knowledge of HOVRS, threatened, before any Governmental Entity, foreign or domestic, against HOVRS or any of its properties or any of its officers or directors (in their capacities as such). There is no private or governmental action, suit, proceeding, claim or arbitration or, to the knowledge of HOVRS, any investigation, that is pending or, to the knowledge of HOVRS, threatened, before any Governmental Entity, foreign or domestic, against HOVRS or any of its properties or any of its officers or directors (in their capacities as such), that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on HOVRS. There is no judgment, decree or order against HOVRS, or, to the knowledge of HOVRS, any of its directors or officers (in their capacities as such), that could prevent, enjoin or materially alter or delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect on HOVRS. 3.9. Restrictions on Business Activities. Except as set forth in Section 3.9 of the HOVRS Disclosure Schedule, there is no agreement, judgment, injunction, order or decree binding upon HOVRS that has or could reasonably be expected to have the effect of prohibiting or materially impairing any current business practice of HOVRS, any acquisition of property by HOVRS or the conduct of business by HOVRS as currently conducted by HOVRS. 3.10. Intellectual Property. (a) For purposes of this Agreement, "Intellectual Property" means: (i) all issued patents, reissued or reexamined patents, revivals of patents, utility models, certificates of invention, registrations of patents and extensions thereof, regardless of country or formal name (collectively, "Issued Patents"); 30 (ii) all published or unpublished nonprovisional and provisional patent applications, reexamination proceedings, invention disclosures and records of invention (collectively "Patent Applications" and, with the Issued Patents, the "Patents"); (iii) all copyrights, registrations, semiconductor topography and mask work rights (including all rights of authorship, use, publication, reproduction, distribution, performance and transformation and moral rights and rights of ownership with respect to copyrightable works, semiconductor topography works and mask works), and all rights to register and obtain renewals and extensions of registrations, together with all other interests accruing by reason of international copyright, semiconductor topography and mask work conventions (collectively, "Copyrights"); (iv) trademarks, trademark registrations, applications for registration of trademarks, service marks, service mark registrations, applications for registration of service marks, trade name registrations and registered trade names and applications for registrations of trade names (collectively, "Trademarks") and domain name registrations; (v) all trade secrets and proprietary information (including with respect to technology, ideas, inventions, designs, manufacturing and operating specifications, know-how, formulae, technical data, computer programs, hardware, software and processes); and (vi) all other intellectual property rights and protections, worldwide. (b) HOVRS owns and has good and marketable title to, or possesses legally enforceable rights to use, all Intellectual Property that is both used in and material to its business as currently conducted by HOVRS. The Intellectual Property owned by or licensed to HOVRS collectively constitutes all of the material Intellectual Property necessary to enable HOVRS to conduct its business as such business is currently being conducted by it. (c) For the purposes of this Agreement, "HOVRS Intellectual Property" means Intellectual Property incorporated into any product of HOVRS or otherwise used in the business of HOVRS (except "off the shelf" or other software widely available through regular commercial distribution channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions, as modified for HOVRS' operations). Section 3.10(c) of the HOVRS Disclosure Schedule lists: (i) the following HOVRS Intellectual Property to the extent owned by HOVRS: (A) all Issued Patents and Patent Applications, (B) all registered Trademarks and pending trademark applications and (C) all registered Copyrights, including the jurisdictions in which each such Intellectual Property has been issued or registered or in which any such application for such issuance and/or registration has been filed; and (ii) the following agreements relating to each of the products of HOVRS (the "HOVRS Products") or HOVRS Intellectual Property: all (A) agreements granting any right to distribute or sublicense a HOVRS Product on any exclusive or non-exclusive basis; (B) any exclusive or non-exclusive licenses of Intellectual Property to or from HOVRS (except "off the shelf" or other software widely available through regular commercial distribution 31 channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions, as modified for HOVRS' operations); (C) agreements pursuant to which the amounts actually paid or payable under firm commitments to HOVRS are Fifteen Thousand Dollars ($15,000) or more; (D) joint development agreements; (E) agreements pursuant to which HOVRS grants or has granted any ownership right to any HOVRS Intellectual Property owned by HOVRS; (F) orders of a court of competent jurisdiction relating to HOVRS Intellectual Property owned or used by HOVRS that are known by HOVRS; (G) any option to purchase or obtain a license to any HOVRS Intellectual Property owned by HOVRS; and (H) agreements pursuant to which HOVRS grants or has granted any party any rights to access source code, or to use source code or object code to create derivative works of HOVRS Products. (d) Section 3.10(d) of the HOVRS Disclosure Schedule contains an accurate list as of the date of this Agreement of all licenses, sublicenses and other agreements to which HOVRS is a party and pursuant to which (i) HOVRS has authorized another party to use any Intellectual Property owned by HOVRS that is material to the business of HOVRS or (ii) to which HOVRS is authorized to use any Intellectual Property that is owned by any third party and material to the business of HOVRS, excluding "off the shelf" or other software widely available through regular commercial distribution channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions ("Third Party HOVRS Intellectual Property"). (e) To the knowledge of HOVRS, there is no unauthorized use, disclosure, infringement or misappropriation of any HOVRS Intellectual Property owned by HOVRS by any third party, including any employee or former employee of HOVRS, other than such uses, disclosures, infringements or misappropriations as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on HOVRS. Except as disclosed in Section 3.10(e) of the HOVRS Disclosure Schedule, HOVRS has not entered into any agreement to indemnify any other Person against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in standard sales or other agreements to end users arising in the ordinary course of business, the forms of which have been delivered to Acquirer or its counsel. Except pursuant to the agreements disclosed in Section 3.10(d) of the HOVRS Disclosure Schedule, there are no royalties, fees or other payments payable by HOVRS to any party by reason of the ownership, use, sale or disposition of Third Party HOVRS Intellectual Property. (f) Other than with respect to matters that have been fully resolved, settled and, if applicable, fully paid, prior to the date hereof, HOVRS has no knowledge of, and HOVRS has not received written notice asserting any breach by HOVRS of, any license, sublicense or other agreement relating to the HOVRS Intellectual Property or Third Party HOVRS Intellectual Property. Neither the execution, delivery or performance of this Agreement or any ancillary agreement contemplated hereby nor the consummation of the Merger or any of the transactions contemplated by this Agreement will contravene, conflict with or result in any limitation on Acquirer's right to own or use any HOVRS Intellectual Property, including any Third Party HOVRS Intellectual Property. (g) To the knowledge of HOVRS, all Issued Patents, registered Trademarks and registered Copyrights owned by HOVRS are valid and subsisting. With respect to any Issued Patents owned by HOVRS, all maintenance and annual fees have been fully paid. With 32 respect to registered Trademarks, all necessary affidavits of use, renewals and/or documents evidencing accurate chain of title and ownership are currently on file with the United States Patent and Trademark Office. Other than with respect to matters that have been fully resolved, settled and, if applicable, fully paid prior to the date hereof, HOVRS has no knowledge of, and HOVRS has not received any written assertion of, any actual or alleged infringement, misappropriation or unlawful use by HOVRS of any Intellectual Property owned by any third party, and there is no proceeding pending or to the knowledge of HOVRS threatened with respect to the foregoing. There is no proceeding pending or, to the knowledge of HOVRS, threatened with respect to, nor has HOVRS received any written claim or demand that challenges, the legality, validity, enforceability or ownership of any item of HOVRS Intellectual Property that is owned by HOVRS. HOVRS has not brought a proceeding alleging infringement of HOVRS Intellectual Property or breach of any license or agreement involving Intellectual Property against any third party. (h) All current and former officers, employees and vendors of HOVRS, to the extent the duties of such officers, employees and vendors involve the handling of confidential information of Acquirer or the creation of Intellectual Property, have executed and delivered to HOVRS an agreement regarding the protection of proprietary information and the assignment or exclusive license to HOVRS of any Intellectual Property arising from services performed for HOVRS by such Persons, the form of which has been supplied to Acquirer. To the knowledge of HOVRS, no employee of HOVRS is in violation of any term relating to Intellectual Property or confidentiality contained in any employment contract or any other contract or agreement relating to the relationship of any such employee with HOVRS. To the knowledge of HOVRS, no current or former officer, director or employee of HOVRS has any right, claim or interest in or with respect to any HOVRS Intellectual Property owned by HOVRS. (i) HOVRS has taken commercially reasonable measures and precautions designed to protect and maintain the confidentiality of all trade secrets and proprietary information of HOVRS (except such trade secrets and proprietary information whose value would not be materially impaired by public disclosure). All disclosure to a third party of any trade secrets that are material to the businesses of and owned by HOVRS has been pursuant to the terms of a written agreement between HOVRS and such third party, such agreement designed to protect and maintain the confidentiality of such trade secrets. (j) Except as set forth in Section 3.10(j) of the HOVRS Disclosure Schedule and except for any claims that have been resolved prior to the date hereof, no product liability claims have been communicated in writing to or, to the knowledge of HOVRS, threatened against HOVRS. (k) A complete list of each of the HOVRS Products and HOVRS' proprietary software that is material to its business ("HOVRS Software"), together with a brief description of each, is set forth in Section 3.10(k) of the HOVRS Disclosure Schedule. (l) To the knowledge of HOVRS, HOVRS is not subject to any proceeding or outstanding decree, order, judgment, stipulation, or agreement restricting in any manner the use, transfer or licensing of any HOVRS Intellectual Property owned by HOVRS, or which may affect the validity, use or enforceability of such HOVRS Intellectual Property. 33 (m) To the knowledge of HOVRS, no Public Software (as defined below) forms a material part of any HOVRS Products, services provided by HOVRS or HOVRS Intellectual Property, and no Public Software was or is (A) both used in connection with, and material to, the development of any HOVRS Product, HOVRS service or HOVRS Intellectual Property owned by HOVRS or (B) in any material respect is incorporated into, in whole or in part, or has been distributed with, in whole or in part, any HOVRS Product, HOVRS service or HOVRS Intellectual Property owned by HOVRS. As used in this Section 3.10(m), "Public Software" means any software that is distributed as free software (as defined by the Free Software Foundation), open source software (e.g., Linux or software distributed under any license approved by the Open Source Initiative as set forth www.opensource.org) or similar licensing or distribution models which requires the distribution of source code to licensees, including software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (i) GNU's General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD License; or (viii) the Apache License. 3.11. Interested Party Transactions. HOVRS is not indebted to any director, officer, employee or agent of HOVRS (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such Person is indebted to HOVRS. To the knowledge of HOVRS, there have been no transactions during the two-year period ending on the date hereof that would require disclosure if HOVRS were subject to disclosure under Item 404 of Regulation S-K under the Securities Act. 3.12. Minute Books. The minute book of HOVRS contains a materially complete and accurate summary of all meetings of directors and stockholders or actions by written consent since the time of incorporation of HOVRS through the date of this Agreement, and reflects all transactions referred to in such minutes accurately in all material respects. 3.13. Complete Copies of Materials. All copies of documents delivered or made available by HOVRS to Acquirer in connection with Acquirer's due diligence review of HOVRS have been true and complete copies of each such document. 3.14. HOVRS Material Contracts. All of the HOVRS Material Contracts (as defined in this Section 3.14) are listed in Section 3.14 of the HOVRS Disclosure Schedule. With respect to the HOVRS Material Contracts, except as set forth in Section 3.14 of the HOVRS Disclosure Schedule: (a) each HOVRS Material Contract is legal, valid, binding and enforceable and in full force and effect with respect to HOVRS, and, to HOVRS' knowledge, is legal, valid, binding, enforceable and in full force and effect with respect to each other party thereto, in either case subject to the effect of bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity; (b) each HOVRS Material Contract will continue to be legal, valid, binding and enforceable and in full force and effect with respect to HOVRS or its successor immediately following the Effective Time in accordance with its terms as in effect prior to the Effective Time, subject to the effect of bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and except as the availability 34 of equitable remedies may be limited by general principles of equity; and (c) neither HOVRS nor, to HOVRS' knowledge, any other party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default by HOVRS or, to HOVRS' knowledge, by any such other party, or permit termination, modification or acceleration, under such HOVRS Material Contract, subject to such exceptions as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on HOVRS. HOVRS is not a party to any oral contract, agreement or other arrangement. "HOVRS Material Contract" means any contract, agreement or commitment to which HOVRS is a party (a) with expected receipts or expenditures in excess of Twenty-Five Thousand Dollars ($25,000); (b) required to be listed pursuant to Section 3.10(d) or Section 3.22; (c) requiring HOVRS to indemnify any party; (d) granting any exclusive rights to any party; (e) evidencing indebtedness for borrowed or loaned money of Twenty-Five Thousand Dollars ($25,000) or more, including guarantees of such indebtedness; or (f) that could reasonably be expected to have a Material Adverse Effect on HOVRS if breached by HOVRS in such a manner as would (I) permit any other party to cancel or terminate the same (with or without notice or passage of time); (II) provide a basis for any other party to claim money damages (either individually or in the aggregate with all other such claims under that contract) from HOVRS; or (III) give rise to a right of acceleration of any material obligation or loss of any material benefit under such HOVRS Material Contract. 3.15. Inventory. HOVRS has no inventory as of the HOVRS Balance Sheet Date. Any inventory acquired subsequent to such date and prior to the Closing shall have been or be acquired and maintained in the ordinary course of business, shall have been or be of good and merchantable quality, and consists or will consist of items of a quantity and quality usable or salable in the ordinary course of business. The values at which any inventories will be carried will reflect an inventory valuation policy of HOVRS that is in accordance with GAAP applied on a consistent basis. HOVRS is not under any material liability or obligation with respect to the return of any item of inventory in the possession of wholesalers, retailers or other customers. Since the HOVRS Balance Sheet Date, adequate provision has been made on the books of HOVRS in the ordinary course of business in accordance with GAAP applied on a consistent basis to provide for all material slow-moving, obsolete or unusable inventories to their estimated useful or scrap values, and such inventory reserves are adequate to provide for such slow-moving, obsolete or unusable inventory and inventory shrinkage. 3.16. Accounts Receivable. Subject to any reserves set forth therein, the accounts receivable shown on the HOVRS Financial Statements are valid and genuine, have arisen solely out of bona fide sales and deliveries of goods, performance of services, and other business transactions in the ordinary course of business consistent with past practices in each case with Persons other than affiliates, are not subject to any prior assignment, lien or security interest, and to HOVRS' knowledge are not subject to valid defenses, set-offs or counter claims. The accounts receivable are collectible in accordance with their terms at their recorded amounts, subject only to the reserve for doubtful accounts on the HOVRS Financial Statements. 3.17. Customers and Suppliers. Except as set forth in Section 3.17 of the HOVRS Disclosure Schedule, as of the date hereof, no customer that individually accounted for more than five percent (5%) of HOVRS' gross revenues during the 12-month period preceding the date hereof and no supplier of HOVRS that individually accounted for more than five percent (5%) of HOVRS' purchases during the 12-month period preceding the date hereof has canceled 35 or otherwise terminated, or made any written threat to HOVRS to cancel or otherwise terminate its relationship with HOVRS or has at any time on or after the HOVRS Balance Sheet Date, decreased materially its services or supplies to HOVRS in the case of any supplier, or its usage of the services or products of HOVRS in the case of such customer, and to HOVRS' knowledge, no such supplier or customer has indicated either orally or in writing that it intends to cancel or otherwise terminate its relationship with HOVRS or to decrease materially its services or supplies to HOVRS or its usage of the services or products of HOVRS, as the case may be. HOVRS has not knowingly breached any agreement with, or engaged in any fraudulent conduct with respect to, any customer or supplier of HOVRS, so as to provide a benefit to HOVRS that was not intended by the parties. 3.18. Employees and Consultants. Section 3.18 of the HOVRS Disclosure Schedule contains a list of the names of all employees (including without limitation part-time employees and temporary employees), leased employees, independent contractors and consultants of HOVRS, together with their respective salaries or wages, other compensation, dates of employment and positions. Section 3.18 of the HOVRS Disclosure Schedule also describes all severance benefits to which any HOVRS employee is or may become entitled pursuant to any agreement between HOVRS and such employee. 3.19. Title to Property. HOVRS has good and marketable title to all of its properties, interests in properties and assets, real and personal, reflected in the HOVRS Balance Sheet or acquired after the HOVRS Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since the HOVRS Balance Sheet Date in the ordinary course of business), or with respect to leased properties and assets, valid leasehold interests therein, free and clear of all mortgages, liens, pledges, charges or encumbrances of any kind or character, except (a) the lien of current taxes not yet due and payable; (b) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties; (c) liens securing debt that is reflected on the HOVRS Balance Sheet or listed in Section 3.19 of the HOVRS Disclosure Schedule; and (d) such other mortgages, liens, pledges, charges or encumbrances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on HOVRS. The plants, property and equipment of HOVRS that are used in the operations of its business are in all material respects in good operating condition and repair, subject to normal wear and tear. All properties used in the operations of HOVRS are reflected in the HOVRS Balance Sheet to the extent required by GAAP. All leases to which HOVRS is a party are in full force and effect and are valid, binding and enforceable in respect of HOVRS in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally and general principles of equity, regardless of whether asserted in a proceeding in equity or at law. True and correct copies of all such leases have been provided or made available to Acquirer. HOVRS own no real property. 3.20. Environmental Matters. (a) The following terms shall be defined as follows: 36 (i) "Environmental Laws" shall mean any applicable foreign, federal, state or local governmental laws (including common laws), statutes, ordinances, codes, regulations, rules, policies, permits, licenses, certificates, approvals, judgments, decrees, orders, directives, or requirements that pertain to the protection of the environment, protection of public health and safety, or protection of worker health and safety, or that pertain to the handling, use, manufacturing, processing, storage, treatment, transportation, discharge, release, emission, disposal, re-use, recycling, or other contact or involvement with Hazardous Materials (as defined in Section 3.20(a)(ii), including, without limitation, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as amended ("CERCLA"),and the federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended ("RCRA"). (ii) "Hazardous Materials" shall mean any material, chemical, compound, substance, mixture or by-product that is identified, defined, designated, listed, restricted or otherwise regulated under Environmental Laws as a "hazardous constituent," "hazardous substance," "hazardous waste," "hazardous waste constituent," "infectious waste," "medical waste," "biomedical waste," "pollutant," "toxic pollutant," "contaminant" or any other statutory or regulatory terminology intended to classify or identify substances, constituents, materials or wastes by reason of properties that are deleterious to the environment, natural resources, worker health and safety, or public health and safety, including without limitation ignitability, corrosivity, reactivity, carcinogenicity, toxicity and reproductive toxicity. The term "Hazardous Materials" shall include without limitation any "hazardous substances" as defined, listed, designated or regulated under CERCLA, any "hazardous wastes" or "solid wastes" as defined, listed, designated or regulated under RCRA, any asbestos or asbestos-containing materials, any polychlorinated biphenyls, and any petroleum or hydrocarbonic substance, fraction, distillate or by-product. (b) To the knowledge of HOVRS, HOVRS is and has been in material compliance with all Environmental Laws applicable to HOVRS and relating to the properties or facilities used, leased or occupied by HOVRS at any time (collectively, "HOVRS' Facilities;" such properties or facilities currently used, leased or occupied by HOVRS are defined herein as "HOVRS' Current Facilities"), and no discharge, emission, release, leak or spill of Hazardous Materials has occurred at any of HOVRS' Facilities during HOVRS' occupancy thereof that could reasonably be expected to give rise to a material liability of HOVRS under Environmental Laws. To HOVRS' knowledge, (i) there are no Hazardous Materials (including without limitation asbestos) present in the surface waters, structures, groundwaters or soils of or beneath any of HOVRS' Current Facilities in a condition, or in concentrations or amounts, that could reasonably be expected to give rise to a material liability of HOVRS, (ii) there neither are nor have been any aboveground or underground storage tanks for Hazardous Materials at HOVRS' Current Facilities except as are operated and maintained, or removed, in material compliance with applicable Environmental Laws, and (iii) no HOVRS employee or other Person has asserted in writing that HOVRS is liable for alleged injury or illness resulting from an alleged exposure to a Hazardous Material. Except as set forth in Section 3.20 of the HOVRS Disclosure Schedule, no civil, criminal or administrative action, proceeding or investigation is pending against HOVRS, or, to HOVRS' knowledge, threatened against HOVRS, alleging a material liability of HOVRS with respect to Hazardous Materials or a material violation of Environmental Laws. 37 3.21. Taxes. HOVRS makes the following representations with respect to Taxes: (a) HOVRS has prepared and timely filed (or will prepare and timely file) all Tax Returns required to be filed by HOVRS for any period ending on or before the Closing Date. All Tax Returns filed by HOVRS are true and correct in all material respects and have been completed in accordance with Applicable Law, and all material Taxes shown to be due on such Tax Returns, and other material Taxes that are due for which no Tax Returns are required to be filed, have been timely paid. To the extent Taxes are not due, adequate reserves have been established on the HOVRS Balance Sheet with respect to accrued taxes up to the HOVRS Balance Sheet Date in accordance with GAAP as applied by HOVRS on a consistent basis with prior periods. HOVRS has no knowledge of any basis for the assertion of a liability for unpaid Taxes with respect to accrued Taxes up to the HOVRS Balance Sheet Date that are not established on the HOVRS Balance Sheet. HOVRS has no knowledge that it has incurred any liability for Taxes after the HOVRS Balance Sheet Date other than in the ordinary course of business that may be material. HOVRS has delivered or made available to the Acquirer true and correct copies of all income and franchise Tax Returns, closing agreements, examination reports or other similar reports, and statements of deficiencies filed, assessed against or agreed to by, or on behalf of, HOVRS since December 31, 2003. (b) There are no audits by any taxing authority pending against HOVRS or any predecessor entity and HOVRS has not received written notice from any taxing authority that it is conducting or intends to conduct an audit or investigation. HOVRS has not waived or extended any statute of limitations in respect of Taxes or Tax Returns or agreed to any extension of time with respect to a Tax assessment, reassessment, deficiency or with respect to the payment of any Taxes. HOVRS is not a party to any power of attorney with respect to a Tax matter that is currently in force or otherwise bound by any private letter ruling of the IRS or comparable rulings issued by any other taxing authority. (c) No claims have been made by a taxing authority in writing to HOVRS in a jurisdiction where HOVRS does not file Tax Returns that HOVRS is or may be subject to taxation by that jurisdiction. No issue has been raised by a taxing authority in writing to HOVRS in any current or most recent examination which, by application of the same or similar principles, would reasonably be expected to affect the Tax treatment of HOVRS in any taxable period (or portion thereof) ending after the Closing Date. (d) HOVRS does not have (i) any liability for the payment of any Taxes as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability or by operation of Applicable Law, and (ii) any liability for the payment of any amounts as a result of being a party to, or bound by, any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to Taxes. (e) HOVRS has disclosed to Acquirer (i) any Tax exemption, Tax holiday or other Tax-sparing arrangement that HOVRS has in any jurisdiction, including the nature, amount and lengths of such Tax exemption, Tax holiday orother Tax-sparing arrangement; and (ii) any expatriate tax programs or policies affecting HOVRS. HOVRS is in compliance in all material respects with all terms and conditions required to maintain such Tax exemption, Tax holiday or 38 other Tax-sparing arrangement or order of any governmental entity and the consummation of the transactions contemplated hereby will not have any adverse effect on the continuing validity and effectiveness of any such Tax exemption, Tax holiday or other Tax-sparing arrangement or order. (f) HOVRS is not, and has not been during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a United States real property holding corporation within the meaning of section 897(c)(2) of the Code. (g) HOVRS is not a party to any contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of HOVRS that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G of the Code by HOVRS or any of its Subsidiaries, or that would be subject to an excise Tax by reason of Section 4999 of the Code. (h) Schedule 3.21(h) contains a list enumerating each jurisdiction in which HOVRS is required to pay Taxes or file Tax Returns and specifying the type of Taxes paid and Tax Returns filed in that jurisdiction. (i) HOVRS (i) has complied in all material respects with all Applicable Laws, rules and regulations relating to the payment and withholding of Taxes, (ii) has timely and properly paid over to the applicable governmental authorities all amounts required to be so withheld from all payments made by or on behalf of HOVRS (including, but not limited to, employee wages and payments to independent contractors) and (iii) is not liable for any Taxes for failure to comply with such laws, rules and regulations. (j) HOVRS has not distributed the stock of any corporation, or had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code. (k) No property of HOVRS (i) is tax exempt use property within the meaning of Section 168(h) or Section 470(c)(2) of the Code, (ii) directly or indirectly secures any debt the interest on which is exempt under Section 103(a) of the Code or (iii) is required to be treated as being owned by any Person (other than HOVRS) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately before the Tax Reform Act of 1986. (l) HOVRS has disclosed on its U.S. federal income tax returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. HOVRS has not engaged in a reportable transaction described in Section 1.6011-4 of the Treasury Regulations. 3.22. Employee Benefit Plans. (a) Section 3.22 of the HOVRS Disclosure Schedule contains a complete and accurate list of each plan, program, policy, practice, contract, agreement or other arrangement providing for employment, compensation, retirement, deferred compensation, loans, severance, 39 separation, relocation, repatriation, expatriation, visas, work permits, termination pay, performance awards, bonus, incentive, stock option, stock purchase, stock bonus, phantom stock, stock appreciation right, supplemental retirement, fringe benefits, cafeteria benefits or other benefits, whether written or unwritten, including without limitation each "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which is sponsored, maintained, contributed to, or required to be contributed to by HOVRS and, with respect to any such plans which are subject to Code Section 401(a), any trade or business (whether or not incorporated) that is treated as a single employer with HOVRS within the meaning of Section 414(b), (c), (m) or (o) of the Code, (an "ERISA Affiliate") for the benefit of any Person who performs or who has performed services for HOVRS or with respect to which HOVRS or any ERISA Affiliate has or may have any liability (including without limitation contingent liability) or obligation (collectively, the "HOVRS Employee Plans"). (b) Documents. HOVRS has furnished or made available to Acquirer true and complete copies of documents embodying each of the existing HOVRS Employee Plans and related plan documents, including without limitation trust documents, group annuity contracts, plan amendments, insurance policies or contracts, participant agreements, employee booklets, administrative service agreements, summary plan descriptions, summaries of material modifications, compliance and nondiscrimination tests for the last three plan years, standard COBRA forms and related notices, registration statements and prospectuses and, to the extent still in its possession, any material employee communications relating thereto. With respect to each HOVRS Employee Plan that is subject to ERISA reporting requirements, HOVRS has provided copies of the Form 5500 reports filed for the last three (3) plan years. HOVRS has furnished Acquirer with the most recent Internal Revenue Service determination or opinion letter issued with respect to each such HOVRS Employee Plan, and to HOVRS' knowledge nothing has occurred since the issuance of each such letter that could reasonably be expected to cause the loss of the tax-qualified status of any HOVRS Employee Plan subject to Code Section 401(a). (c) Compliance. (i) Each HOVRS Employee Plan has been administered in accordance with its terms and in compliance with the requirements prescribed by any and all statutes, rules and regulations (including ERISA and the Code), except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on HOVRS; and HOVRS and each ERISA Affiliate have performed all material obligations required to be performed by them under, are not in material respect in default under or violation of and have no knowledge of any material default or violation by any other party to, any of the HOVRS Employee Plans; (ii) any HOVRS Employee Plan intended to be qualified under Section 401(a) of the Code is either subject to a favorable determination letter or opinion letter issued by the Internal Revenue Service as to its qualified status under the Code, including all currently effective amendments to the Code, or has time remaining to apply under applicable Treasury Regulations or Internal Revenue Service pronouncements for a determination or opinion letter and to make any amendments necessary to obtain a favorable determination or opinion letter; (iii) none of the HOVRS Employee Plans promises or provides retiree medical or other retiree welfare benefits to any Person (except to the extent required to comply with "COBRA" (as defined in paragraph (e) below) or any similar state law); (iv) there has been no non-exempt "prohibited transaction," as such term is defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any HOVRS Employee Plan; (v) neither HOVRS nor any ERISA Affiliate 40 is subject to any liability or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any HOVRS Employee Plan; (vi) all material contributions required to be made by HOVRS or any ERISA Affiliate to any HOVRS Employee Plan have been paid or accrued in accordance with Applicable Law; (vii) with respect to each HOVRS Employee Plan, no "reportable event" within the meaning of Section 4043 of ERISA (excluding any such event for which the thirty (30) day notice requirement has been waived under the regulations to Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISA has occurred; (viii) each HOVRS Employee Plan subject to ERISA has prepared in good faith and timely filed all requisite governmental reports, which were true and correct as of the date filed, and has properly and timely filed and distributed or posted all notices and reports to employees required to be filed, distributed or posted with respect to each such HOVRS Employee Plan except where such failure would result in a material liability; (ix) no suit, administrative proceeding, action or other litigation has been brought, or to the knowledge of HOVRS is threatened, against or with respect to any such HOVRS Employee Plan, including any audit or inquiry by the IRS or United States Department of Labor; (x) except as contemplated by this Agreement there has been no amendment to, written interpretation or announcement by HOVRS or any ERISA Affiliate that would materially increase the expense of maintaining any HOVRS Employee Plan above the level of expense incurred with respect to that Plan for the most recent fiscal year included in the HOVRS Financial Statements; and (xi) no HOVRS Employee Plan is required to comply with any foreign law. (d) No Title IV or Multiemployer Plan. Neither HOVRS nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, contributed to, or is obligated to contribute to, or otherwise incurred any obligation or liability (including without limitation any contingent liability) under any "multiemployer plan" (as defined in Section 3(37) of ERISA) or to any "pension plan" (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code. Neither HOVRS nor any ERISA Affiliate has any actual or potential withdrawal liability (including without limitation any contingent liability) for any complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) from any multiemployer plan. (e) COBRA, FMLA, HIPAA, Cancer Rights. With respect to each HOVRS Employee Plan, HOVRS has complied with (i) the applicable health care continuation and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations thereunder or any state law governing health care coverage extension or continuation; (ii) the applicable requirements of the Family and Medical Leave Act of 1993 and the regulations thereunder; (iii) the applicable requirements of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"); and (iv) the applicable requirements of the Cancer Rights Act of 1998, except to the extent that such failure to comply could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on HOVRS. HOVRS has no material unsatisfied obligations to any employees, former employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing health care coverage extension or continuation. (f) Effect of Transaction. The consummation of the transactions contemplated by this Agreement will not either alone or in conjunction with an individual's termination of employment or service or a change in the terms and conditions of employment or 41 service (i) entitle any current or former employee or other service provider of HOVRS or any ERISA Affiliate to severance benefits or any other payment (including without limitation unemployment compensation, golden parachute, bonus or benefits under any HOVRS Employee Plan), except as expressly provided in this Agreement; or (ii) accelerate the time of payment or vesting of any such benefits or increase the amount of compensation due any such employee or service provider. No benefit payable or that may become payable by HOVRS pursuant to any HOVRS Employee Plan or as a result of or arising under this Agreement shall constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) subject to the imposition of an excise Tax under Section 4999 of the Code or the deduction for which would be disallowed by reason of Section 280G of the Code. Each HOVRS Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without material liability to Acquirer or HOVRS other than ordinary administration expenses typically incurred in a termination event. 3.23. Employee Matters. HOVRS is in compliance in all material respects with all currently Applicable Laws and regulations respecting terms and conditions of employment, including without limitation applicant and employee background checking, immigration laws, discrimination laws, verification of employment eligibility, employee leave laws, classification of workers as employees and independent contractors, wage and hour laws, and occupational safety and health laws, except for such noncompliance that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on HOVRS. Except as specified in Section 3.8 of the HOVRS Disclosure Schedule, as of the date of this Agreement, there are no proceedings pending or, to HOVRS' knowledge, reasonably expected or threatened, between HOVRS, on the one hand, and any or all of its current or former employees, on the other hand, which proceedings could reasonably be expected to have, a Material Adverse Effect on HOVRS, including without limitation any claims for actual or alleged harassment or discrimination based on race, national origin, age, sex, sexual orientation, religion, disability, or similar tortious conduct, breach of contract, wrongful termination, defamation, intentional or negligent infliction of emotional distress, interference with contract or interference with actual or prospective economic disadvantage. HOVRS is not a party to any collective bargaining agreement or other labor union contract, nor does HOVRS know of any activities or proceedings of any labor union to organize its employees. To HOVRS' knowledge, HOVRS has provided all employees with all wages, benefits, relocation benefits, stock options, bonuses and incentives, and all other compensation that became due and payable through the date of this Agreement. No "mass layoff", "plant closing" or similar event as defined by the Worker Adjustment and Notification Act (29 U.S.C. ss. 2101 et seq.) with respect to HOVRS has occurred nor is expected to occur as a result of this Agreement. 3.24. Insurance. HOVRS has policies of insurance and bonds of the type and in amounts customarily carried by Persons conducting businesses or owning assets similar to those of HOVRS. There is no material claim pending under any of such policies or bonds as to which coverage has been denied, disputed or to the knowledge of HOVRS questioned by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and HOVRS is otherwise in compliance in all material respects with the terms of such policies and bonds. HOVRS has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies. 42 3.25. Compliance With Laws. HOVRS has complied with, is not in violation of and has not received any written notices of violation with respect to, any federal state, local or foreign statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as could not reasonably be expected to have a Material Adverse Effect on HOVRS. 3.26. Brokers' and Finders' Fee. Except as set forth in Section 3.26 of the HOVRS Disclosure Schedule, HOVRS has not entered into any arrangement or agreement with any broker, finder or investment banker that would be entitled to brokerage or finders' fees or agents' commissions or investment bankers' fees or any similar charges from HOVRS in connection with the Merger, this Agreement or any transaction contemplated hereby. 3.27. Privacy Policies and Web Site Terms and Conditions. (a) For purposes of this Section 3.27: (i) "HOVRS Sites" means all of HOVRS' public sites on the World Wide Web; and (ii) "HOVRS Privacy Statements" means, collectively, any and all of HOVRS' privacy policies published on the HOVRS Sites or otherwise made publicly available by HOVRS regarding the collection, retention, use and distribution of the personal information of individuals, including, without limitation, from visitors of any of the HOVRS Sites ("Individuals"). (b) HOVRS is in material compliance with (i) the HOVRS Privacy Statements as applicable to any given set of personal information collected by HOVRS from Individuals; and (ii) all applicable privacy laws and regulations regarding the collection, retention, use and disclosure of personal information. (c) HOVRS has not received written notice of any claims or controversies regarding the HOVRS Privacy Statements or the implementation thereof. 3.28. International Trade Matters. HOVRS is, and at all times has been, in material compliance with and has not been and is not in material violation of any International Trade Law, including but not limited to, all laws and regulations related to the import and export of commodities, software, and technology from and into the United States, and the payment of required duties and tariffs in connection with same. HOVRS has no basis to expect, and neither HOVRS nor any other Person for whose conduct it is or may be held to be responsible has received, any actual or threatened order, notice, or other communication from any governmental body of any actual or potential violation or failure to comply with any International Trade Law. 3.29. Proxy Statement and Information Statement. None of the information to be supplied by HOVRS or any of its accountants, counsel or other authorized representatives for inclusion in the Preliminary Proxy Statement or the HOVRS Information Statement will, at the time of the mailing thereof to the HOVRS Stockholders, or for inclusion in the Proxy Statement will, at the time of the mailing thereof to the stockholders of Acquirer or at the time of the meeting of the stockholders of Acquirer to be held in connection with the Merger, contain any 43 untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, it being understood and agreed that no representation or warranty is made by HOVRS with respect to any information supplied by Acquirer or its accountants, counsel or other authorized representatives. If at any time prior to the Effective Time any event with respect to HOVRS or its officers and directors shall occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement, such event shall be so described and the presentation in such amendment or supplement of such information will not contain any statement which, at the time and in light of the circumstances under which it is made, is false or misleading in any material respect or omits to state any 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 false or misleading. 3.30. No Other Representations. Except for the representations and warranties contained in this Section 3 (as modified by the HOVRS Disclosure Schedule), neither HOVRS nor any other Person makes any other express or implied representation or warranty with respect to HOVRS or the transactions contemplated by this Agreement, and HOVRS disclaims any other representations or warranties, whether made by HOVRS or any of its affiliates, officers, directors, employees, agents or representatives. Except for the representations and warranties contained in this Section 3 (as modified by the HOVRS Disclosure Schedule), HOVRS hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to Acquirer, HOVRS Merger Sub or any of their affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided to Acquirer by any director, officer, employee, agent, consultant, or representative of the HOVRS or any of its affiliates or representatives). The disclosure of any matter or item in the HOVRS Disclosure Schedule shall not be deemed to constitute an acknowledgement that any such matter is required to be disclosed. 3.31. Board Approval. The board of directors of HOVRS, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (i) approved this Agreement and the other documents contemplated hereunder, together with the Merger and the other transactions contemplated hereby, and (ii) recommended that the stockholders of HOVRS approve this Agreement, the Merger and the other transactions contemplated hereby. 4. Representations and Warranties of Acquirer. Acquirer represents and warrants to HOVRS and the HOVRS Stockholders that the statements contained in this Section 4 are true and correct, except as disclosed in a document of even date herewith and delivered by Acquirer to HOVRS on the date hereof referring to the representations and warranties in this Agreement (the "Acquirer Disclosure Schedule") (it being understood and agreed that the disclosure set forth in a specific section or subsection of Acquirer Disclosure Schedule shall qualify the representations and warranties set forth in the corresponding section and subsection of this Section 4 (whether or not a specific cross-reference is included therein) if and to the extent that it is reasonably apparent on the face of such disclosure that such disclosure applies to such other section or subsection, and that the representation and warranties provided hereunder may be qualified by disclosures made by Acquirer in its public filings with the SEC, if and only to the 44 extent such filing is reasonably identified by report captions or otherwise when cross-referenced on the Acquirer Disclosure Schedule). For purposes of the representations and warranties set forth in this Section 4 only, unless the context otherwise requires, the term "Acquirer" shall mean "Acquirer and its Subsidiaries, taken as a whole." 4.1. Organization, Standing and Power. Each of Acquirer and HOVRS Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Except as described in Section 4.1 of the Acquirer Disclosure Schedule, every other Subsidiary of Acquirer is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized. Acquirer and HOVRS Merger Sub have corporate power to own their respective properties and to carry on their respective businesses as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified and in good standing could reasonably be expected to have a Material Adverse Effect on Acquirer. Acquirer has delivered a true and correct copy of the Charter Documents of Acquirer, HOVRS Merger Sub and any other Subsidiary of Acquirer, each as amended to date, to HOVRS. Neither Acquirer, HOVRS Merger Sub nor any other Subsidiary of Acquirer is in violation of any of the provisions of its Charter Documents. Except as set forth on Section 4.1 of the Acquirer Disclosure Schedule and other than its Subsidiaries, Acquirer does not own directly or indirectly any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. 4.2. Authority. Acquirer and HOVRS Merger Sub have all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Acquirer and HOVRS Merger Sub, subject only to the approval of the Merger, the issuance of the Acquirer Common Stock pursuant to this Agreement and such other matters as shall be required by Nasdaq in connection with the consummation of the Merger by Acquirer's stockholders as contemplated in Section 6.4. This Agreement has been duly executed and delivered by Acquirer and HOVRS Merger Sub, and constitutes the valid and binding obligation of Acquirer and HOVRS Merger Sub enforceable against Acquirer and HOVRS Merger Sub in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally, and is subject to general principles of equity. The execution and delivery of this Agreement by Acquirer and HOVRS Merger Sub do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any material obligation or loss of any material benefit under (a) any provision of the Charter Documents of Acquirer, HOVRS Merger Sub or any of their Subsidiaries, as amended; or (b) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Acquirer, HOVRS Merger Sub or any of their Subsidiaries or their properties or assets in the case of clause (b), except for such conflicts, violations, defaults, rights of termination, cancellation or acceleration as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Acquirer. No consent, approval, order or authorization of or registration, declaration or filing with any 45 Governmental Entity is required by or with respect to Acquirer, HOVRS Merger Sub or any of their Subsidiaries in connection with the execution and delivery of this Agreement by Acquirer or HOVRS Merger Sub, or the consummation by Acquirer and HOVRS Merger Sub of the transactions contemplated hereby, except for (a) the filing of the Certificate of Merger as provided in Section 2.2; (b) filings required under the Exchange Act; (c) filings required by the National Association of Securities Dealers ("NASD"); (d) the filing with the Nasdaq Capital Market of a Notification Form for Listing of Additional Shares with respect to the shares of Acquirer Common Stock issuable in exchange for the HOVRS Securities in the Merger and upon exercise of options under the HOVRS Option Plan or otherwise assumed by Acquirer; (e) such filings as may be required under applicable state securities laws and the securities laws of any foreign country; and (f) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, could not reasonably be expected to have a Material Adverse Effect on Acquirer and could not reasonably be expected to prevent, or materially alter or delay any of the transactions contemplated by this Agreement. 4.3. Governmental Authorization. Acquirer has obtained each federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (a) pursuant to which Acquirer currently operates or holds any interest in any of its properties; or (b) that is required for the operation of Acquirer's business or the holding of any such interest and all of such authorizations are in full force and effect except where the failure to obtain or have any such authorizations could not reasonably be expected to have a Material Adverse Effect on Acquirer. 4.4. Financial Statements. (a) Acquirer has delivered or made available to HOVRS the audited financial statements of Acquirer on a consolidated basis for each of the fiscal years ended December 31, 2004, 2005 and 2006, respectively, and unaudited financial statements of Acquirer on a consolidated basis as at and for the six-month period ended June 30, 2007 (collectively, the "Acquirer Financial Statements"). The Acquirer Financial Statements have been prepared in accordance with GAAP (except that the unaudited financial statements do not contain footnotes and are subject to normal recurring year-end audit adjustments, the effect of which will not, individually or in the aggregate, be materially adverse) applied on a consistent basis throughout the periods presented and consistent with each other. The Acquirer Financial Statements fairly present the consolidated financial condition, operating results and cash flow of Acquirer as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments and the absence of footnotes in the case of the unaudited Acquirer Financial Statements. (b) Acquirer maintains and will continue to maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of consolidated financial statements of Acquirer and to maintain accountability for assets; (iii) access to Acquirer's assets is permitted only in accordance with management's authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Acquirer is not a party to or otherwise involved in any "off-balance sheet arrangements" (as defined in Item 303 of Regulation S-K under the Exchange Act). 46 4.5. Capital Structure. (a) At the close of business on the date hereof, the authorized capital stock of Acquirer consists of 200,000,000 shares of Acquirer Common Stock, of which there are 2,462,605 shares issued and outstanding, and 4,351,943 shares of Acquirer Preferred Stock, of which there are 290,135 shares issued and outstanding. All outstanding shares of Acquirer Common Stock and Acquirer Preferred Stock have been duly authorized, validly issued, fully paid and are nonassessable and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the Charter Documents of Acquirer or any agreement to which Acquirer is a party or by which it is bound. (b) As of the close of business on the date hereof, there are 290,135 shares of Acquirer Common Stock reserved for issuance upon the conversion of the outstanding Acquirer Preferred Stock. As of that same date, there are 188,158 shares of Acquirer Common Stock reserved for issuance pursuant to Acquirer's Stock Option Plans, of which 83,191 shares are subject to outstanding, unexercised options. Section 4.5(b) of the Acquirer Disclosure Schedule lists every outstanding option to purchase shares of Acquirer Common Stock, and for each such option sets forth the name of the optionee, the number of shares of Acquirer Common Stock subject to purchase upon the exercise of the option, the applicable exercise price per share and the shares vested as of the date designated thereon. (c) Section 4.5(c) of the Acquirer Disclosure Schedule sets forth a list of each Subsidiary of Acquirer and its jurisdiction of organization. All of the outstanding shares of capital stock of each Subsidiary of Acquirer (i) have been duly authorized, validly issued, fully paid and are nonassessable, and are not subject to preemptive rights or rights of first refusal created by statute, the Charter Documents of any Subsidiary of Acquirer or any agreement to which any Subsidiary of Acquirer is a party or by which it is bound, and (ii) are owned by Acquirer, by another Subsidiary of Acquirer or by Acquirer and another Subsidiary of Acquirer, free and clear of all pledges, liens, charges, mortgages, encumbrances and security interests of any kind or nature whatsoever. (d) Except for the rights created pursuant to this Agreement and the rights otherwise disclosed in this Section 4.5 or in Section 4.5 of the Acquirer Disclosure Schedule, there are no other options, warrants, calls, rights, commitments or agreements of any character to which Acquirer or any Subsidiary of Acquirer is a party or by which any of them is bound obligating any of them to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of their capital stock or obligating Acquirer or any Subsidiary of Acquirer to grant, extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no other contracts, commitments or agreements relating to voting, purchase or sale of the capital stock of Acquirer or any Subsidiary of Acquirer (a) between or among Acquirer or any Subsidiary of Acquirer or any of their stockholders; and (b) to Acquirer's knowledge, between or among any of Acquirer's stockholders. 4.6. Absence of Certain Changes. Except as disclosed in Section 4.6 of the Acquirer Disclosure Schedule, since December 31, 2006 (the "Acquirer Balance Sheet Date"), Acquirer 47 has conducted its business in the ordinary course consistent with past practice and there has not occurred (a) any change, event or condition (whether or not covered by insurance) that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect on Acquirer; (b) any acquisition, sale or transfer of any material asset of Acquirer other than in the ordinary course of business and consistent with past practice; (c) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Acquirer or any revaluation by Acquirer of any of its assets; (d) any declaration, setting aside or payment of a dividend or other distribution with respect to the shares of Acquirer or any direct or indirect redemption, purchase or other acquisition by Acquirer of any of its shares of capital stock; (e) any Acquirer Material Contract entered into by Acquirer, other than in the ordinary course of business and as provided to HOVRS, or any material amendment or termination of, or default under, any Acquirer Material Contract to which Acquirer is a party or by which it is bound; (f) any amendment or change to the Charter Documents of Acquirer or any of its Subsidiaries; (g) any increase in or modification of the compensation or benefits payable or to become payable by Acquirer to any of its directors or employees, other than in the ordinary course of business consistent with past practice; or (h) any negotiation or agreement by Acquirer to do any of the things described in the preceding clauses (a) through (g) (other than negotiations with HOVRS and its representatives regarding the transactions contemplated by this Agreement). Except as disclosed in Section 4.6 of the Acquirer Disclosure Schedule, at the Effective Time, there will be no accrued but unpaid dividends on shares of Acquirer's capital stock. 4.7. Absence of Undisclosed Liabilities. Acquirer has no material obligations or material liabilities of any nature (matured or unmatured, fixed or contingent) other than (a) those set forth or adequately provided for in the consolidated balance sheets of Acquirer as of Acquirer Balance Sheet Date (the "Acquirer Balance Sheet"); (b) those incurred in the ordinary course of business and not required to be set forth in Acquirer Balance Sheet under GAAP; (c) those incurred in the ordinary course of business since Acquirer Balance Sheet Date and consistent with past practice; and (d) those incurred in connection with the execution of this Agreement. 4.8. Litigation. Section 4.8 of the Acquirer Disclosure Schedule identifies every private or governmental action, suit, proceeding, claim and arbitration and, to the knowledge of Acquirer, every investigation, that is pending or, to the knowledge of Acquirer, threatened, before any Governmental Entity, foreign or domestic, against Acquirer or any of its properties or any of its officers or directors (in their capacities as such). There is no private or governmental action, suit, proceeding, claim or arbitration or, to the knowledge of Acquirer, any investigation, that is pending or, to the knowledge of Acquirer, threatened, before any Governmental Entity, foreign or domestic, against Acquirer or any of its properties or any of its officers or directors (in their capacities as such), that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Acquirer. There is no judgment, decree or order against Acquirer, or, to the knowledge of Acquirer, any of its directors or officers (in their capacities as such), that could prevent, enjoin or materially alter or delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect on Acquirer. 4.9. Restrictions on Business Activities. There is no agreement, judgment, injunction, order or decree binding upon Acquirer that has or could reasonably be expected to have the effect of prohibiting or materially impairing any current or future business practice of Acquirer, 48 any acquisition of property by Acquirer or the conduct of business by Acquirer as currently conducted by Acquirer. 4.10. Intellectual Property. (a) Acquirer owns and has good and marketable title to, or possesses legally enforceable rights to use, all Intellectual Property that is both used in and material to the business of Acquirer as currently conducted by Acquirer. The Intellectual Property owned by and licensed to Acquirer collectively constitutes all of the material Intellectual Property necessary to enable Acquirer to conduct its business as such business is currently being conducted by Acquirer. (b) For the purposes of this Agreement, "Acquirer Intellectual Property" means Intellectual Property incorporated into any product of Acquirer or otherwise used in the business of Acquirer (except "off the shelf" or other software widely available through regular commercial distribution channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions, as modified for Acquirer's operations). Section 4.10(b) of the Acquirer Disclosure Schedule lists: (i) the following Acquirer Intellectual Property to the extent owned by Acquirer: (A) all Issued Patents and Patent Applications, (B) all registered Trademarks and pending trademark applications and (C) all registered Copyrights, including the jurisdictions in which each such Intellectual Property has been issued or registered or in which any such application for such issuance and/or registration has been filed; and (ii) the following agreements relating to each of the products of Acquirer (the "Acquirer Products") or Acquirer Intellectual Property: all (A) agreements granting any right to distribute or sublicense a Acquirer Product on any exclusive or non-exclusive basis; (B) any exclusive or non-exclusive licenses of Intellectual Property to or from Acquirer (except "off the shelf" or other software widely available through regular commercial distribution channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions, as modified for Acquirer's operations); (C) agreements pursuant to which the amounts actually paid or payable under firm commitments to Acquirer are Twenty-Five Thousand Dollars ($25,000) or more; (D) joint development agreements; (E) agreements pursuant to which Acquirer grants or has granted any ownership right to any Acquirer Intellectual Property owned by Acquirer; (F) orders of a court of competent jurisdiction relating to Acquirer Intellectual Property owned or used by Acquirer that are known by Acquirer; (G) any option to purchase or obtain a license to any Acquirer Intellectual Property owned by Acquirer; and (H) agreements pursuant to which Acquirer grants or has granted any party any rights to access source code or to use source code or object code to create derivative works of Acquirer Products. (c) Section 4.10(c) of the Acquirer Disclosure Schedule contains an accurate list as of the date of this Agreement of all licenses, sublicenses and other agreements to which Acquirer is a party and pursuant to which (i) Acquirer has authorized another party to use any Intellectual Property owned by Acquirer that is material to the business or (ii) to which Acquirer is authorized to use any Intellectual Property that is owned by any third party and material to the 49 business of Acquirer, excluding "off the shelf" or other software widely available through regular commercial distribution channels at a cost not exceeding Ten Thousand Dollars ($10,000) on standard terms and conditions ("Third Party Acquirer Intellectual Property"). (d) To the knowledge of Acquirer, there is no unauthorized use, disclosure, infringement or misappropriation of any Acquirer Intellectual Property owned by Acquirer by any third party, including any employee or former employee of Acquirer, other than such uses, disclosures, infringements or misappropriations as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Acquirer. Except as disclosed in Section 4.10(c) of the Acquirer Disclosure Schedule, Acquirer has not entered into any agreement to indemnify any other Person against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in standard sales or other agreements to end users arising in the ordinary course of business, the forms of which have been delivered to HOVRS or its counsel. Except pursuant to agreements disclosed in Section 4.10(c) of the Acquirer Disclosure Schedule, there are no royalties, fees or other payments payable by Acquirer to any party by reason of the ownership, use, sale or disposition of Third Party Acquirer Intellectual Property. (e) Other than with respect to matters which have been fully resolved, settled and, if applicable, fully paid, prior to the date hereof, Acquirer has no knowledge of, and has not received written notice asserting any breach by Acquirer of any license, sublicense or other agreement relating to Acquirer Intellectual Property or Third Party Acquirer Intellectual Property. Neither the execution, delivery or performance of this Agreement or any ancillary agreement contemplated hereby nor the consummation of the Merger or any of the transactions contemplated by this Agreement will contravene, conflict with or result in any limitation on Acquirer's right to own or use any Acquirer Intellectual Property, including any Third Party Acquirer Intellectual Property. (f) To the knowledge of Acquirer, all Issued Patents, registered Trademarks and registered Copyrights owned by Acquirer are valid and subsisting. With respect to any Issued Patents owned by Acquirer, all maintenance and annual fees have been fully paid. With respect to registered Trademarks, all necessary affidavits of use, renewals and/or documents evidencing accurate chain of title and ownership are currently on file with the United States Patent and Trademark Office. Other than with respect to matters which have been fully resolved, settled, and, if applicable, fully paid, prior to the date hereof, Acquirer has no knowledge of, and has not received any written assertion of, any actual or alleged infringement, misappropriation or unlawful use by Acquirer of any Intellectual Property owned by any third party, and there is no proceeding pending or, to the knowledge of Acquirer, threatened with respect to the foregoing. There is no proceeding pending or, to the knowledge of Acquirer, threatened with respect to, nor has Acquirer received any written claim or demand that challenges, the legality, validity, enforceability or ownership of any item of Acquirer Intellectual Property that is owned by Acquirer. Acquirer has not brought a proceeding alleging infringement of Acquirer Intellectual Property or breach of any license or agreement involving Intellectual Property against any third party. (g) All current and former officers, employees and vendors of Acquirer, to the extent the duties of such officers, employees and vendors primarily involve the handling of 50 confidential information of Acquirer or the creation of Intellectual Property, have executed and delivered to Acquirer an agreement regarding the protection of proprietary information and the assignment to Acquirer of any Intellectual Property arising from services performed for Acquirer by such persons, the form of which has been supplied to HOVRS. To the knowledge of Acquirer, no employee of Acquirer is in violation of any term relating to Intellectual Property or confidentiality contained in any employment contract or any other contract or agreement relating to the relationship of any such employee with Acquirer. To the knowledge of Acquirer, no current or former officer, director or employee of Acquirer has any right, claim or interest in or with respect to any Acquirer Intellectual Property owned by Acquirer. (h) Acquirer has taken commercially reasonable measures and precautions designed to protect and maintain the confidentiality of all trade secrets and proprietary information of Acquirer (except such trade secrets and proprietary information whose value would not be materially impaired by public disclosure). All disclosure to a third party of any trade secrets that are material to the business of and owned by Acquirer has been pursuant to the terms of a written agreement between Acquirer and such third party, such agreements designed to protect and maintain the confidentiality of all trade secrets. (i) Except as set forth in Section 4.10(i) of the Acquirer Disclosure Schedule and except for any claims that have been resolved prior to the date hereof, no product liability claims have been communicated in writing to or, to Acquirer's knowledge, threatened against Acquirer. (j) A complete list of each of Acquirer Products and Acquirer's proprietary software that is material to its business ("Acquirer Software"), together with a brief description of each, is set forth in Section 4.10(j) of the Acquirer Disclosure Schedule. (k) To the knowledge of Acquirer, Acquirer is not subject to any proceeding or outstanding decree, order, judgment, stipulation, or agreement restricting in any manner the use, transfer or licensing of any Acquirer Intellectual Property owned by Acquirer, or which may affect the validity, use or enforceability of such Acquirer Intellectual Property. (l) To the knowledge of Acquirer, no Public Software (as defined below) forms a material part of any Acquirer Products, services provided by Acquirer or Acquirer Intellectual Property, and no Public Software was or is (A) both used in connection with, and material to, the development of any Acquirer Product, Acquirer service or Acquirer Intellectual Property owned by Acquirer, or (B) in any material respect is incorporated into, in whole or in part, or has been distributed with, in whole or in part, any Acquirer Product, Acquirer service or Acquirer Intellectual Property owned by Acquirer. As used in this Section 4.10(l), "Public Software" means any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software (as defined by the Free Software Foundation), open source software (e.g., Linux or software distributed under any license approved by the Open Source Initiative as set forth www.opensource.org) or similar licensing or distribution models which requires the distribution of source code to licensees, including software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (i) GNU's General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the Mozilla 51 Public License; (iv) the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD License; or (viii) the Apache License. 4.11. Interested Party Transactions. Acquirer is not indebted to any director, officer, employee or agent of Acquirer (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such Person is indebted to Acquirer. There have been no transactions during the two-year period ending on the date hereof that would require disclosure under Item 404 of Regulation S-K under the Securities Act, except those transactions described in the Acquirer SEC Documents. 4.12. Minute Books. The minute book of Acquirer contains a materially complete and accurate summary of all meetings of directors and stockholders or actions by written consent since the time of incorporation of Acquirer through the date of this Agreement, and reflects all transactions referred to in such minutes accurately in all material respects. 4.13. Complete Copies of Materials. All copies of documents delivered or made available by Acquirer to HOVRS in connection with HOVRS' due diligence review of Acquirer have been true and complete copies of each such document. 4.14. Acquirer Material Contracts. All Acquirer Material Contracts (as defined below in this Section 4.14) are listed in Section 4.14 of the Acquirer Disclosure Schedule. With respect to Acquirer Material Contracts: (a) each Acquirer Material Contract is legal, valid, binding and enforceable and in full force and effect with respect to Acquirer, and, to Acquirer's knowledge, is legal, valid, binding, enforceable and in full force and effect with respect to each other party thereto, in either case subject to the effect of bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity; (b) each Acquirer Material Contract will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the Effective Time in accordance with its terms as in effect prior to the Effective Time, subject to the effect of bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity; and (c) neither Acquirer nor, to Acquirer's knowledge, any other party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default by Acquirer or, to Acquirer's knowledge, by any such other party, or permit termination, modification or acceleration, under such Acquirer Material Contract, subject to such exceptions as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Acquirer. Acquirer is not a party to any oral contract, agreement or other arrangement. "Acquirer Material Contract" means any contract, agreement or commitment to which Acquirer is a party (a) with expected receipts or expenditures in excess of Twenty-Five Thousand Dollars ($25,000); (b) required to be listed pursuant to Section 4.10(c) or Section 4.22; (c) requiring Acquirer to indemnify any party; (d) granting any exclusive rights to any party; (e) evidencing indebtedness for borrowed or loaned money of Twenty-Five Thousand Dollars ($25,000) or more, including guarantees of such indebtedness; or (f) that could reasonably be expected to have a Material Adverse Effect on Acquirer if breached by Acquirer in such a manner as would (I) permit any other party to cancel or terminate the same (with or without notice or passage of time); (II) provide a basis for any 52 other party to claim money damages (either individually or in the aggregate with all other such claims under that contract) from Acquirer; or (III) give rise to a right of acceleration of any material obligation or loss of any material benefit under such Acquirer Material Contract. 4.15. Inventory. The inventories shown on Acquirer Balance Sheet or thereafter acquired by Acquirer, were acquired and maintained in the ordinary course of business, are of good and merchantable quality, and consist of items of a quantity and quality usable or salable in the ordinary course of business. Since Acquirer Balance Sheet Date, Acquirer has continued to replenish inventories in a normal and customary manner consistent with past practices. The values at which inventories are carried reflect the inventory valuation policy of Acquirer, which is consistent with its past practice and in accordance with GAAP applied on a consistent basis. Acquirer is not under any material liability or obligation with respect to the return of any item of inventory in the possession of wholesalers, retailers or other customers. Since Acquirer Balance Sheet Date, adequate provision has been made on the books of Acquirer in the ordinary course of business in accordance with GAAP applied on a consistent basis to provide for all material slow-moving, obsolete or unusable inventories to their estimated useful or scrap values, and such inventory reserves are adequate to provide for such slow-moving, obsolete or unusable inventory and inventory shrinkage. 4.16. Accounts Receivable. Subject to any reserves set forth therein, the accounts receivable shown on Acquirer Financial Statements are valid and genuine, have arisen solely out of bona fide sales and deliveries of goods, performance of services, and other business transactions in the ordinary course of business consistent with past practices in each case with persons other than affiliates, are not subject to any prior assignment, lien or security interest, and to Acquirer's knowledge are not subject to valid defenses, set-offs or counter claims. The accounts receivable are collectible in accordance with their terms at their recorded amounts, subject only to the reserve for doubtful accounts on the Acquirer Financial Statements. 4.17. Customers and Suppliers. As of the date hereof, no customer that individually accounted for more than five percent (5%) of Acquirer's gross revenues during the 12-month period preceding the date hereof and no supplier of Acquirer that individually accounted for more than five percent (5%) of Acquirer's purchases during the 12-month period preceding the date hereof has canceled or otherwise terminated, or made any written threat to Acquirer to cancel or otherwise terminate its relationship with Acquirer or has at any time on or after Acquirer Balance Sheet Date, decreased materially its services or supplies to Acquirer in the case of any such supplier, or its usage of the services or products of Acquirer in the case of such customer, and to Acquirer's knowledge no such supplier or customer has indicated either orally or in writing that it intends to cancel or otherwise terminate its relationship with Acquirer or to decrease materially its services or supplies to Acquirer or its usage of the services or products of Acquirer, as the case may be. Acquirer has not knowingly breached any agreement with, or engaged in any fraudulent conduct with respect to, any customer or supplier of Acquirer, so as to provide a benefit to Acquirer that was not intended by the parties. 4.18. Employees and Consultants. Section 4.18 of the Acquirer Disclosure Schedule contains a list of the names of all employees (including without limitation part-time employees and temporary employees), leased employees, independent contractors and consultants of Acquirer, together with their respective salaries or wages, other compensation, dates of 53 employment and positions. Section 4.18 of the Acquirer Disclosure Schedule also describes all severance benefits to which any Acquirer employee is or may become entitled pursuant to any agreement between Acquirer and such employee. 4.19. Title to Property. Acquirer has good and marketable title to all of its properties, interests in properties and assets, real and personal, reflected in Acquirer Balance Sheet or acquired after Acquirer Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since Acquirer Balance Sheet Date in the ordinary course of business), or with respect to leased properties and assets, valid leasehold interests therein, free and clear of all mortgages, liens, pledges, charges or encumbrances of any kind or character, except (a) the lien of current taxes not yet due and payable; (b) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties; (c) liens securing debt that is reflected on Acquirer Balance Sheet or listed in Section 4.19 of the Acquirer Disclosure Schedule; and (d) such other mortgages, liens, pledges, charges or encumbrances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Acquirer. The plants, property and equipment of Acquirer that are used in the operations of Acquirer's business are in all material respects in good operating condition and repair, subject to normal wear and tear. All properties used in the operations of Acquirer are reflected in Acquirer Balance Sheet to the extent required by GAAP. All leases to which Acquirer is a party are in full force and effect and are valid, binding and enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally; and general principles of equity, regardless of whether asserted in a proceeding in equity or at law. True and correct copies of all such leases have been provided to Acquirer. Acquirer owns no real property. 4.20. Environmental Matters. To the knowledge of Acquirer, Acquirer is and has been in material compliance with all Environmental Laws applicable to Acquirer and relating to the properties or facilities used, leased or occupied by Acquirer at any time (collectively, "Acquirer's Facilities" such properties or facilities currently used, leased or occupied by Acquirer are defined herein as "Acquirer's Current Facilities"), and no discharge, emission, release, leak or spill of Hazardous Materials has occurred at any of Acquirer `s Facilities during Acquirer's occupancy thereof that could reasonably be expected to give rise to a material liability of Acquirer under Environmental Laws. To Acquirer `s knowledge, (i) there are no Hazardous Materials (including without limitation asbestos) present in the surface waters, structures, groundwaters or soils of or beneath any of Acquirer's Current Facilities in a condition, or in concentrations or amounts, that could reasonably be expected to give rise to a material liability of Acquirer, (ii) there neither are nor have been any aboveground or underground storage tanks for Hazardous Materials at Acquirer's Current Facilities except as are operated and maintained, or removed, in material compliance with applicable Environmental Laws, and (iii) no Acquirer employee or other Person has asserted in writing that Acquirer is liable for alleged injury or illness resulting from an alleged exposure to a Hazardous Material. Except as set forth in Section 4.20 of the Acquirer Disclosure Schedule, no civil, criminal or administrative action, proceeding or investigation is pending against Acquirer, or, to Acquirer `s knowledge, threatened against Acquirer, alleging a material liability of Acquirer with respect to Hazardous Materials or a material violation of Environmental Laws. 54 4.21. Taxes. Acquirer makes the following representations with respect to Taxes: (a) Acquirer has prepared and timely filed (or will prepare and timely file) all Tax Returns required to be filed by Acquirer for any period ending on or before the Closing Date. All Tax Returns filed by Acquirer are true and correct in all material respects and have been completed in accordance with Applicable Law, and all material Taxes shown to be due on such Tax Returns, and other material Taxes that are due for which no Tax Returns are required to be filed, have been timely paid. To the extent Taxes are not due, adequate reserves have been established on the Acquirer Balance Sheet with respect to accrued Taxes up to the Acquirer Balance Sheet Date in accordance with GAAP as applied by Acquirer on a consistent basis with prior periods. Acquirer has no knowledge of any basis for the assertion of a liability for unpaid Taxes with respect to accrued Taxes up to the Acquirer Balance Sheet Date that are not established on the Acquirer Balance Sheet. Acquirer has no knowledge that it has incurred any liability for Taxes after the Acquirer Balance Sheet Date other than in the ordinary course of business that may be material. Acquirer has delivered or made available to HOVRS true and correct copies of all income and franchise Tax Returns, closing agreements, examination reports or other similar reports, and statements of deficiencies filed, assessed against or agreed to by, or on behalf of, Acquirer since December 31, 2003. (b) There are no audits by any taxing authority pending against Acquirer or any predecessor entity and Acquirer has not received written notice from any taxing authority that it is conducting or intends to conduct an audit or investigation. Acquirer has not waived or extended any statute of limitations in respect of Taxes or Tax Returns or agreed to any extension of time with respect to a Tax assessment, reassessment, deficiency or with respect to the payment of any Taxes. Acquirer is not a party to any power of attorney with respect to a Tax matter that is currently in force or otherwise bound by any private letter ruling of the IRS or comparable rulings issued by any other taxing authority. (c) No claims have been made by a taxing authority in writing to Acquirer in a jurisdiction where Acquirer does not file Tax Returns that Acquirer is or may be subject to taxation by that jurisdiction. No issue has been raised by a taxing authority in writing to Acquirer in any current or most recent examination which, by application of the same or similar principles, would reasonably be expected to affect the Tax treatment of Acquirer in any taxable period (or portion thereof) ending after the Closing Date. (d) Acquirer does not have (i) any liability for the payment of any Taxes as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability or by operation of Applicable Law, and (ii) any liability for the payment of any amounts as a result of being a party to, or bound by, any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to Taxes. (e) Acquirer has disclosed to HOVRS (i) any Tax exemption, Tax holiday or other Tax-sparing arrangement that Acquirer has in any jurisdiction, including the nature, amount and lengths of such Tax exemption, Tax holiday or other Tax-sparing arrangement; and (ii) any expatriate tax programs or policies affecting Acquirer. Acquirer is in compliance in all material respects with all terms and conditions required to maintain such Tax exemption, Tax 55 holiday or other Tax-sparing arrangement or order of any governmental entity and the consummation of the transactions contemplated hereby will not have any adverse effect on the continuing validity and effectiveness of any such Tax exemption, Tax holiday or other Tax-sparing arrangement or order. (f) Acquirer is not, and has not been during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a United States real property holding corporation within the meaning of section 897(c)(2) of the Code. (g) Acquirer is not a party to any contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of Acquirer that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G of the Code by Acquirer or any of its Subsidiaries, or that would be subject to an excise Tax by reason of Section 4999 of the Code. (h) Section 4.21(h) of the Acquirer Disclosure Schedule contains a list enumerating each jurisdiction in which Acquirer is required to pay Taxes or file Tax Returns and specifying the type of Taxes paid and Tax Returns filed in that jurisdiction. (i) Acquirer (i) has complied in all material respects with all Applicable Laws, rules and regulations relating to the payment and withholding of Taxes, (ii) has timely and properly paid over to the applicable governmental authorities all amounts required to be so withheld from all payments made by or on behalf of Acquirer (including, but not limited to, employee wages and payments to independent contractors) and (iii) is not liable for any Taxes for failure to comply with such laws, rules and regulations. (j) Acquirer has not distributed the stock of any corporation, or had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code. (k) No property of Acquirer (i) is tax exempt use property within the meaning of Section 168(h) or Section 470(c)(2) of the Code, (ii) directly or indirectly secures any debt the interest on which is exempt under Section 103(a) of the Code or (iii) is required to be treated as being owned by any Person (other than Acquirer) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately before the Tax Reform Act of 1986. (l) Acquirer has disclosed on its U.S. federal income tax returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. Acquirer has not engaged in a reportable transaction described in Section 1.6011-4 of the Treasury Regulations. 4.22. Employee Benefit Plans. (a) Section 4.22(a) of the Acquirer Disclosure Schedule contains a complete and accurate list of each plan, program, policy, practice, contract, agreement or other arrangement providing for employment, compensation, retirement, deferred compensation, loans, 56 severance, separation, relocation, repatriation, expatriation, visas, work permits, termination pay, performance awards, bonus, incentive, stock option, stock purchase, stock bonus, phantom stock, stock appreciation right, supplemental retirement, fringe benefits, cafeteria benefits or other benefits, whether written or unwritten, including without limitation each "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which is sponsored, maintained, contributed to, or required to be contributed to by Acquirer and, with respect to any such plans which are subject to Code Section 401(a), any trade or business (whether or not incorporated) that is treated as a single employer with Acquirer within the meaning of Section 414(b), (c), (m) or (o) of the Code, (an "ERISA Affiliate") for the benefit of any Person who performs or who has performed services for Acquirer or with respect to which Acquirer or any ERISA Affiliate has or may have any liability (including without limitation contingent liability) or obligation (collectively, the "Acquirer Employee Plans"). (b) Documents. Acquirer has furnished or made available to HOVRS true and complete copies of documents embodying each of the existing Acquirer Employee Plans and related plan documents, including without limitation trust documents, group annuity contracts, plan amendments, insurance policies or contracts, participant agreements, employee booklets, administrative service agreements, summary plan descriptions, summaries of material modifications, compliance and nondiscrimination tests for the last three plan years, standard COBRA forms and related notices, registration statements and prospectuses and, to the extent still in its possession, any material employee communications relating thereto. With respect to each Acquirer Employee Plan that is subject to ERISA reporting requirements, Acquirer has provided HOVRS with copies of the Form 5500 reports filed for the last three (3) plan years. Acquirer has furnished HOVRS with the most recent Internal Revenue Service determination or opinion letter issued with respect to each such Acquirer Employee Plan, and to Acquirer's knowledge nothing has occurred since the issuance of each such letter that could reasonably be expected to cause the loss of the tax-qualified status of any Acquirer Employee Plan subject to Code Section 401(a). (c) Compliance. (i) Each Acquirer Employee Plan has been administered in accordance with its terms and in compliance with the requirements prescribed by any and all statutes, rules and regulations (including ERISA and the Code), except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Acquirer; and Acquirer and each ERISA Affiliate have performed all material obligations required to be performed by them under, are not in material respect in default under or violation of and have no knowledge of any material default or violation by any other party to, any of Acquirer Employee Plans; (ii) any Acquirer Employee Plan intended to be qualified under Section 401(a) of the Code is either subject to a favorable determination letter or opinion letter issued by the Internal Revenue Service as to its qualified status under the Code, including all currently effective amendments to the Code, or has time remaining to apply under applicable Treasury Regulations or Internal Revenue Service pronouncements for a determination or opinion letter and to make any amendments necessary to obtain a favorable determination or opinion letter; (iii) none of Acquirer Employee Plans promises or provides retiree medical or other retiree welfare benefits to any Person (except to the extent required to comply with COBRA or any similar state law); (iv) there has been no non-exempt "prohibited transaction," as such term is defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any Acquirer Employee Plan; 57 (v) none of Acquirer or any ERISA Affiliate is subject to any liability or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any Acquirer Employee Plan; (vi) all material contributions required to be made by Acquirer or any ERISA Affiliate to any Acquirer Employee Plan have been paid or accrued in accordance with Applicable Law; (vii) with respect to each Acquirer Employee Plan, no "reportable event" within the meaning of Section 4043 of ERISA (excluding any such event for which the thirty (30) day notice requirement has been waived under the regulations to Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISA has occurred; (viii) each Acquirer Employee Plan subject to ERISA has prepared in good faith and timely filed all requisite governmental reports, which were true and correct as of the date filed, and has properly and timely filed and distributed or posted all notices and reports to employees required to be filed, distributed or posted with respect to each such Acquirer Employee Plan except where such failure would result in a material liability; (ix) no suit, administrative proceeding, action or other litigation has been brought, or to the knowledge of Acquirer is threatened, against or with respect to any such Acquirer Employee Plan, including any audit or inquiry by the IRS or United States Department of Labor; (x) except as contemplated by this Agreement, there has been no amendment to, written interpretation or announcement by Acquirer or any ERISA Affiliate that would materially increase the expense of maintaining any Acquirer Employee Plan above the level of expense incurred with respect to that Plan for the most recent fiscal year included in Acquirer Financial Statements; and (xi) no Acquirer Employee Plan is required to comply with any foreign law. (d) No Title IV or Multiemployer Plan. Neither Acquirer nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, contributed to, or is obligated to contribute to, or otherwise incurred any obligation or liability (including without limitation any contingent liability) under any "multiemployer plan" (as defined in Section 3(37) of ERISA) or to any "pension plan" (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code. None of Acquirer or any ERISA Affiliate has any actual or potential withdrawal liability (including without limitation any contingent liability) for any complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) from any multiemployer plan. (e) COBRA, FMLA, HIPAA, Cancer Rights. With respect to each Acquirer Employee Plan, Acquirer has complied with (i) the applicable health care continuation and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations thereunder or any state law governing health care coverage extension or continuation; (ii) the applicable requirements of the Family and Medical Leave Act of 1993 and the regulations thereunder; (iii) the applicable requirements of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"); and (iv) the applicable requirements of the Cancer Rights Act of 1998, except to the extent that such failure to comply could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Acquirer. Acquirer has no material unsatisfied obligations to any employees, former employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing health care coverage extension or continuation. (f) Effect of Transaction. The consummation of the transactions contemplated by this Agreement will not either alone or in conjunction with an individual's 58 termination of employment or service or a change in the terms and conditions of employment or service (i) entitle any current or former employee or other service provider of Acquirer or any ERISA Affiliate to severance benefits or any other payment (including without limitation unemployment compensation, golden parachute, bonus or benefits under any Acquirer Employee Plan), except as expressly provided in this Agreement; or (ii) accelerate the time of payment or vesting of any such benefits or increase the amount of compensation due any such employee or service provider. No benefit payable or that may become payable by Acquirer pursuant to any Acquirer Employee Plan or as a result of or arising under this Agreement shall constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) subject to the imposition of an excise Tax under Section 4999 of the Code or the deduction for which would be disallowed by reason of Section 280G of the Code. Each Acquirer Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without material liability to Acquirer or Acquirer other than ordinary administration expenses typically incurred in a termination event. 4.23. Employee Matters. Acquirer is in compliance in all material respects with all currently Applicable Laws and regulations respecting terms and conditions of employment, including without limitation applicant and employee background checking, immigration laws, discrimination laws, verification of employment eligibility, employee leave laws, classification of workers as employees and independent contractors, wage and hour laws, and occupational safety and health laws, except for such noncompliance that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Acquirer. Except as specified in Section 4.8 of the Acquirer Disclosure Schedule, as of the date of this Agreement, there are no proceedings pending or, to Acquirer's knowledge, reasonably expected or threatened, between Acquirer, on the one hand, and any or all of its current or former employees, on the other hand, which proceedings could reasonably be expected to have, a Material Adverse Effect on Acquirer, including without limitation any claims for actual or alleged harassment or discrimination based on race, national origin, age, sex, sexual orientation, religion, disability, or similar tortious conduct, breach of contract, wrongful termination, defamation, intentional or negligent infliction of emotional distress, interference with contract or interference with actual or prospective economic disadvantage. Acquirer is not a party to any collective bargaining agreement or other labor union contract, nor does Acquirer know of any activities or proceedings of any labor union to organize its employees. To Acquirer's knowledge, Acquirer has provided all employees with all wages, benefits, relocation benefits, stock options, bonuses and incentives, and all other compensation that became due and payable through the date of this Agreement. Acquirer represents that it or the Surviving Corporation intends to employ all or substantially all of HOVR's employees following the Effective Time. Accordingly, no "mass layoff", "plant closing" or similar event as defined by the Worker Adjustment and Notification Act (29 U.S.C. ss. 2101 et seq.) with respect to Acquirer has occurred nor is expected to occur as a result of this Agreement. 4.24. Insurance. Acquirer has policies of insurance and bonds of the type and in amounts customarily carried by persons conducting businesses or owning assets similar to those of Acquirer. There is no material claim pending under any of such policies or bonds as to which coverage has been denied, disputed or to the knowledge of Acquirer questioned by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and Acquirer is otherwise in compliance in all material respects with 59 the terms of such policies and bonds. Acquirer has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies. 4.25. Compliance With Laws. Acquirer has complied with, is not in violation of and has not received any written notices of violation with respect to, any federal, state, local or foreign statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as could not reasonably be expected to have a Material Adverse Effect on Acquirer. 4.26. Brokers' and Finders' Fee. Except as set forth in Section 4.26 to the Acquirer Disclosure Schedule, Acquirer has not entered into any arrangement or agreement with any broker, finder or investment banker that would be entitled to brokerage or finders' fees or agents' commissions or investment bankers' fees or any similar charges from Acquirer in connection with the Merger, this Agreement or any transaction contemplated hereby. 4.27. Privacy Policies and Web Site Terms and Conditions. (a) For purposes of this Section 4.27: (i) "Acquirer Sites" means all of Acquirer's public sites on the World Wide Web; and (ii) "Acquirer Privacy Statements" means, collectively, any and all of Acquirer's privacy policies published on Acquirer Sites or otherwise made publicly available by Acquirer regarding the collection, retention, use and distribution of the personal information of individuals, including, without limitation, from visitors of any of Acquirer Sites ("Acquirer Individuals"). (b) Acquirer is in material compliance with (i) Acquirer Privacy Statements as applicable to any given set of personal information collected by Acquirer from Acquirer Individuals; and (ii) all applicable privacy laws and regulations regarding the collection, retention, use and disclosure of personal information. (c) Acquirer has not received any written notice of any claims or controversies regarding Acquirer Privacy Statements or the implementation thereof. 4.28. International Trade Matters. Acquirer is, and at all times has been, in material compliance with and has not been and is not in material violation of any International Trade Law, including but not limited to, all laws and regulations related to the import and export of commodities, software, and technology from and into the United States, and the payment of required duties and tariffs in connection with same. Acquirer has no basis to expect, nor has any of them or any other Person for whose conduct they are or may be held to be responsible received, any actual or threatened order, notice, or other communication from any governmental body of any actual or potential violation or failure to comply with any International Trade Law. 4.29. Proxy Statement and Information Statement. None of the information to be supplied by Acquirer or any of its accountants, counsel or other authorized representatives for inclusion in the Preliminary Proxy Statement or the HOVRS Information Statement will, at the 60 time of the mailing thereof to the HOVRS Stockholders, or for inclusion in the Proxy Statement will, at the time of the mailing thereof to the stockholders of Acquirer or at the time of the meeting of the stockholders of Acquirer to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, it being understood and agreed that no representation or warranty is made by Acquirer with respect to any information supplied by HOVRS or its accountants, counsel or other authorized representatives. If at any time prior to the Effective Time any event with respect to Acquirer or any of its Subsidiaries, or any of their officers and directors, shall occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement, such event shall be so described and the presentation in such amendment or supplement of such information will not contain any statement which, at the time and in light of the circumstances under which it is made, is false or misleading in any material respect or omits to state any 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 false or misleading. The Proxy Statement will comply in all material respects with all Applicable Laws, including the provisions of the Exchange Act. 4.30. Board Approval. The board of directors of Acquirer, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (i) approved this Agreement and the other documents contemplated hereunder, together with the Merger and the other transactions contemplated hereunder, and (ii) recommended that the stockholders of Acquirer approve the Merger, the issuance of the Acquirer Common Stock pursuant to this Agreement and such other matters as shall be required by Nasdaq in connection with the consummation of the Merger. 4.31. SEC Documents. (a) Acquirer has timely filed each statement, report, registration statement (with the prospectus in the form required to be filed pursuant to Rule 424(b) of the Securities Act), definitive proxy statement, and other filing required to be filed with the SEC by Acquirer, and, prior to the Effective Time, Acquirer will file any additional documents required to be filed with the SEC by Acquirer prior to the Effective Time (such documents filed by the Acquirer since January 1, 2004, collectively, the "Acquirer SEC Documents"). In addition, Acquirer has made available to HOVRS all exhibits to the Acquirer SEC Documents filed prior to the date hereof that are (a) requested by HOVRS and (b) not available in complete form through EDGAR ("Requested Confidential Exhibits") and will promptly make available to HOVRS all Requested Confidential Exhibits to any Acquirer SEC Documents filed prior to the Effective Time. All documents required to be filed as exhibits to Acquirer SEC Documents have been so filed. As of their respective filing dates, the Acquirer SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act and none of the Acquirer SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a subsequently filed Acquirer SEC Document prior to the date hereof. 61 (b) The financial statements of Acquirer, including the notes thereto, included in the Acquirer SEC Documents (the "Acquirer SEC Financial Statements"), complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates, and have been prepared in accordance with GAAP applied on a basis consistent throughout the periods indicated and consistent with each other (except as may be indicated in the notes thereto or, in the case of unaudited statements included in quarterly reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Acquirer SEC Financial Statements fairly present the consolidated financial condition, operating results and cash flow of Acquirer and its Subsidiaries at the dates and during the periods presented therein (subject, in the case of unaudited statements, to normal, recurring year-end adjustments). There has been no change in Acquirer accounting policies except as described in the notes to the Acquirer SEC Financial Statements. 4.32. Issuance of Shares. The issuance and delivery of Acquirer Common Stock in the Merger in accordance with this Agreement shall be, at or prior to the Effective Time, duly authorized by all necessary corporate action on the part of Acquirer, and, when issued at the Effective Time as contemplated hereby, such shares of Acquirer Common Stock will be duly and validly issued, fully paid and nonassessable. Such Acquirer Common Stock, when so issued and delivered in accordance with the provisions of this Agreement, shall be free and clear of all liens and encumbrances and adverse claims, other than restrictions on transfer created by applicable securities laws and the Lock-Up Agreement and will not have been issued in violation of any preemptive rights or rights of first refusal or similar rights. 4.33. HOVRS Merger Sub. HOVRS Merger Sub is a direct, wholly-owned entity of Acquirer. HOVRS Merger Sub was formed solely for the purpose of engaging in the transaction contemplated by this Agreement, has engaged in no other business activities and has no material assets or liabilities and has conducted its operations only as expressly contemplated hereby. Acquirer owns beneficially and of record all outstanding capital stock of HOVRS Merger Sub free and clear of any liens and no other Person holds any capital stock of HOVRS Merger Sub, nor has any rights to acquire any interest in HOVRS Merger Sub. 4.34. No Other Representations. Except for the representations and warranties contained in this Section 4 (as modified by the Acquirer Disclosure Schedule), neither Acquirer nor any other Person makes any other express or implied representation or warranty with respect to Acquirer or the transactions contemplated by this Agreement, and Acquirer disclaims any other representations or warranties, whether made by Acquirer or any of its affiliates, officers, directors, employees, agents or representatives. Except for the representations and warranties contained in this Section 4 (as modified by the Acquirer Disclosure Schedule), Acquirer hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to HOVRS or any of their affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided to HOVRS by any director, officer, employee, agent, consultant, or representative of the Acquirer or any of its affiliates or representatives). The disclosure of any matter or item in the Acquirer Disclosure Schedule shall not be deemed to constitute an acknowledgement that any such matter is required to be disclosed. 62 5. Conduct Prior to the Effective Time. 5.1. Conduct of Business. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, HOVRS agrees (except to the extent expressly contemplated by this Agreement or as consented to in writing by Acquirer), and Acquirer agrees (except to the extent expressly contemplated by this Agreement or the Verizon Agreement or as consented to in writing by HOVRS): (a) to carry on its business in the usual regular and ordinary course in substantially the same manner as heretofore conducted; (b) to pay its debts and Taxes when due (subject to good faith disputes over such debts or Taxes); (c) to pay or perform other material obligations when due; and (d) to use all reasonable efforts to preserve intact its present business organizations, keep available the services of its present officers and key employees and preserve its relationships with material customers, suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that its goodwill and ongoing businesses shall be unimpaired at the Effective Time. Each party agrees to promptly notify the other parties hereto of (a) any material event or occurrence not in the ordinary course of such party's business, and of any event which could reasonably be expected to have a Material Adverse Effect on such party; and (b) any material change in its capitalization as set forth in this Agreement (including the schedules hereto). Without limiting the foregoing, except as expressly contemplated by this Agreement, Section 5.1 of the HOVRS Disclosure Schedule or the Acquirer Disclosure Schedule, and in the case of Acquirer the Verizon Agreement, HOVRS shall not cause or permit any of the following without the prior written consent of Acquirer (which consent, with respect to clause (k) below, will not be unreasonably withheld by Acquirer), and Acquirer shall not cause or permit any of the following without the prior written consent of HOVRS: (a) Charter Documents. Cause or permit any amendments to its Charter Documents; provided, however, that Acquirer may amend its Charter Documents: (i) to decrease the number of authorized shares of Acquirer Common Stock to a number not less than 50,000,000; (ii) to declassify its board of directors, so that all directors will be of a single class and each will serve for a term of one year and until his or her successor is elected and qualified; and (iii) to file an Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit 6.22, to amend the rights, preferences and privileges of the Acquirer Preferred Stock; and upon the effectiveness of any such amendment to Acquirer's Charter Documents, the related representations of Acquirer set forth in Section 4 hereof shall be deemed to have been modified accordingly, mutatis mutandis; (b) Dividends; Changes in Capital Stock. Declare or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or 63 repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock, except from former employees, directors and consultants in accordance with agreements providing for the repurchase of shares in connection with any termination of service to it; (c) Stock Option Plans, Etc. In the case of HOVRS, except as required by this Agreement or permitted by or contemplated in the HOVRS Option Plan, by any stock option agreement or by any employment agreement entered into by HOVRS prior to the date hereof, and in the case of Acquirer, except as approved by the stockholders of Acquirer at the Acquirer Stockholders Meeting, accelerate, amend or change the period of exercisability or vesting of options or other rights granted under its stock plans or authorize cash payments in exchange for any options or other rights granted under any of such plans; (d) Issuance of Securities. Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of its capital stock or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating it to issue any such shares or other convertible securities other than (i) the issuance of shares of Common Stock by HOVRS or Acquirer pursuant to the exercise of stock options, warrants or other rights outstanding as of the date of this Agreement, (ii) the grant by Acquirer of options to purchase Acquirer Common Stock pursuant to the Acquirer Stock Option Plans, (iii) with the permission of Acquirer, which may be granted or denied in Acquirer's discretion, the grant by HOVRS of options to purchase HOVRS Common Stock pursuant to the HOVRS Option Plan or otherwise to persons retained by HOVRS in the ordinary course of business as employees after the date hereof, which options if granted prior to the Effective Time shall be treated as Assumed HOVRS Options for all purposes hereunder (provided that Acquirer shall advise HOVRS whether it may issue such options within five (5) Business Days of Acquirer's receipt of a written request from HOVRS to issue such options, and Acquirer's failure to respond within such five (5) Business Days shall be deemed the grant of Acquirer's permission to grant the options proposed by HOVRS), (iv) the acceptance of promissory notes as payment of exercise price and applicable taxes from option holders exercising HOVRS Stock Options as of the Determination Date, which promissory notes shall be paid in full as of the Closing Date; and (v) the issuance of debt and equity securities by Acquirer pursuant to existing agreements with Clearlake and its affiliates; (e) Intellectual Property. Transfer to any Person any rights, present, future or contingent, to its Intellectual Property other than granting licenses in the ordinary course of business consistent with past practice; (f) Exclusive Rights. Other than in the ordinary course of business consistent with past practice, enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other exclusive rights of any type or scope with respect to any of such party's products or Intellectual Property; (g) Dispositions. Sell, lease, license or otherwise dispose of or encumber any of its properties or assets that are material, individually or in the aggregate, to its business, taken as a whole, other than in the ordinary course of business consistent with past practice or, in the case of Acquirer, as contemplated by existing agreements between Acquirer and Clearlake or its affiliates; 64 (h) Indebtedness. Incur any indebtedness for borrowed money, or guarantee any such indebtedness, or issue or sell any debt securities or guaranty any debt securities of others, in excess of Fifty Thousand Dollars ($50,000) in the aggregate except, in the case of Acquirer, pursuant to existing agreements with Clearlake or its affiliates; (i) Agreements. Other than in the ordinary course of business, enter into, terminate or amend, in a manner that will adversely affect the business of such party, (i) any agreement involving the obligation to pay or the right to receive Twenty-Five Thousand Dollars ($25,000) or more, (ii) any agreement relating to the license, transfer or other disposition or acquisition of Intellectual Property rights or rights to market or sell such party's products, or (iii) any other agreement material to the business or prospects of such party or that is or would be a HOVRS Material Contract or Acquirer Material Contract, as the case may be; (j) Payment of Obligations. Pay, discharge or satisfy, in an amount in excess of Twenty-Five Thousand Dollars ($25,000) in the aggregate, any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) arising other than in the ordinary course of business, other than the payment, discharge or satisfaction of liabilities reflected or reserved against in the HOVRS Financial Statements or the Acquirer Financial Statements, as the case may be; (k) Capital Expenditures. With respect to Acquirer, except as contemplated by the Verizon Agreement, make any capital expenditures, capital additions or capital improvements, in excess of One Hundred Thousand Dollars ($100,000) in the aggregate; and with respect to HOVRS, make any capital expenditures, capital additions or capital improvements in excess of One Hundred Thousand Dollars ($100,000) in the aggregate; (l) Insurance. Materially reduce the amount of any material insurance coverage provided by existing insurance policies; (m) Termination or Waiver. Terminate or waive any right of substantial value, other than in the ordinary course of business; (n) Employee Benefit Plans; New Hires; Pay Increases. Except as provided under this Agreement, or required by Applicable Law, amend any HOVRS Employee Plan or adopt any plan that would constitute a HOVRS Employee Plan, or amend any Acquirer Employee Plan or adopt any plan that would constitute an Acquirer Employee Plan, as the case may be, or hire any new officer-level employee, pay any special bonus, special remuneration or special noncash benefit (except payments and benefits made pursuant to written agreements outstanding on the date hereof), or materially increase the benefits, salaries or wage rates of its employees (other than normal annual salary increases consistent with past practices), except in the case of Acquirer as contemplated by the Verizon Agreement or as approved by the stockholders of Acquirer at the Acquirer Stockholders Meeting; (o) Severance Arrangements. Grant or pay any severance or termination pay or benefits (i) to any director or officer or (ii) except for payments made pursuant to written 65 agreements outstanding on the date hereof and disclosed on the HOVRS Disclosure Schedule or the Acquirer Disclosure Schedule, as the case may be, to any other employee; (p) Lawsuits. Commence a lawsuit other than (i) for the routine collection of bills, or (ii) in such cases where such party in good faith determines that failure to commence suit would result in the material impairment of a valuable aspect of such party's business, provided that such party consults with the other parties hereto prior to the filing of such a suit; (q) Acquisitions. Acquire or agree to acquire by merging with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that are material individually or in the aggregate, to its business, taken as a whole, except in the case of Acquirer as contemplated by the Verizon Agreement; (r) Taxes. Make or change any material election in respect of Taxes, adopt or change any accounting method or period in respect of Taxes, file any material Tax Return or any amendment to a material Tax Return, enter into any closing agreement, settle any material claim or assessment in respect of Taxes, surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of Taxes; (s) Revaluation. Revalue any of its assets, including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business or as required by changes in GAAP; or (t) Other. Take or agree in writing or otherwise to take, any of the actions described in Sections 5.1(a) through 5.1(s) above, or any action that would cause a material breach of its representations or warranties contained in this Agreement or prevent it from materially performing or cause it not to materially perform its covenants hereunder. 5.2. No Solicitation. (a) During the period from the date of this Agreement until the earlier of the termination of this Agreement or the Effective Time, HOVRS shall not, directly or indirectly, through any officer, director, employee, representative or agent, (i) take any action to solicit, initiate, encourage or support any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock (including without limitation by way of a tender offer, but excluding sales pursuant to any exercise of outstanding stock options granted under the HOVRS Option Plan) or similar transactions involving HOVRS, other than the transactions contemplated or expressly permitted by this Agreement (any of the foregoing inquiries or proposals being referred to in this Agreement as a "HOVRS Transaction Proposal"), (ii) engage in negotiations or discussions concerning, or provide any non-public information to any Person relating to, any HOVRS Transaction Proposal, or (iii) agree to approve or recommend any HOVRS Transaction Proposal. 66 (b) HOVRS shall notify Acquirer no later than twenty-four (24) hours after receipt by HOVRS (or its advisors) of any HOVRS Transaction Proposal or any request for nonpublic information in connection with a HOVRS Transaction Proposal or for access to the properties, books or records of HOVRS by any Person that informs HOVRS that it is considering making, or has made, a HOVRS Transaction Proposal. (c) During the period from the date of this Agreement until the earlier of the termination of this Agreement or the Effective Time, Acquirer shall not, directly or indirectly, through any officer, director, employee, representative or agent, take any action to solicit, initiate, encourage or support any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock (including without limitation by way of a tender offer, but excluding sales pursuant to any exercise of outstanding stock options granted under Acquirer Option Plan) or similar transactions involving Acquirer, other than the transactions contemplated or expressly permitted by this Agreement (any of the foregoing inquiries or proposals being referred to in this Agreement as an "Acquirer Transaction Proposal"), (ii) engage in negotiations or discussions concerning, or provide any non-public information to any Person relating to, any Acquirer Transaction Proposal, or (iii) agree to approve or recommend any Acquirer Transaction Proposal; provided, however, that nothing contained in this Agreement shall prevent Acquirer or its board of directors from (i) complying with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquirer Transaction Proposal. (d) Acquirer shall notify HOVRS no later than twenty-four (24) hours after receipt by Acquirer (or its advisors) of any Acquirer Transaction Proposal or any request for nonpublic information in connection with an Acquirer Transaction Proposal or for access to the properties, books or records of Acquirer by any Person that informs Acquirer that it is considering making, or has made, an Acquirer Transaction Proposal. 6. Additional Agreements. 6.1. Proxy Statement. (a) As promptly as practicable after the date of this Agreement, but in any event no later than forty-five (45) days following the date of this Agreement, Acquirer, in cooperation with HOVRS, shall prepare and file with the SEC a proxy statement of Acquirer, meeting the requirements of Delaware Law and the Exchange Act and the requirements identified in Section 6.1(d) hereof (the "Proxy Statement"). Each of Acquirer and HOVRS shall respond to any comments of the SEC, and Acquirer shall cause the definitive Proxy Statement to be mailed to its stockholders at the earliest practicable time after the Proxy Statement is filed with the SEC, subject to compliance with the Exchange Act, including without limitation Rule 14a-6 thereunder, but in no event later than five (5) Business Days following the date on which the SEC shall have advised that it has no further comments regarding the Proxy Statement; provided, however, that if the SEC Staff advises Acquirer that it will not review the Proxy Statement, Acquirer shall cause the Proxy Statement to be mailed to its stockholders no later than twenty (20) Business Days after it is so advised. Each of Acquirer and HOVRS shall notify the other promptly upon the receipt of any comments from the SEC or its staff or any other Governmental Entity and of any request by the SEC or its staff or any Governmental Entity 67 for amendments or supplements to the Proxy Statement or for additional information and shall supply the other with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC, or its staff or any other Governmental Entity, on the other hand, with respect to the Proxy Statement or the Merger. Each of Acquirer and HOVRS shall use its best efforts to cause all documents that it is responsible for filing with the SEC or other regulatory authorities under this Section 6.1 to comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder. Whenever any event occurs that is required to be set forth in an amendment or supplement to the Proxy Statement, Acquirer or HOVRS, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with the SEC or its staff or any other Governmental Entity, and/or mailing to stockholders of HOVRS and Acquirer, such amendment or supplement. (b) In furtherance and not in limitation of its obligations under Section 6.1(a), HOVRS shall promptly provide Acquirer with the information required to be included in the Proxy Statement relating to HOVRS, and HOVRS shall use commercially reasonable efforts to provide Acquirer with (i) an unqualified audit report signed by the firm of Gallina LLP with respect to each of the annual audited financial statements included within the HOVRS Financial Statements, (ii) a consent in form and substance reasonably satisfactory to Acquirer, executed by such accounting firm as of a date within two (2) Business Days of each of the dates on which the HOVRS Financial Statements are filed with the SEC, consenting to the filing by Acquirer of such report with the SEC, and (iii) an acknowledgment in form and substance reasonably satisfactory to Acquirer, executed by such firm as of a date within two (2) Business Days of each such filing, confirming that such firm is independent with respect to HOVRS. (c) Except to the extent legally required for the discharge by Acquirer's board of directors of its fiduciary duties as advised by such Board's legal counsel, Acquirer will include in the Proxy Statement (i) the recommendation of the board of directors of Acquirer that the stockholders of Acquirer vote to approve the Merger, the issuance of the Acquirer Common Stock pursuant to this Agreement and such other matters as shall be required by Nasdaq in connection with the consummation of the Merger and (ii) the written opinion dated as of Duff & Phelps, financial advisor to the board of directors of Acquirer, to the effect that the Merger is fair, from a financial point of view, to Acquirer. (d) Each of HOVRS and Acquirer shall ensure that the Proxy Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made relating to such party, in light of the circumstances under which they were made, not misleading (provided that such party shall not be responsible for the accuracy or completeness of any information concerning the other party furnished by the other party for inclusion in the Proxy Statement). The Proxy Statement shall contain information to satisfy the information requirements of Rule 502(b) of Regulation D of the Securities Act for purposes of satisfying Rule 506 of Regulation D of the Securities Act. 6.2. Preliminary Proxy Statement. As promptly as practicable after the date of this Agreement, but in any event no later than five (5) Business Days prior to the date of the filing of the preliminary Proxy Statement with the SEC (such filing date to be mutually agreed upon between Acquirer and HOVRS), Acquirer shall provide to HOVRS the preliminary Proxy 68 Statement in a form that Acquirer advises HOVRS in writing is ready for filing with the SEC (the "Preliminary Proxy Statement"). 6.3. HOVRS Stockholder Approval. Within five (5) Business Days of the receipt by HOVRS from Acquirer of the Preliminary Proxy Statement pursuant to Section 6.2, HOVRS shall prepare and mail to the HOVRS Stockholders an information statement regarding the Merger, this Agreement and the other transactions contemplated hereunder, together with a copy of the Preliminary Proxy Statement (the "HOVRS Information Statement"). HOVRS shall provide Acquirer with a reasonable opportunity to review and comment upon drafts of the HOVRS Information Statement. Acting through its board of directors, in accordance with Delaware Law and its Charter Documents, HOVRS will use its commercially reasonable efforts to cause the Key HOVRS Stockholders to execute and deliver their written consent to the Merger, this Agreement and the other transactions contemplated hereunder and the documents to be executed in connection therewith, and to the waiver of their rights of appraisal relating thereto, which consent shall be substantially in the form of Exhibit 6.3 hereto, with such changes thereto as to which Acquirer may consent, such consent not to be unreasonably withheld, conditioned or delayed (the "Written Consent"). 6.4. Acquirer Stockholder Approval. Acquirer, acting through its board of directors, in accordance with Applicable Law, its Charter Documents and the rules and listing requirements of Nasdaq, will duly call, give notice of, convene and hold an annual or special meeting of its stockholders (the "Acquirer Stockholders Meeting") as soon as reasonably practicable after mailing of the definitive Proxy Statement to the Acquirer's stockholders on a date (selected by Acquirer in consultation with HOVRS), for the purpose of submitting the proposals adopted by the board of directors of Acquirer to approve the Merger, the issuance of shares of Acquirer Common Stock pursuant to this Agreement and such other matters as shall be required by Nasdaq in connection with the consummation of the Merger and such other proposals relating to the consummation of the Merger as Acquirer in its discretion shall deem appropriate for adoption and approval by the required vote of the holders of Acquirer capital stock. 6.5. Access to Information. (a) HOVRS shall afford Acquirer and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to (i) all of HOVRS' properties, personnel, books, contracts, commitments and records and (ii) all other information concerning the business, properties and personnel of HOVRS as Acquirer may reasonably request. Acquirer shall afford HOVRS and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to (i) all of Acquirer's properties, books, contracts, commitments and records and (ii) all other information concerning the business, properties and personnel of Acquirer as HOVRS may reasonably request. (b) Subject to compliance with Applicable Law, from the date hereof until the Effective Time, each of Acquirer and HOVRS shall confer on a regular and frequent basis with one or more representatives of the other party to report operational matters of materiality and the general status of ongoing operations. 69 6.6. Confidentiality. The parties acknowledge that Acquirer and HOVRS have previously executed a mutual confidentiality agreement dated as of June 26, 2007 (the "Confidentiality Agreement"), which Confidentiality Agreement is hereby incorporated herein by reference and shall continue in full force and effect in accordance with its terms. 6.7. Public Disclosure. Unless otherwise permitted by this Agreement, Acquirer and HOVRS shall consult with each other before issuing any press release or otherwise making any public statement or making any other public (or non-confidential) disclosure (whether or not in response to an inquiry) regarding the terms of this Agreement and the transactions contemplated hereby, and neither shall issue any such press release or make any such statement or disclosure without the prior approval of the other (which approval shall not be unreasonably withheld), except as may be required by law or by obligations pursuant to any listing agreement with any national securities exchange or with Nasdaq. 6.8. Regulatory Approval; Further Assurances. (a) To the extent required by Applicable Law, each party shall use all reasonable efforts to file, as promptly as practicable after the date of this Agreement, all notices, reports and other documents required to be filed by such party with any Governmental Entity with respect to the Merger and the other transactions contemplated by this Agreement, and to submit promptly any additional information requested by any such Governmental Entity. Each of HOVRS and Acquirer shall (i) give the other party prompt notice of the commencement of any legal proceeding by or before any Governmental Entity with respect to the Merger or any of the other transactions contemplated by this Agreement, (ii) keep the other party informed as to the status of any such legal proceeding, and (iii) promptly inform the other party of any communication to or from the FCC or any other Governmental Entity regarding the Merger. (b) Acquirer and HOVRS shall use all reasonable efforts to take, or cause to be taken, all actions necessary to effectuate the Merger and make effective the other transactions contemplated by this Agreement. Without limiting the generality of the foregoing, each party to this Agreement shall: (i) make any filings and give any notices required to be made and given by such party in connection with the Merger and the other transactions contemplated by this Agreement; (ii) use all reasonable efforts to obtain any consent required to be obtained (pursuant to any applicable legal requirement or contract, or otherwise) by such party in connection with the Merger or any of the other transactions contemplated by this Agreement; and (iii) use all reasonable efforts to lift any restraint, injunction or other legal bar to the Merger. Each party shall promptly deliver to the other a copy of each such filing made, each such notice given and each such consent obtained by such party during the period prior to the Effective Time. Each party, at the reasonable request of the other party, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby. 6.9. HOVRS Options. As soon as practicable after the date hereof, HOVRS will take commercially reasonable measure to provide notice of the transactions contemplated under this Agreement to the holders of HOVRS Stock Options in accordance with the terms of the HOVRS Option Plan. 70 6.10. Form S-8. Acquirer agrees to file, no later than ten (10) days after the Closing, a registration statement on Form S-8 (or any successor form) or another appropriate form covering the shares of Acquirer Common Stock issuable pursuant to the Assumed HOVRS Options and shall use commercially reasonable efforts at least equivalent to those used in maintaining the effectiveness of Acquirer's other registration statements on Form S-8 to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Assumed HOVRS Options remain outstanding. The Stockholders' Agent shall cooperate with and assist Acquirer in the preparation of such registration statement. 6.11. Issuance of Securities Exempt From Registration; Blue Sky Laws. Assuming the delivery of certain representations by the HOVRS Stockholders in the Investment Representation Letter, the offer and sale of the Acquirer Common Stock in accordance with this Agreement will be exempt from the registration and prospectus delivery requirements of the Securities Act and applicable state securities laws, and the shares of Acquirer Common Stock will be issued pursuant to an exemption from the registration and prospectus delivery requirements of the Securities Act and applicable state securities laws. Acquirer shall take such steps as may be necessary to comply with the securities and blue sky laws of all jurisdictions applicable to the issuance of Acquirer Common Stock in connection with the Merger. HOVRS shall use its commercially reasonable efforts to assist Acquirer to comply with the securities and blue sky laws of all jurisdictions applicable to the issuance of Acquirer Common Stock in connection with the Merger. 6.12. Escrow Agreement. On or before the Closing Date, Acquirer and the Stockholders' Agent will execute, and shall request the Escrow Agent to execute, the Escrow Agreement contemplated by Section 9.1, in substantially the form attached as Exhibit 6.12, provided that prior to the execution of the Escrow Agreement, Schedule I thereto shall be completed to list all HOVRS Stockholders (other than holders of Dissenting Shares) and their respective pro rata or percentage interest in the Escrow Fund based upon their ownership of HOVRS Common Stock or HOVRS Preferred Stock immediately prior to the Closing (the "Escrow Agreement"). 6.13. Listing of Additional Shares. Prior to the Effective Time, Acquirer shall file with the Nasdaq Stock Market a Notification Form for Listing of Additional Shares with respect to the shares of Acquirer Common Stock issuable upon conversion of the HOVRS Common Stock and HOVRS Preferred Stock in the Merger or upon exercise of Assumed HOVRS Options. Prior to the Effective Time, Acquirer shall cause Acquirer Common Stock to be issued in the Merger to be authorized for listing on the Nasdaq Capital Market upon official notice of issuance. 6.14. Tax Matters. Acquirer and HOVRS shall each use its best efforts to cause the exchange of HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger to qualify as a tax-free exchange of property for stock pursuant to Section 351 of the Code and to obtain the opinion of its respective counsel contemplated by Sections 7.2(d) and 7.3(d). HOVRS (on the one hand), and Acquirer and HOVRS Merger Sub (on the other hand) shall execute and deliver to both Orrick, Herrington & Sutcliffe LLP and Chadbourne & Parke LLP a letter (each, a "Tax Representation Letter") making reasonable and customary representations relating to certain Tax matters. The Tax Representation Letters shall be 71 sufficient to enable each such counsel to render the Tax opinions contemplated by Sections 7.2(d) and 7.3(d) at the Closing. Neither Acquirer, HOVRS Merger Sub nor HOVRS shall take any action prior to the Closing, and Acquirer shall not take any action (and shall prevent the Surviving Corporation from taking any action) following the Closing that could reasonably be expected to cause the exchange of the HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger to fail to qualify as a tax-free exchange of property to Acquirer in exchange for stock under Section 351 of the Code. No election under Section 338(g) of the Code or under any comparable provisions of any other state, local or foreign laws shall be made with respect to the acquisition of HOVRS by the Acquirer. 6.15. Clearlake. Acquirer shall use commercially reasonable efforts (i) to raise additional capital through the sale of Acquirer Preferred Stock to Clearlake in an amount sufficient so that Clearlake and the holders of HOVRS Common Stock and HOVRS Preferred Stock who will receive Acquirer Common Stock in exchange for their capital stock of HOVRS in the Merger will be in "control" of Acquirer within the meaning of Section 368(c) of the Code immediately following the Merger and completion of the corresponding sale and issuance of Acquirer Preferred Stock to Clearlake, and (ii) to time the closing of such sale of Acquirer Preferred Stock to Clearlake to occur on the Closing Date of the Merger. For the avoidance of doubt, the purchase of additional equity by Clearlake on the Closing Date in an amount with a value equal to the greater of Five Million Dollars ($5,000,000) and ten percent (10%) of the value of Clearlake's holdings in Acquirer immediately prior to the Closing (based on the average of the high and low prices for Acquirer Common Stock on the Closing Date as reported on the Nasdaq Capital Market) shall satisfy Acquirer's obligations. 6.16. Expenses. If the Merger is not consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense. If the Merger is consummated, Acquirer shall pay all of its Transaction Expenses, and the HOVRS Stockholders shall assume HOVRS' Transaction Expenses only to the extent of the amount that exceeds One Million Dollars ($1,000,000) (which assumption shall be made by a reduction in the amount of the Merger Cash in accordance with the definition thereof). 6.17. Real Property Holding Corporation. Pursuant to Treasury Regulations Section 1.897-2(h) and Treasury Regulations Selection 1.1445-2(c)(3)(i), at the Closing HOVRS shall furnish to Acquirer a statement certifying that HOVRS is not, and has never been during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code. 6.18. Rule 144 Sales. Acquirer shall file all reports with the SEC in a timely manner to ensure compliance with the requirements of Rule 144(c) under the Securities Act for a period of two (2) years after the Effective Time. 6.19. Guaranty Releases. Acquirer shall take commercially reasonable efforts to cause, as soon as practicable, but in no event later than thirty (30) days, following the Effective Time, the release of each guaranty set forth on Section 3.11 to the HOVRS Disclosure Schedule. 72 6.20. Accountants' Letters. Each of Acquirer and HOVRS shall use reasonable best efforts to cause to be delivered to the other party two letters from their respective independent accountants, one dated approximately as of the date the Proxy Statement is mailed to the stockholders of Acquirer and one dated approximately as of the Closing Date, each addressed to the other party, in form and substance reasonably satisfactory to the other party and customary in scope and substance for comfort letters delivered by independent public accountants in connection with transactions similar to the Merger. 6.21. Lock-up Agreement. On or before the Closing Date, Acquirer shall execute and deliver to the Stockholders' Agent the Lock-up Agreement substantially in the form of Exhibit 2.7(c)(i) hereto. 6.22. Radvision. Prior to the Closing, HOVRS will take all commercially reasonable measures to obtain from Radvision, Inc. a release of claims in connection with HOVRS' prior use of Radvision software included in certain deliverables provided by Vianet, Inc. to HOVRS. 6.23. Disclosure Schedule. Prior to the Closing, each of HOVRS and Acquirer may supplement or amend the HOVRS Disclosure Schedule and Acquirer Disclosure Schedule, respectively, delivered in connection herewith with respect to any matter which, if existing or occurring at or prior to the date of this Agreement, would have been required to be set forth or described in the HOVRS Disclosure Schedule which is necessary to supplement the information in the HOVRS Disclosure Schedule, or in the Acquirer Disclosure Schedule which is necessary to supplement the information in the Acquirer Disclosure Schedule, which has been rendered a representation or warranty in Section 3 or Section 4 inaccurate by an event, condition, fact or circumstance occurring after the date hereof; provided, however, that the HOVRS Disclosure Schedule may not be amended or supplemented with respect to any representation set forth in Section 3.21, and the Acquirer Disclosure Schedule may not be amended or supplemented with respect to any representation set forth in Section 4.21 7. Conditions to the Closing of the Merger. 7.1. Conditions to Obligations of Each Party to Effect the Merger. The respective obligations of Acquirer and HOVRS Merger Sub, on the one hand, and HOVRS, on the other hand, to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, by agreement of all the parties hereto: (a) Stockholder Approval. This Agreement and the Merger shall have been approved by the stockholders of HOVRS by the requisite vote under Delaware Law and HOVRS' Charter Documents. The Merger, the issuance of the shares of Acquirer Common Stock pursuant to this Agreement and each other matter as shall be required by Nasdaq in connection with the consummation of the Merger shall have been approved by the stockholders of Acquirer by the requisite vote under Rule 4350(i)(1) of the Marketplace Rules of The NASDAQ Stock Market LLC. (b) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction 73 or other legal or regulatory restraint or prohibition preventing the consummation of the Merger shall be and remain in effect, nor shall any proceeding brought by an administrative agency or commission or other Governmental Entity, domestic or foreign, seeking any of the foregoing be pending, which could reasonably be expected to have a Material Adverse Effect on Acquirer, either individually or combined with the Surviving Corporation after the Effective Time, nor shall there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger, which makes the consummation of the Merger illegal. (c) Governmental Approval. Acquirer, HOVRS and HOVRS Merger Sub shall have timely obtained from each Governmental Entity all approvals, waivers and consents, necessary for consummation of or in connection with the Merger and the several transactions contemplated hereby, including such approvals, waivers and consents as may be required under the Securities Act and state blue sky laws, other than filings and approvals relating to the Merger or affecting Acquirer's ownership of HOVRS or any of its properties if failure to obtain such approval, waiver or consent could not reasonably be expected to have a Material Adverse Effect on Acquirer after the Effective Time. (d) No Governmental Litigation. There shall not be pending or threatened any legal proceeding in which a Governmental Entity is or is threatened to become a party or is otherwise involved, and neither Acquirer nor HOVRS shall have received any communication from any Governmental Entity in which such Governmental Entity indicates the probability of commencing any legal proceeding or taking any other action: (i) challenging or seeking to restrain or prohibit the consummation of the Merger; (ii) relating to the Merger and seeking to obtain from Acquirer or any of its Subsidiaries, or HOVRS, any damages or other relief that would be material to Acquirer after the Effective Time; (iii) seeking to prohibit or limit in any material respect Acquirer's ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to the stock of HOVRS; or (iv) that would prohibit or effectively prohibit the right of Acquirer or HOVRS to own the assets or operate the business of HOVRS. (e) No Other Litigation. There shall not be pending any legal proceeding: (i) challenging or seeking to restrain or prohibit the consummation of the Merger or any of the other transactions contemplated by this Agreement; (ii) relating to the Merger and seeking to obtain from Acquirer or any of its Subsidiaries, or HOVRS, any damages or other relief that would be material to Acquirer; (iii) seeking to prohibit or limit in any material respect Acquirer's ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to any shares of the capital stock of HOVRS; or (iv) that would prohibit or effectively prohibit the right of Acquirer or HOVRS to own the assets or operate the business of HOVRS. (f) Verizon Transaction. The transactions contemplated by the Verizon Agreement shall have been consummated. (g) Escrow Agreement. Acquirer, the Escrow Agent and the Stockholders' Agent shall have entered into an Escrow Agreement substantially in the form attached hereto as Exhibit 6.12. 74 7.2. Additional Conditions to the Obligations of Acquirer. The obligations of Acquirer to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, by Acquirer: (a) Representations, Warranties and Covenants. The representations and warranties of HOVRS in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and at and as of the Closing as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically as of the date hereof or as of another date, which shall be true and correct as of such date), disregarding for the purposes of such determination any "Material Adverse Effect" or other materiality qualifiers set forth in such representations and warranties, except for such failures of such representations and warranties regarding HOVRS, its business or properties to be so true and correct as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on HOVRS. (b) Performance of Obligations. HOVRS shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing. (c) Certificate of Officers. Acquirer shall have received a certificate executed on behalf of HOVRS by the Chief Executive Officer and Chief Financial Officer of HOVRS certifying that the conditions set forth in Sections 7.2(a) and 7.2(b) have been satisfied. (d) Tax Opinion. Acquirer shall have received a written opinion from Acquirer's legal counsel to the effect that the exchange of the HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger should be treated for federal income tax purposes as an exchange of property for stock under Section 351 of the Code. (e) Third Party Consents. All consents or approvals required to be obtained by HOVRS in connection with the Merger and the other transactions contemplated by this Agreement, including consent under the Master Services Agreement dated July 1, 2007 by and between HOVRS and Sprint/United Management Company, shall have been obtained and shall be in full force and effect, except where the failure to obtain any such consents or approvals could not individually or in the aggregate be reasonably expected to have a Material Adverse Effect on HOVRS. (f) Opinion. Counsel for HOVRS, Orrick, Herrington & Sutcliffe LLP, shall have delivered to Acquirer an opinion, reasonably acceptable to Acquirer, covering such matters as are customary in transactions of the type described herein, substantially in the form attached hereto as Exhibit 7.2(f). 7.3. Additional Conditions to Obligations of HOVRS. The obligations of HOVRS to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, by HOVRS: 75 (a) Representations, Warranties and Covenants. The representations and warranties of Acquirer in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and at and as of the Closing as though such representations and warranties were made on and as of such time (except for such representations and warranties that speak specifically as of the date hereof or as of another date, which shall be true and correct as of such date), disregarding for the purposes of such determination any "Material Adverse Effect" or other materiality qualifiers set forth in such representations and warranties, except for such failures of such representations and warranties regarding Acquirer, its business or properties to be so true and correct as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Acquirer. (b) Performance of Obligations. Acquirer shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing. (c) Certificate of Officers. HOVRS shall have received a certificate executed on behalf of Acquirer by the Chief Executive Officer and Chief Financial Officer of Acquirer certifying that the conditions set forth in Sections 7.3(a) and 7.3(b) have been satisfied. (d) Tax Opinion. HOVRS shall have received a written opinion from HOVRS' legal counsel to the effect that the exchange of the HOVRS Common Stock and HOVRS Preferred Stock for Acquirer Common Stock in the Merger should be treated for federal income tax purposes as an exchange of property for stock under Section 351 of the Code. (e) Third Party Consents. All consents or approvals required to be obtained by Acquirer in connection with the Merger and the other transactions contemplated by this Agreement shall have been obtained and shall be in full force and effect, except where the failure to obtain any such consents or approvals could not individually or in the aggregate be reasonably expected to have a Material Adverse Effect on Acquirer. (f) Opinions. Counsels for Acquirer, Chadbourne & Parke LLP and Lowenstein Sandler PC, shall have delivered to HOVRS opinions, reasonably acceptable to HOVRS, covering such matters as are customary in transactions of the type described herein, substantially in the form attached hereto as Exhibit 7.3(f) (it being understood that some but not all such opinions may be delivered by either such firm, provided that all such opinions are delivered collectively by both firms). (g) Amended and Restated Certificate of Incorporation. Acquirer shall have duly adopted, executed and filed with the Secretary of State of the State of Delaware the Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit 7.3(h). (h) Election of Directors. The directors designated by HOVRS identified on Exhibit 2.5 shall have been duly elected to serve the board of directors of Acquirer. (i) Clearlake. Acquirer shall have completed the sale of Acquirer Preferred Stock to Clearlake in an amount sufficient so that Clearlake and the holders of HOVRS Common Stock and HOVRS Preferred Stock that will receive Acquirer Common Stock in exchange for their stock of HOVRS in the Merger are in "control" of Acquirer within the meaning of Section 76 368(c) of the Code immediately following the Merger, and such sale will occur on the Closing Date of the Merger. For the avoidance of doubt, the purchase of additional equity of Acquirer by Clearlake on the Closing Date that complies with the ten percent (10%) safe harbor rule of Revenue Procedure 77-37 (i.e., Clearlake shall acquire Acquirer Preferred Stock in an amount with a value equal to the greater of Five Million Dollars ($5,000,000) and ten percent (10%) of the value of Clearlake's holdings in Acquirer immediately prior to the Closing (based on the average of the high and low prices for Acquirer Common Stock on the Closing Date as reported on the Nasdaq Capital Market)) shall satisfy this condition. Acquirer shall have obtained the representations from Clearlake and Reservoir Capital Group, L.L.C., on behalf of all the limited partners of Clearlake, to be delivered thereby pursuant to that certain Clearlake/Reservoir Certificate of even date herewith delivered by Clearlake and Reservoir Capital Group, L.L.C. to Acquirer and HOVRS. 8. Termination, Amendment and Waiver. 8.1. Termination. This Agreement may be terminated at any time prior to the Effective Time (with respect to Section 8.1(b) through Section 8.1(d), by written notice by the terminating party to the other party): (a) by the mutual written consent of Acquirer and HOVRS; (b) by Acquirer or HOVRS if the Merger shall not have been consummated by the earlier of (i) February 29, 2008, or (ii) forty-five (45) days following the date on which the SEC shall have advised that it has no further comments regarding the Proxy Statement (or that it will not review the Proxy Statement) and Acquirer has received all necessary approvals from the states of California and Tennessee and the District of Columbia in connection with the transactions contemplated under the Verizon Agreement (the "Outside Date"); provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before such date; (c) by Acquirer or HOVRS if a court of competent jurisdiction or other Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger, unless the party relying on such order, decree or ruling or other action has not complied in all material respects with its obligations under this Agreement; (d) by Acquirer or HOVRS, if there has been a breach of any representation, warranty, covenant or agreement on the part of the other party set forth in this Agreement, which breach (i) causes the conditions set forth in Section 7.1 or 7.2 (in the case of termination by Acquirer) or Section 7.1 or 7.3 (in the case of termination by HOVRS) not to be satisfied, and (ii) shall not have been cured within ten (10) Business Days following receipt by the breaching party of written notice of such breach from the other party; (e) by Acquirer or HOVRS, if the requisite votes by the stockholders of Acquirer in order to consummate the transactions described in this Agreement are not obtained at the Acquirer Stockholders Meeting, or at any adjournment or postponement thereof; or 77 (f) by Acquirer or HOVRS, if HOVRS does not deliver to Acquirer a copy of the Written Consent that has been executed by each of the Key HOVRS Stockholders within five (5) Business Days after Acquirer delivers to HOVRS the Preliminary Proxy Statement pursuant to Section 6.2, or if at any time after the delivery of the Written Consent any of the Key HOVRS Stockholders takes any action intended to withdraw, rescind or revoke the Written Consent. 8.2. Effect of Termination. (a) In the event of termination of this Agreement pursuant to Section 8.1(e), Acquirer shall, concurrently with such termination, pay HOVRS a fee equal to One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate, if and only if (i) the requisite votes by the stockholders of Acquirer were not obtained to approve the Merger, the issuance of the Acquirer Common Stock pursuant to this Agreement and each other matter as shall be required by Nasdaq in connection with the consummation of the Merger, but the requisite votes by the stockholders of Acquirer were obtained to approve the transactions contemplated by the Verizon Agreement, or (ii) either (A) the Acquirer Stockholders Meeting has not been noticed and convened by the Outside Date or (B) the Acquirer Stockholders Meeting has been held by the Outside Date but the foregoing proposal has not been put to a vote of the Acquirer's stockholders at such Acquirer Stockholders Meeting (or any adjournment thereof held not later than the Outside Date). (b) In the event of termination of this Agreement pursuant to Section 8.1(f), HOVRS shall, concurrently with such termination, pay Acquirer a fee equal to One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate. (c) In the event of termination of this Agreement other than as set forth in Section 8.2(a) or 8.2(b), there shall be no liability or obligation on the part of Acquirer, HOVRS or their respective officers, directors or stockholders, except to the extent that such termination results from the willful breach by a party of any of its representations, warranties or covenants set forth in this Agreement. The provisions of Sections 6.6, 6.7, 6.15, 6.16 and 10 shall remain in full force and effect and survive any termination of this Agreement. 8.3. Amendment. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective boards of directors. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 8.4. Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective boards of directors, may, to the extent legally allowed: (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto; (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto; and (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. 9. Escrow and Indemnification. 9.1. Escrow Fund. 78 (a) At the Closing, the Escrow Cash shall be deposited with the Escrow Agent to constitute the Escrow Fund and be governed by the terms set forth herein and in the Escrow Agreement. The Escrow Fund shall be available to compensate Acquirer pursuant to the indemnification obligations of the HOVRS Stockholders. (b) For income tax purposes, all earnings on investment of the Escrow Cash shall be reported by Acquirer. The parties hereto acknowledge and agree that upon the release of the Escrow Fund in accordance with this Escrow Agreement, a portion of the payment will be treated as a payment of interest to the HOVRS Stockholders, and the Acquirer will be permitted a corresponding interest deduction, determined by treating the entire payment under the rules set forth in Section 1.1275-4(c)(4) of the Treasury Regulations. The Escrow Agent shall make a distribution within (30) thirty days following the end of each calendar year of all interest and other amounts earned with respect to the Escrow Cash to the HOVRS Stockholders in accordance with their pro rata portion of the Escrow Cash, as set forth on Schedule I attached to the Escrow Agreement. 9.2. Indemnification. (a) Survival of Warranties and Covenants. Except as otherwise specified herein, all representations and warranties made by Acquirer or HOVRS herein, or in any certificate, schedule or exhibit delivered pursuant hereto, shall survive the Closing and continue in full force and effect until the date that is twelve (12) months after the Closing Date (the "Termination Date"). All covenants and agreements made by the parties to this Agreement which contemplate performance following the Closing Date shall survive the Closing Date in accordance with their terms. All covenants and agreements that contemplate performance prior to the Closing Date shall not survive the Closing Date; provided, however, that if any such covenant or agreement is breached on or prior to the Closing Date, the non-breaching party shall retain all rights and remedies hereunder with respect to such breach following the Closing Date in accordance with this Agreement. The indemnification obligations provided under this Section 9 shall survive the Closing Date and remain in effect until the Termination Date, except for indemnification obligations for Damages under the FCC Subpoena as related to any HOVRS Unapproved Marketing Program (as described in Section 9.2(b)) or the FCC Letter as related to any Acquirer Unapproved Marketing Program (described in Section 9.3(b)), as to which the indemnification obligations hereunder shall remain during the Reserved Escrow Period (as defined below) in accordance with Section 9.3 hereof. (b) Indemnification by HOVRS Stockholders. Subject to the limitations set forth in this Section 9, the HOVRS Stockholders will, severally and not jointly, indemnify and hold harmless Acquirer, the Surviving Corporation and their respective officers, directors, agents, attorneys and employees, and each person, if any, who controls or may control Acquirer or the Surviving Corporation within the meaning of the Securities Act (each an "Acquirer Indemnified Party" and collectively the "Acquirer Indemnified Parties"), from and against any and all losses, costs, damages, liabilities and expenses, including without limitation legal fees, from claims, demands, actions, causes of action (collectively, "Damages") arising out of the following: 79 (i) any misrepresentation or breach of or default in connection with any of the representations, warranties, covenants and agreements given or made by HOVRS in this Agreement, the HOVRS Disclosure Schedule or any exhibit or schedule to this Agreement; and (ii) any violation or alleged violation of the Communications Act of 1934, as amended, including amendments made by the Telecommunications Act of 1996, 47 U.S.C. ss. 151 et seq., and the rules and regulations of the FCC or the National Exchange Carrier Association (collectively, the "Communications Act"), and any violation or alleged violation of any public utility or other similar statutes which specifically govern and regulate intrastate telecommunications or relay service in the various states, in each case that occur prior to the Effective Time, that is directly related to the HOVRS' Unapproved Marketing Programs that are not continued by Acquirer or the Surviving Corporation in the conduct of its business after the Effective Time, including any alleged violation of the Communications Act or other law found pursuant to that certain subpoena issued by the Enforcement Bureau of the FCC, Case No. EB-07-TC-4008, by letter to HOVRS dated August 6, 2007 (the "FCC Subpoena") as it may be related to a HOVRS Unapproved Marketing Program (the "FCC Investigation"). As used herein, "HOVRS Unapproved Marketing Programs" means (i) each marketing program that is conducted by HOVRS prior to the Closing Date that HOVRS submits in writing to Acquirer for approval at least fifteen (15) days before the Closing Date and as to which Acquirer notifies HOVRS in writing that it disapproves within fifteen (15) days of such submission by HOVRS and (ii) each marketing program that is conducted by HOVRS prior to the Closing Date that HOVRS does not submit in writing to Acquirer for approval at least fifteen (15) days before the Closing Date. The Acquirer Indemnified Parties shall act in good faith and in a commercially reasonable manner to mitigate any and all Damages. Claims against the Escrow Fund (valued as of the Closing Date) shall be the sole and exclusive remedy of the Acquirer Indemnified Parties for any Damages hereunder, provided, however, that the liability of HOVRS or the HOVRS Stockholders for Damages arising from a breach of any representation, warranty or covenant based on a criminal act or fraud shall be limited to the aggregate value of the Merger Consideration. (c) Indemnification by Acquirer. Subject to the limitations set forth in this Section 9, Acquirer hereby agrees to indemnify, defend and hold harmless the HOVRS Stockholders and their respective officers, directors, agents, attorneys and employees, and each Person who controls or may control HOVRS or any such HOVRS Stockholder (each a "HOVRS Indemnified Party" and collectively, the "HOVRS Indemnified Parties") from and against any and all Damages arising out of the following: (i) any misrepresentation or breach of or default in connection with any of the representations, warranties, covenants and agreements given or made by Acquirer in this Agreement, the Acquirer Disclosure Schedule or any exhibit or schedule to this Agreement; and (ii) any violation or alleged violation of the Communications Act, and any violation or alleged violation of any public utility or other similar statutes which specifically 80 govern and regulate intrastate telecommunications or relay service in the various states, in each case that occur prior to the Effective Time, that is directly related to the Acquirer Unapproved Marketing Programs that are not continued by Acquirer or the Surviving Corporation in the conduct of their business after the Effective Time, including any alleged violation of the Communications Act or other law found pursuant to that certain investigation by the FCC commenced by letter to Acquirer dated May 7, 2007 (the "FCC Letter"). As used herein, "Acquirer Unapproved Marketing Programs" means (i) each marketing program that is conducted by Acquirer prior to the Closing Date that Acquirer submits in writing to HOVRS for approval at least fifteen (15) days before the Closing Date and as to which HOVRS notifies Acquirer in writing that it disapproves within fifteen (15) days of such submission by Acquirer and (ii) each marketing program that is conducted by Acquirer prior to the Closing Date that Acquirer does not submit in writing to Acquirer for approval at least fifteen (15) days before the Closing Date. The HOVRS Indemnified Parties shall act in good faith and in a commercially reasonable manner to mitigate any and all Damages. The maximum amount of Damages for which Acquirer shall be liable hereunder is Five Million Dollars ($5,000,000), provided, however, that the liability of Acquirer for Damages arising from a breach of any representation, warranty or covenant based on a criminal act or fraud shall be limited to the aggregate value of the Merger Consideration. (d) Deductible for Claims. No claim for Damages shall be made under Section 9 unless the aggregate of Damages exceeds Two Hundred Fifty Thousand Dollars ($250,000) for which claims are made hereunder by the HOVRS Indemnified Parties or Acquirer Indemnified Parties, as the case may be, and it being understood and agreed that the Two Hundred Fifty Thousand Dollars ($250,000) is intended as a deductible, and none of the HOVRS Indemnifying Parties nor the Acquirer Indemnifying Parties shall be liable for the first Two Hundred Fifty Thousand Dollars ($250,000) of Damages for which the HOVRS Indemnified Parties or Acquirer Indemnified Parties, as the case may be, are entitled to indemnification; provided, however, that the foregoing deductible shall not apply to any claim for Damages arising under Section 9.2(b)(ii) or 9.2(c)(ii), which shall be subject to indemnification on a dollar-for-dollar basis without regard to the foregoing deductible. 9.3. Escrow Period; Release From Escrow. (a) Subject to the following requirements, the Escrow Fund shall be in existence as of the Effective Time and shall terminate at 5:00 p.m., Pacific Daylight Time on the Termination Date (the "Escrow Period"), and the Escrow Agent shall release and distribute the Escrow Fund within three (3) Business Days after the expiration of the Escrow Period to the HOVRS Stockholders on a pro rata basis in accordance with the percentages set forth on Schedule I to the Escrow Agreement; provided, however, that (i) 100% of the amount of any unsatisfied claims for Damages (other than in connection with the FCC Subpoena) specified in any Officer's Certificate delivered in good faith to the Escrow Agent prior to the expiration of the Escrow Period with respect to claims existing prior to the expiration of the Escrow Period (the "Unresolved Claim Amount"), shall not be released until such claims are resolved in accordance with Section 9.5 hereof, and (ii) subject to Section 9.3(b), the Reserved Escrow Amount shall be retained in the Escrow Fund and shall not be released if the FCC Investigation 81 is not Terminated or if actual Damages have been incurred in connection with the FCC Investigation but have not been resolved in accordance with Section 9.5 hereof. (b) The FCC Investigation shall be terminated or deemed terminated, if (i) the FCC has issued a notice of termination of the FCC Investigation, (ii) the FCC has not issued a notice of apparent liability or similar order seeking forfeiture in connection with the FCC Investigation, or (iii) HOVRS has not entered into a tolling agreement to extend the statute of limitations in connection with the FCC Investigation ( these conditions being individually or collectively referred to as "Terminated"). At the end of the Escrow Period, if the FCC Investigation is Terminated, the Escrow Agent shall release and distribute the Escrow Fund to the HOVRS Stockholders in accordance with Schedule I of the Escrow Agreement. At the end of the Escrow Period, if the FCC Investigation has not been Terminated, a portion of the Escrow Fund equal to the lesser of Two Million Dollars ($2,000,000) or if determinable the amount of potential Damages reasonably specified by Acquirer in consultation with the Stockholders' Agent and agreed upon by the Stockholders' Agent as the potential Damages in connection with the FCC Investigation (the "Reserved Escrow Amount") shall remain in existence until and terminate on the earlier of (i) twenty-four (24) months after the Closing Date, (ii) the date on which the FCC has issued a notice of termination of the FCC Investigation or (iii) the date on which all actual Damages incurred in connection with the FCC Investigation and resolved in accordance with Section 9.5 have been paid in full (the "Reserved Escrow Period"); provided, however, that in the event that prior to the end of the Reserved Escrow Period the FCC has issued a notice of apparent liability or similar order specifying alleged Damages, the amount of such specified Damages shall remain in the Escrow Fund until a final order resolving such matter has been issued and Acquirer has determined to pay any amount due. At the expiration of the Reserved Escrow Period (or any other period during which funds remain in the Escrow Fund pursuant to this Section 9.3(b)), the Escrow Agent shall promptly (and in any event no later than three (3) Business Days following the date of expiration) release all property remaining in the Escrow Fund to the HOVRS Stockholders in accordance with Schedule I of the Escrow Agreement. (c) No property held in the Escrow Fund or any beneficial interest therein may be pledged, sold, assigned or transferred, including by operation of law, by any HOVRS Stockholder or be taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such stockholder, prior to the delivery to such stockholder of such stockholder's allocable portion of the Escrow Fund by the Escrow Agent as provided herein. 9.4. Claims Upon Escrow Fund. Upon receipt by the Escrow Agent on or before the expiration of Escrow Period or in connection with the FCC Subpoena, on or before the expiration of the Reserved Escrow Period, of a certificate signed by any executive officer of Acquirer (an "Officer's Certificate") stating that Damages have been incurred and are subject to the indemnification obligations of the HOVRS Stockholders, and specifying in reasonable detail the individual items of such Damages included in the amount so stated, the date each such item was paid, or properly accrued or arose, and the nature of the misrepresentation, breach of warranty, covenant or claim to which such item is related, the Escrow Agent shall, subject to the provisions of Section 9.5, distribute to Acquirer out of the Escrow Fund, as promptly as practicable, property held in the Escrow Fund having a value equal to such Damages. 82 9.5. Objections to Claims. (a) At the time of delivery of any Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's Certificate shall be delivered to the Stockholders' Agent. For a period of thirty (30) days after such delivery, the Escrow Agent shall make no delivery of property from the Escrow Fund to Acquirer unless the Escrow Agent shall have received written authorization from the Stockholders' Agent to make such delivery. After the expiration of such 30-day period, the Escrow Agent shall make delivery of property from the Escrow Fund to Acquirer in accordance with Section 9.4 hereof, provided that no such payment or delivery may be made if the Stockholders' Agent shall object in a written statement to the claim made in the Officer's Certificate (the "Objection Notice"), and such Objection Notice shall have been delivered to the Escrow Agent and to Acquirer prior to the expiration of such 30-day period. (b) In case the Stockholders' Agent shall have delivered an Objection Notice, Acquirer shall have thirty (30) days to respond in a written statement to the objection of the Stockholders' Agent. If after such 30-day period there remains a dispute as to any claims, the Stockholders' Agent and Acquirer shall attempt in good faith for sixty (60) days from the Stockholders' Agent's delivery of the Objection Notice to agree upon the rights of the respective parties with respect to each of such claims. If the Stockholders' Agent and Acquirer should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and shall distribute property from the Escrow Fund to Acquirer in accordance with Section 9.4. 9.6. Claims by HOVRS Indemnitees. (a) Subject to the provisions of this Section 9, upon receipt by Acquirer of a certificate signed by the Stockholders' Agent (an "Agent Certificate") stating that Damages exist with respect to the indemnification obligations of Acquirer set forth in Section 9.2(c) and specifying in reasonable detail the individual items of such Damages included in the amount so stated, the date each item was paid, or properly accrued or arose, and the nature of the misrepresentation, breach of warranty, covenant or other claim to which such item is related, Acquirer shall, subject to the provisions of this Section 9, deliver a sum of cash equal to such Damages to the Stockholders' Agent as promptly as practicable. (b) Acquirer shall have thirty (30) days after delivery of an Agent Certificate to object to any claim or claims made by such Agent Certificate in a written statement delivered to Stockholders' Agent. In case Acquirer shall so object in writing to any claim or claims made by the Stockholders' Agent in the Agent Certificate, the Stockholders Agent shall have thirty (30) days to respond in a written statement to the objection of Acquirer ("Acquirer Objection Notice"). If after such 30-day period there remains a dispute as to any claims, the Stockholders' Agent and Acquirer shall attempt in good faith for sixty (60) days from the Acquirer's delivery of the Acquirer Objection Notice to agree upon the rights of the respective parties with respect to each of such claims. If the Stockholders' Agent and Acquirer should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties. Acquirer shall, if agreed in such memorandum, make payment for claims or other disposition as agreed in such memorandum and such performance shall satisfy all of Acquirer's obligations as to such claim. 83 9.7. Resolution of Conflicts and Arbitration. (a) If no agreement can be reached after good faith negotiation between the parties pursuant to Sections 9.5 or 9.6, either Acquirer or the Stockholders' Agent may, by written notice to the other, demand arbitration of the matter unless the amount of the Damages at issue is in pending litigation with a third party or is subject to a pending investigation by any Governmental Entity, in which event arbitration shall not be commenced until such amount is ascertained or both parties agree to arbitration; and in either such event the matter shall be settled by arbitration conducted by one arbitrator. Acquirer and the Stockholders' Agent shall agree on the arbitrator, provided that if Acquirer and the Stockholders' Agent cannot agree on such arbitrator, either Acquirer or Stockholders' Agent can request that Judicial Arbitration and Mediation Services ("JAMS") select the arbitrator. The arbitrator shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys' fees and costs, to the same extent as a court of competent law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification. The decision of the arbitrator shall be written, shall be in accordance with Applicable Law and with this Agreement, and shall be supported by written findings of fact and conclusion of law which shall set forth the basis for the decision of the arbitrator. The decision of the arbitrator as to the validity and amount of any claim in such Officer's Certificate or Agent Certificate shall be binding and conclusive upon the parties to this Agreement, and notwithstanding anything in Section hereof, the Escrow Agent and the parties shall be entitled to act in accordance with such decision and the Escrow Agent shall be entitled to make or withhold payments out of the Escrow Fund in accordance therewith. (b) Judgment upon any award rendered by the arbitrator may be entered in any federal or state court of competent jurisdiction located in the State of Calfornia. Any such arbitration shall be held in San Francisco, California under the commercial rules then in effect of JAMS. The non-prevailing party to an arbitration shall pay its own expenses, the fees of the arbitrator, any administrative fee of JAMS, and the expenses, including attorneys' fees and costs, reasonably incurred by the other party to the arbitration. For purposes of this Section 9, in any arbitration hereunder in which any claim or the amount thereof stated in the Officer's Certificate or Agent Certificate, as the case may be, is at issue, the party seeking indemnification shall be deemed to be the non-prevailing party unless the arbitrators award the party seeking indemnification more than one-half (1/2) of the amount in dispute, plus any amounts not in dispute; otherwise, the Person against whom indemnification is sought shall be deemed to be the non-prevailing party. 9.8. Stockholders' Agent. (a) The approval by the HOVRS Stockholders of the principal terms of this Agreement and the Merger pursuant to the Written Consent shall automatically and without any further action on the part of any HOVRS Stockholder constitute the irrevocable appointment of Bill M. McDonagh, as the agent, proxy and attorney-in-fact for each of the HOVRS 84 Stockholders with respect to matters arising after the effectiveness of the Merger and the other matters set forth in this Agreement and in the Escrow Agreement to be performed by the Stockholders' Agent. (b) Without limiting Section 9.8(a), the Stockholders' Agent is hereby irrevocably appointed the agent, proxy and attorney-in-fact for each of the HOVRS Stockholders for all purposes of this Agreement and the Escrow Agreement, including without limitation, full power and authority on such HOVRS Stockholders' behalf (i) to give and receive notices and communications, (ii) to authorize delivery to Acquirer of property from the Escrow Fund in satisfaction of claims by Acquirer, (iii) to object to such deliveries, (iv) to make claims on behalf of the HOVRS Stockholders pursuant to Section 9, (v) to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, (vi) to execute any instrument or document that the Stockholders' Agent may determine is necessary or desirable in the exercise of his authority under this Section 9.8 and the Escrow Agreement, and (vii) to take all actions necessary or appropriate in the judgment of the Stockholders' Agent for the accomplishment of the foregoing. A vacancy in the position of Stockholders' Agent may be filled by the holders of a majority in interest of the Escrow Fund. No bond shall be required of the Stockholders' Agent, and the Stockholders' Agent shall receive no compensation for his services. Notices or communications to or from the Stockholders' Agent shall constitute notice to or from each of the HOVRS Stockholders. (c) The Stockholders' Agent shall not be liable for any act done or omitted hereunder as Stockholder' Agent while acting in good faith and in the exercise of reasonable judgment and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith. The Stockholders' Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the Escrow Agreement, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on behalf of any HOVRS Stockholder shall otherwise exist against the Stockholders' Agent. The HOVRS Stockholders shall severally indemnify and hold the Stockholders' Agent harmless against any loss, liability or expense incurred without gross negligence or bad faith on the part of the Stockholders' Agent and arising out of or in connection with the acceptance or administration of his duties hereunder. (d) At the Closing, the Holdback Cash shall be deposited into an interest bearing account held in the name of the Stockholders' Agent for the benefit of the HOVRS Stockholders. The Holdback Fund may be used at the discretion of the Stockholders' Agent solely for reasonable and documented expenses incurred in the administration of his duties under this Section 9.8 and the Escrow Agreement. As soon as practicable following the end of the Escrow Period, all funds remaining in the Holdback Fund shall be released and distributed to the HOVRS Stockholders on a pro rata basis in accordance with the percentages set forth on Schedule I to the Escrow Agreement; provided, however, expenses projected to be incurred in the reasonable determination of the Stockholders' Agent for the administration of his duties in connection with claims unresolved as of the expiration of the Escrow Period may be retained in the Holdback Fund for such purpose following the expiration of the Escrow Period. In the event the Holdback Fund is insufficient to satisfy the reasonable out-of-pocket expenses (including attorneys' and accountants' fees and expenses) incurred by the Stockholders' Agent in serving in that capacity (the "Expenses"), the Stockholder's Agent shall have the right to recover from the 85 Escrow Fund, prior to any distribution to the HOVRS Stockholders (but after any disbursement from the Escrow Fund to the Escrow Agent pursuant to terms and conditions of the Escrow Agreement), the Stockholder's Agent's Expenses. In the event the Escrow Fund is insufficient to satisfy the Expenses, then each HOVRS Stockholder will be obligated to pay a percentage of the Expenses in excess of the Escrow Fund proportionate to such HOVRS Stockholder's allocable shares of the Escrow Fund. (e) The Stockholders' Agent shall have reasonable access to information about Acquirer and the reasonable assistance of Acquirer's officers and employees for purposes of performing his duties and exercising his rights hereunder, provided that the Stockholders' Agent shall treat confidentially and not disclose any nonpublic information from or about the Surviving Corporation or the Acquirer to anyone (except on a need to know basis to individuals who agree to treat such information confidentially). (f) Acquirer acknowledges that the Stockholders' Agent may have a conflict of interest with respect to its duties as Stockholders' Agent, and in such regard the Stockholders' Agent has informed Acquirer that he will act in the best interests of the HOVRS Stockholders. 9.9. Actions of the Stockholders' Agent. A decision, act, consent or instruction of the Stockholders' Agent shall constitute a decision of all HOVRS Stockholders and shall be final, binding and conclusive upon each such HOVRS Stockholder, and the Escrow Agent and Acquirer may rely upon any decision, act, consent or instruction of the Stockholders' Agent as being the decision, act, consent or instruction of each and every such HOVRS Stockholder. The Escrow Agent and Acquirer are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of the Stockholders' Agent. 9.10. Third-Party Claims. In the event Acquirer becomes aware of a third-party claim or other event that Acquirer believes may result in a demand against the Escrow Fund, Acquirer shall promptly notify the Stockholders' Agent of such claim, and the Stockholders' Agent shall be entitled, at the expense of the HOVRS Stockholders, to participate in any defense of such claim or resolution of such event. Acquirer shall not have the right to settle any such claim or to agree to any such resolution without the prior consent of the Stockholders' Agent, with consent shall not be unreasonably withheld, conditioned or delayed. In the event that the Stockholders' Agent has consented to any such settlement, the Stockholders' Agent shall have no power or authority to object under any provision of Section 9 to the amount of any claim by Acquirer against the Escrow Fund for indemnity with respect to such settlement. 9.11. Tax Returns. Acquirer shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax Returns for HOVRS for any taxable periods ending on or prior to the Closing Date or attributable to the period up to and including the Closing Date with respect to a taxable period that does not end on the Closing Date. Tax Returns filed pursuant to this Section 9.11 shall be prepared in a manner consistent with prior tax accounting practices and methods used by HOVRS (except to the extent counsel for the Acquirer determines there is no reasonable basis in law therefor or determines that such Tax Return cannot be so prepared and filed or an item so reported without being subject to penalties). In the event that the Taxes reflected on such Tax Returns would form the basis for a claim of indemnification pursuant to Section 9.2, the 86 Acquirer shall provide the portion of such Tax Returns relevant to HOVRS to the Stockholders' Agent for review and comment at least thirty (30) days prior to the due date for filing such Tax Returns, and shall not file any such Tax Returns without the consent of the Stockholders' Agent, which consent shall not be unreasonably withheld, conditioned or delayed. 9.12. Tax Treatment of Indemnification Payments. The parties hereto agree to treat any indemnity payment made pursuant to this Section 9 as an adjustment to the Merger Consideration for federal, state, local and foreign income tax purposes unless a contrary treatment is required under applicable law. 10. General Provisions. 10.1. Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) upon receipt if delivered personally; (ii) three (3) Business Days after being mailed by registered or certified mail, postage prepaid, return receipt requested; (iii) one (1) Business Day after it is sent by commercial overnight courier service; or (iv) upon transmission if sent via facsimile with confirmation of receipt to the parties at the following address (or at such other address for a party as shall be specified upon like notice): (a) if to Acquirer to: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Attention: Daniel R. Luis Fax: (201) 996-1772 Tel: (201) 996-1717 with a copy to: Chadbourne & Parke LLP 1200 New Hampshire Avenue, N.W. Washington, DC 20036 Attention: Dana Frix Fax: (973) 974-679 Tel: (202) 974-5691 (b) if to HOVRS to: Hands On Video Relay Services, Inc. 595 Menlo Drive Rocklin, CA 95765-3708 Attention: Edmond Routhier Fax: (916) 435-0624 Tel: (916) 435-3337 87 with a copy to: Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, CA 94105 Attention: Richard Smith Fax: (415) 773-5759 Tel: (415) 773-5830 10.2. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 10.3. Entire Agreement; Nonassignability; Parties in Interest. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the exhibits and schedules hereto, including the HOVRS Disclosure Schedule and the Acquirer Disclosure Schedule: (a) together constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof except for the Confidentiality Agreement, which shall continue in full force and effect, and shall survive any termination of this Agreement or the Closing, in accordance with its terms; and (b) are not intended to confer upon any other Person any rights or remedies hereunder and shall not be assigned by operation of law or otherwise without the written consent of the other party. 10.4. Severability. In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. 10.5. Remedies Cumulative. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. 10.6. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of Delaware, without regard to conflicts of law principles. 10.7. Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that 88 ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 10.8. Enforcement. Each of the parties hereto agrees that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. Subject to the procedures set forth in Section 9 herein, each of the parties hereto (a) consents to submit itself exclusively to the personal jurisdiction of any federal or state court located in the State of California, wherein venue shall be exclusive, in the event that any dispute arises out of this Agreement or out of any transaction contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any such court, and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a federal or state court sitting in the State of California. 10.9. Amendment; Waiver. Any amendment or waiver of any of the terms or conditions of this Agreement must be in writing and must be duly executed by or on behalf of the party to be charged with such waiver. The failure of a party to exercise any of its rights hereunder or to insist upon strict adherence to any term or condition hereof on any one occasion shall not be construed as a waiver or deprive that party of the right thereafter to insist upon strict adherence to the terms and conditions of this Agreement at a later date. Further, no waiver of any of the terms and conditions of this Agreement shall be deemed to or shall constitute a waiver of any other term of condition hereof (whether or not similar). 10.10. Attorneys' Fees. If any court proceeding is brought in connection with this Agreement, or any document, agreement, instrument or certificate delivered under or pursuant to this Agreement, the prevailing party in such proceeding (whether at trial or on appeal) shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incidental to any such proceeding. The term "prevailing party" as used herein shall mean the party in whose favor a final judgment or award is entered in any such judicial proceeding; provided, however, that if such proceeding is resolved prior to a final judgment or award on the merits, the party in whose favor the proceeding is settled may by motion may apply to the court for an award of the aforementioned costs, fees and expenses, and may take judgment therefor. 10.11. Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. [Signatures on following page] 89 IN WITNESS WHEREOF, Acquirer, HOVRS Merger Sub, HOVRS and the Stockholders' Agent have caused this Agreement to be executed and delivered by each of them or their respective officers thereunto duly authorized, all as of the date first written above. GOAMERICA, INC. By: /s/ Daniel R. Luis ----------------------------------------------- Daniel R. Luis President and Chief Executive Officer HOVRS ACQUISITION CORPORATION By: /s/ Daniel R. Luis ----------------------------------------------- Daniel R. Luis President and Chief Executive Officer HANDS ON VIDEO RELAY SERVICES, INC. By: /s/ Edmond Routhier ----------------------------------------------- Edmond Routhier President BILL M. McDONAGH, as Stockholders' Agent /s/ Bill M. McDonagh -------------------------------------------------- Bill M. McDonagh [Signature page to Agreement and Plan of Merger] 90 [GoAmerica letterhead] September 17, 2007 Mr. Edmond Routhier President Hands On Video Relay Services, Inc. 590 Menlo Drive Rocklin, CA 95765-3708 Re: Agreement with Regard to HOVRS Unvested Options (this "Letter Agreement") -------------------------------------------------------------------- Dear Ed: Reference is made to Section 2.6(d)(ii) of the Agreement and Plan of Merger dated September 12, 2007 (the "Merger Agreement") by and among GoAmerica, Inc., a Delaware corporation ("GoAmerica"), the HOVRS Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of GoAmerica, Hands On Video Relay Services, Inc., a Delaware corporation ("Hands On"), and Bill M. McDonagh as stockholders' agent, which provides that at the Effective Time GoAmerica shall assume each HOVRS Stock Option that is outstanding and not vested in accordance with its terms immediately prior to the Closing (the "HOVRS Unvested Options") together with the option agreement representing each such HOVRS Stock Option (each, an "Assumed HOVRS Option"). Capitalized terms used but not defined herein shall have the meaning set forth in the Merger Agreement. Notwithstanding anything to the contrary set forth in the Merger Agreement or the HOVRS Disclosure Schedule, including Section 3.5(b) of the HOVRS Disclosure Schedule, Hands On hereby agrees and acknowledges that, as of the Effective Time, the maximum number of outstanding HOVRS Unvested Options that GoAmerica will be required to assume under the terms of Section 2.6(d)(ii) of the Merger Agreement is two hundred twenty thousand, four hundred and ninety eight (220,498) shares as Assumed HOVRS Options (the "Maximum Assumed HOVRS Options"), and that in the event there is a greater number of HOVRS Unvested Options outstanding as of the Closing, Hands On hereby agrees to accelerate the vesting of such excess HOVRS Unvested Options so that such excess HOVRS Unvested Options shall for all purposes be HOVRS Vested Options under the provisions of Section 2.6(d)(i) of the Merger Agreement; provided, however, the foregoing shall in no way alter or amend the provisions of Section 5.1(d)(iii) which provides that, with the permission of Acquirer, HOVRS may grant options to purchase HOVRS Common Stock following the date of the Merger Agreement pursuant to the HOVRS Option Plan or otherwise to persons retained by HOVRS in the ordinary course of business as employees after the date of the Merger Agreement, which options shall not be counted toward the Maximum Assumed HOVRS Options and be treated as Assumed HOVRS Options for all purposes under the Merger Agreement. Except as expressly set forth above in this Letter Agreement, the Merger Agreement shall remain unmodified and in full force and effect. This Letter Agreement shall be governed by and construed in accordance with the laws of Delaware, without regard to conflicts of law principles. If the foregoing reflects our agreement, I would be grateful if you would acknowledge below. Very truly yours, GOAMERICA, INC. By: /s/ Daniel R. Luis --------------------------------------- Daniel R. Luis, Chief Executive Officer HANDS ON VIDEO RELAY SERVICES, INC. By: /s/ Edmond Routhier -------------------------- Edmond Routhier, President Date: September 17, 2007 EX-10.2 4 e28555ex10_2.txt AGREEMENT Exhibit 10.2 Execution Version SUPPORT AND LOCK-UP AGREEMENT This SUPPORT AND LOCK-UP AGREEMENT (this "Agreement") is entered into as of September 12, 2007, by and among GoAmerica, Inc., a Delaware corporation (the "Acquirer"), and the stockholders of Hands On Video Relay Services, Inc., a Delaware corporation ("HOVRS"), identified on the signature pages hereto (each a "Stockholder," and collectively, the "Stockholders"). RECITALS A. Reference is hereby made to that certain Agreement and Plan of Merger dated as of September 12, 2007 (as it may be amended from time to time, the "Merger Agreement"), by and among Acquirer, HOVRS Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Acquirer ("HOVRS Merger Sub"), and HOVRS, pursuant to which, and subject to the terms and conditions whereof, (i) HOVRS Merger Sub will merge with and into HOVRS and the separate corporate existence of HOVRS Merger Sub will cease, (ii) each share of HOVRS Common Stock will be converted into the right to receive the Common Merger Consideration, and (iii) each share HOVRS Preferred Stock will be converted into the right to receive the Preferred Merger Consideration (such transactions are referred to herein as the "Merger"). B. As a condition to the willingness of Acquirer to enter into the Merger Agreement, Acquirer has requested that the other parties hereto enter into this Agreement, and such parties are willing to enter into this Agreement for such purpose. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises herein contained, and intending to be legally bound, the parties hereto agree as follows: 1. Defined Terms. Capitalized terms used herein without definition shall have the same meanings as they are given in the Merger Agreement. As used herein, the term "Shares" shall mean, with respect to each Stockholder, all shares of HOVRS Common Stock and HOVRS Preferred Stock set forth opposite the name of such Stockholder on Schedule I hereto, and any other voting securities of HOVRS, whether issued before or after the date of this Agreement, that such Stockholder purchases or with respect to which such Stockholder otherwise acquires record or beneficial ownership after the date of this Agreement. 2. Conduct of Stockholders Pending Closing. Until the time specified in paragraph 4 below, and except for all agreements and obligations of the Stockholders hereunder and as contemplated by the Merger Agreement, unless authorized in advance by the HOVRS Board of Directors and by the Acquirer Board of Directors, each Stockholder, solely in its capacity as a stockholder of HOVRS, agrees (a) not to sell or otherwise transfer any of its Shares or any economic, voting or other direct or indirect interest therein, (b) not to grant a proxy or enter into any voting agreement concerning any of the Shares, and (c) at any meeting of the stockholders of HOVRS, to vote (or cause to be voted) the Shares against (x) any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization or recapitalization of or by HOVRS or any of its subsidiaries (except in connection with the Merger), or (y) any amendment of HOVRS's certificate of incorporation or bylaws or other proposal or transaction involving HOVRS or any of its subsidiaries (except in connection with the Merger), for the purpose of impeding, frustrating, preventing or nullifying the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement. 3. Representations and Warranties. Each of the Stockholders hereby represents and warrants to HOVRS and Acquirer that: (a) such Stockholder has the power and authority to enter into and deliver this Agreement and perform its obligations under this Agreement and, such Stockholder's execution and delivery of this Agreement and performance of its obligations hereunder have been duly and validly authorized by any necessary corporate or similar proceedings on the part of such Stockholder, (b) this Agreement is binding on such Stockholder and enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally or by general equitable principles relating to enforceability, (c) the execution and delivery of this Agreement and the performance by such Stockholder of its obligations hereunder do not require the authorization, consent, approval, license, exemption or other action by, or filing with, any third party or governmental authority, do not violate applicable law or conflict with or result in a breach of any of such Stockholder's organizational documents or contractual obligations, (d) such Stockholder owns the Shares that are identified as to such Stockholder on Schedule I to this Agreement and that such Shares are free and clear of any liens, claims or encumbrances of any kind apart from such Stockholder's obligations under this Agreement, and (e) other than the Shares that are identified as to such Stockholder on Schedule I to this Agreement, such Stockholder does not own (beneficially or of record) any voting securities of HOVRS. 4. Termination. The obligations of the Stockholders under this Agreement shall terminate upon the earliest to occur of any of the following: (i) the Merger Agreement is amended or modified or provisions waived, without the prior written consent of the Stockholders, in a manner that is materially adverse to the Stockholders, it being understood that any amendment, modification, supplement or waiver that would reduce the amount or form of the Merger Consideration payable in the Merger or extend the Outside Date shall be deemed to be materially adverse to the Stockholders, (ii) the Merger Agreement, as it may be amended or modified from time to time, is terminated in accordance with its terms, (iii) the consummation of the Merger, or (iv) the written agreement to terminate such provisions executed by each of the parties. 5. Notice. All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) upon receipt if delivered personally; (ii) three business days after being mailed by registered or certified mail, postage prepaid, return receipt requested; (iii) one business day after it is sent by commercial overnight courier service; or (iv) upon transmission if sent via facsimile with confirmation of receipt to the parties at the following address (or at such other address for a party as shall be specified upon like notice): -2- if to Acquirer to: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Attention: Daniel R. Luis Fax: (201) 996-1772 Tel: (201) 996-1717 with a copy to: Chadbourne & Parke LLP 1200 New Hampshire Avenue, N.W. Washington, DC 20036 Attention: Dana Frix Fax: (973) 974-679 Tel: (202) 974-5691 If to any Stockholder, to the address set forth below such Stockholder's name on Schedule I hereto. with a copy to: Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, CA 94105 Attention: Richard Smith Fax: (415) 773-5759 Tel: (415) 773-5830 6. Entire Agreement. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. 7. No Other Rights. Nothing in this Agreement shall be considered to give any person other than the parties any legal or equitable right, claim or remedy under or in respect of this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the sole and exclusive benefit of the parties and their respective successors and permitted assigns. 8. Equitable Relief. Each of the parties hereto acknowledges that a breach by it of any provision contained in this Agreement will cause the other parties to sustain damage for -3- which they would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach, the aggrieved party shall be entitled to the remedy of specific performance of such agreement and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 9. Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement which is held invalid or unenforceable only in part shall remain in full force and effect to the extent not held invalid or unenforceable. 10. Headings. All references in this Agreement to "paragraph" or "paragraphs" refer to the corresponding numbered paragraph or paragraphs of this Agreement. All words used in this Agreement shall be construed to be of the appropriate gender or number as the context requires. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original copy of this Agreement and all of which, when taken together, shall be considered to constitute one and the same agreement. 12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to that state's conflicts of laws principles. 13. Amendments; Waivers. Any amendment or modification of or to any provision of this Agreement, and any consent to any departure of any party from the terms of any provision of this Agreement, shall be effective only if it is made or given in writing and signed by each party. Notwithstanding the foregoing sentence, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by any party entitled to the benefits thereof only by a written instrument signed by such party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. 14. Successors and Assigns. This Agreement shall apply to, be binding in all respects upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign any of its rights under this Agreement without the prior written consent of each of the other parties. [Signatures on following pages] -4- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. GOAMERICA, INC. By: /s/ Daniel R. Luis -------------------------------------------- Daniel R. Luis President and Chief Executive Officer STOCKHOLDERS: /s/ Ronald Obray -------------------------------------------- Ronald Obray /s/ Denise Obray -------------------------------------------- Denise Obray /s/ Edmond Routhier -------------------------------------------- Edmond Routhier Caymus Investment Group II, LLC By: /s/ Edmond Routhier ------------------------------------------- Its: Managing Member ------------------------------------------- Caymus Obray, LLC By: /s/ Edmond Routhier ------------------------------------------- Its: Managing Member ------------------------------------------- [Signature page to Support & Lock-Up Agreement] -5- Schedule I
- ------------------------------------------------------------------------------------------------------------- Name and Address of Stockholder Common Stock Series A Preferred ------------------------------- ------------ ------------------ - ------------------------------------------------------------------------------------------------------------- Denise Obray 2,464,921 132 Lincoln Way Auburn, CA 95603 Facsimile: (530) 823-0897 - ------------------------------------------------------------------------------------------------------------- Ronald Obray 2,288,222 132 Lincoln Way Auburn, CA 95603 Facsimile: (530) 823-0897 - ------------------------------------------------------------------------------------------------------------- Edmond Routhier 1,094,455 525 Michael Dr. Sonoma, CA 95476 Facsimile: (707) 221-1471 - ------------------------------------------------------------------------------------------------------------- Caymus Investment Group II, LLC 476,700 1,724,138 2800 Leavenworth, Ste. #70 San Francisco, CA 94133 Facsimile: - ------------------------------------------------------------------------------------------------------------- Caymus Obray, LLC 540,157 2800 Leavenworth, Ste. #70 San Francisco, CA 94133 Facsimile: - ------------------------------------------------------------------------------------------------------------- TOTAL 6,864,455 1,724,138 - -------------------------------------------------------------------------------------------------------------
EX-10.3 5 e28555ex10_3.txt PURCHASE AGREEMENT Exhibit 10.3 Execution Version GOAMERICA, INC. AMENDED AND RESTATED STOCK PURCHASE AGREEMENT 7,446,809 SHARES OF SERIES A PREFERRED STOCK September 12, 2007 SCHEDULES AND EXHIBITS SCHEDULE A Schedule of Investors SCHEDULE B Schedule of Exceptions SCHEDULE C Operating Subsidiaries SCHEDULE D Insurance EXHIBIT A-1 Form of First Restated Certificate EXHIBIT A-2 Form of Second Restated Certificate EXHIBIT B-1 Investor Rights Agreement EXHIBIT B-2 Form of Amended and Restated Investor Rights Agreement EXHIBIT B-3 Form of Second Amended and Restated Investor Rights Agreement EXHIBIT C Form of Opinion of Company Counsel EXHIBIT D Compliance Certificate AMENDED AND RESTATED SERIES A PREFERRED STOCK PURCHASE AGREEMENT THIS AMENDED AND RESTATED SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as of September 12, 2007, by and between GoAmerica, Inc., a Delaware corporation (the "Company"), and the investors listed on Schedule A hereto (each, an "Investor" and collectively, the "Investors"), and amends and restates in its entirety that certain Series A Preferred Stock Purchase Agreement dated as of August 1, 2007 among the parties hereto. THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. 1.1 Sale and Issuance of Series A Preferred Stock. (a) The Board of Directors of the Company has approved, and upon receipt of all necessary stockholder approvals, the Company shall file with the Secretary of State of the State of Delaware (i) on or before the Closing (as defined below), an Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit A-1 (the "First Restated Certificate"), and (ii) on or before the Subsequent Closing (as defined below), an Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit A-2 (the "Second Restated Certificate"); provided that, if the Closing and the Subsequent Closing are substantially simultaneous, the Company shall file only the Second Restated Certificate. (b) The Board of Directors of the Company has authorized, subject to the receipt of all necessary stockholder approvals, (i) the sale and issuance to the Investors of the Series A Preferred Stock (as defined below) and (ii) the issuance of the shares of Common Stock (as defined below) to be issued upon conversion of the Series A Preferred Stock (the "Conversion Shares"). The Series A Preferred Stock and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the First Restated Certificate or the Second Restated Certificate, as applicable. (c) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Closing (as defined below) and the Company agrees to sell and issue to each Investor at the Closing, that number of shares of the Company's Series A Preferred Stock set forth opposite each Investor's name on Part I of Schedule A hereto for a purchase price of $5.17 per share (the "Per Share Price"). (d) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Subsequent Closing (as defined below) and the Company agrees to sell and issue to each Investor at the Subsequent Closing, that number of shares of the Company's Series A Preferred Stock set forth opposite each Investor's name on Part II of Schedule A hereto for a purchase price of the Per Share Price. 1.2 Closing and Subsequent Closing. Assuming that all other conditions of Closing have been satisfied or waived, the purchase and sale of the Series A Preferred Stock to be sold at the Closing pursuant to Section 1.1(c) shall take place at the offices -1- of Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068 concurrently with the consummation of the closing provided for in that certain asset purchase agreement (the "Asset Purchase Agreement") dated as of August 1, 2007, by and between GoAmerica Relay Services Corp. (formerly Acquisition 1 Corp.) and MCI Communications Services, Inc., providing for the Company's purchase of a telecommunications relay services business (the "TRS Business"), or at such other time and place as the Company and Investors acquiring in the aggregate more than half of the shares of Series A Preferred Stock sold pursuant hereto mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to each Investor a certificate representing the Series A Preferred Stock that such Investor is purchasing against payment of the purchase price therefor by wire transfer of immediately available funds to an account designated by the Company. Assuming that all conditions of the Subsequent Closing have been satisfied or waived, the purchase and sale of the Series A Preferred Stock to take place at the Subsequent Closing shall take place at the offices of Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068 concurrently with the consummation of the closing provided for in that certain merger agreement (the "Merger Agreement") of even date herewith, by and between the Company, HOVRS Acquisition Corporation and Hands On Video Relay Services, Inc. ("HOVRS"), providing for the Company's acquisition of HOVRS, or at such other time and place as the Company and Investors acquiring in the aggregate more than half of the shares of Series A Preferred Stock sold pursuant hereto mutually agree upon orally or in writing (which time and place are designated as the "Subsequent Closing"). At the Subsequent Closing, the Company shall deliver to each Investor a certificate representing the Series A Preferred Stock that such Investor is purchasing at the Subsequent Closing against payment of the purchase price therefor by wire transfer of immediately available funds to an account designated by the Company. 1.3 Use of Proceeds. The Company shall use the proceeds from the sale of the Series A Preferred Stock to the Investors at the Closing (a) to fund the cash purchase price payable by the Company pursuant to the Asset Purchase Agreement, (b) for general working capital purposes and (c) for the repayment of certain of the Company's existing secured debt. The Company shall use the proceeds from the sale of Series A Preferred Stock at the Subsequent Closing (a) to fund the cash merger consideration payable by the Company pursuant to the Merger Agreement and (b) for general working capital purposes. 1.4 Transaction Fee. Concurrently with the Closing, the Company shall pay the Investors by wire transfer of immediately available funds (to the account or accounts designated by the Investors prior to Closing) an aggregate transaction fee of $960,000. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as set forth in the SEC Reports (as defined below) or on the Schedule of Exceptions (the "Schedule of Exceptions") furnished to each Investor prior to execution hereof and attached hereto as Schedule B, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of -2- Delaware. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse change in the assets, liabilities, customer or supplier relationships, financial condition, operations or results of operations of the Company and the TRS Business taken as a whole, provided, however, in each case, not including any change that (A) is generally applicable to the U.S. economy, (B) is generally applicable to Internet protocol data and voice providers, (C) results from the execution of the Asset Purchase Agreement, the announcement of the Asset Purchase Agreement or the consummation of the transactions contemplated by the Asset Purchase Agreement or (D) relates to changes in generally accepted accounting principles generally applicable to companies serving as Internet protocol data and voice providers occurring after the date of the Asset Purchase Agreement (a "Material Adverse Effect"). 2.2 Capitalization and Voting Rights. (a) Authorized Stock. The authorized capital of the Company consists of: (i) Preferred Stock. 4,351,943 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), and, after the filing of the First Restated Certificate and/or the Second Restated Certificate, 11,671,180 shares of Preferred Stock, 290,135 of which are issued and outstanding as of the date hereof (all of which were issued and outstanding pursuant to that certain $1,500,000 Stock Purchase Agreement dated as of August 1, 2007 (the "$1.5 million Stock Purchase Agreement"), by and among the Company and the Investors). Upon filing the First Restated Certificate with the Secretary of State of the State of Delaware, 6,769,826 shares of Preferred Stock shall be designated Series A Preferred Stock and upon filing the Second Restated Certificate with the Secretary of State of the State of Delaware, 7,736,944 shares of Preferred Stock shall be designated Series A Preferred Stock (the "Series A Preferred Stock"), all of which may be sold pursuant to this Agreement (other than the Series A Preferred Stock issued on August 1, 2007 pursuant to the $1.5 million Stock Purchase Agreement). As of the date of the Subsequent Closing, the only shares of Series A Preferred Stock issued and outstanding are (A) the shares issued to the Investors pursuant hereto on the date of the Closing, and (B) the shares issued to the Investors pursuant to the $1.5 million Stock Purchase Agreement; and (ii) Common Stock. 200,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), and, after the filing of the First Restated Certificate and/or the Second Restated Certificate, 50,000,000 shares of Common Stock, of which 2,486,668 shares are issued and outstanding as of the date hereof, and 24,063 shares are held in treasury as of the date hereof. (b) Valid Issuance. The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (c) Rights to Acquire. Except for (i) options to purchase an aggregate of 83,191 shares of Common Stock granted and outstanding under the GoAmerica Communications Corp. 1999 Stock Option Plan, the -3- GoAmerica, Inc. 1999 Stock Plan, the GoAmerica, Inc. Employee Stock Purchase Plan and the GoAmerica, Inc. 2005 Equity Compensation Plan (collectively, the "Company Option Plans") and (ii) warrants to purchase an aggregate of 84,320 shares of Common Stock granted and outstanding, there are not outstanding any options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock as of the date hereof. The Company has reserved a total of 272,478 shares of Common Stock for issuance under the Company Option Plans (including the shares described above). (d) Voting of Shares. Other than the Investor Rights Agreement entered into by the Company and the Investors on August 1, 2007 in connection with the $1.5 million Stock Purchase Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement to be entered into in connection with the Closing and/or Subsequent Closing hereunder, the Company is not a party or subject to any agreement or understanding and, to the Company's knowledge, except for the voting agreements identified on Schedule 2.2(d) hereof, there is no agreement or understanding between any persons and/or entities which affects or relates to the voting or giving of written consents with respect to any security of the Company. 2.3 Operating Subsidiaries. (a) Schedule C hereto sets forth the name of each operating subsidiary of the Company (each, an "Operating Subsidiary" and collectively, the "Operating Subsidiaries") and the jurisdiction in which such Operating Subsidiary is incorporated. Each Operating Subsidiary is a duly organized and validly existing corporation or other entity and has all requisite corporate power and authority to carry on its business as now conducted. Each Operating Subsidiary is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a Material Adverse Effect. (b) All of the outstanding shares of capital stock of each Operating Subsidiary of the Company are duly and validly authorized and issued, fully paid and non-assessable and are owned directly by the Company, free and clear of all liens, encumbrances, preemptive rights, subscription rights, other rights to purchase, voting or transfer restrictions and other claims, except as set forth in or contemplated by the Credit Agreement, the First Lien Debt Commitment Letter and the Second Lien Debt Commitment Letter. There are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any equity interests of any Operating Subsidiary. (c) Each subsidiary of the Company that is not an Operating Subsidiary (i) has consolidated gross revenues for the period of four fiscal consecutive quarters most recently ended of less than $5,000, (ii) has consolidated total assets on the last day of the fiscal quarter most recently ended of less than $5,000 and (iii) does not own or possess the right to use any Intellectual Property Rights or other assets that are material to the business of the Company and its subsidiaries, taken as a whole. For purposes of this Agreement, the terms "subsidiary" and "subsidiaries" of any person means any corporation, partnership, joint venture, limited liability company, association or other legal entity of which such person (either alone or through or together with any other subsidiary), owns, directly or indirectly, 50% or more of the stock or other equity interests the holder of which is generally entitled to vote for the election of -4- the board of directors or other governing body of such corporation, partnership, joint venture, limited liability company, association or other legal entity. 2.4 Authorization. Other than the stockholder approvals described in Section 2.4 of the Schedule of Exceptions, the filing of the First Restated Certificate and/or the Second Restated Certificate, as applicable, with the Secretary of State of the State of Delaware and filings required under federal and state securities laws, all corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution and delivery by the Company of this Agreement, the Investor Rights Agreement, a copy of which is attached hereto as Exhibit B-1 (the "Investor Rights Agreement"), an Amended and Restated Investor Rights Agreement in substantially the form attached hereto as Exhibit B-2 (the "Amended and Restated Investor Rights Agreement")and a Second Amended and Restated Investor Rights Agreement in substantially the form attached hereto as Exhibit B-3 (the "Second Amended and Restated Investor Rights Agreement"), the performance of all obligations of the Company hereunder and thereunder, and the authorization, sale, issuance and delivery of the Series A Preferred Stock being sold hereunder and the Conversion Shares issuable upon conversion of the Series A Preferred Stock has been taken or will be taken prior to the Closing or, in respect of the Series A Preferred Stock and Conversion Stock to be issued or issuable at the Subsequent Closing, the Subsequent Closing. This Agreement, the Investor Rights Agreement, and, when executed, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement, constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 2.5 Valid Issuance of Preferred Stock. Assuming receipt of all stockholder approvals described in Section 2.5 of the Schedule of Exceptions, the Series A Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions on transfer (a) under this Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement, (b) under applicable state and federal securities laws and (c) otherwise imposed as a result of actions taken by the Investors. The Conversion Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the First Restated Certificate or the Second Restated Certificate, as applicable, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions on transfer (a) under this Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement, (b) under applicable state and federal securities laws and (c) otherwise imposed as a result of actions taken by the Investors. 2.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for (i) such consents, approvals, orders, authorizations, registrations, qualifications, designations, -5- declarations or filings which are not required to be obtained prior to the Closing and such consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings which are not required to be obtained prior to the Subsequent Closing, (ii) the filing of the First Restated Certificate and/or the Second Restated Certificate, as applicable, with the Secretary of State of the State of Delaware, (iii) the filing with The Nasdaq Stock Market, Inc. ("Nasdaq") of an application to list the Conversion Shares and (iv) such filings as are required pursuant to applicable federal and state securities laws and blue sky laws, which filings will be effected within the required statutory period. 2.7 Offering. Subject in part to the truth and accuracy of each Investor's representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Series A Preferred Stock and Conversion Shares as contemplated by this Agreement are exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), and the qualification or registration requirements of applicable state blue sky laws, as such registration requirements and laws currently exist. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. 2.8 Litigation. There is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company that questions the validity of this Agreement, the Merger Agreement, the Asset Purchase Agreement, the Managed Services Agreement (as defined below) or the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement or the Second Amended and Restated Investor Rights Agreement, or the right of the Company to enter into such agreements or to consummate the transactions contemplated hereby, or that would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect or in any change in the current equity ownership of the Company. Neither the Company nor any Operating Subsidiary is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. 2.9 Asset Purchase Agreement and Managed Services Agreement. The Company has delivered to counsel to the Investors true and complete copies of the Managed Services Agreement, dated as of August 1, 2007, by and between the Company and Stellar Nordia Services LLC, a Nevada limited liability company (the "Managed Services Agreement" and, together with the Asset Purchase Agreement, the Merger Agreement and the documents referenced in any of the Asset Purchase Agreement, the Merger Agreement or the Managed Services Agreement pertaining to the acquisitions described in the Asset Purchase Agreement and the Merger Agreement, the "Operative Agreements"). All corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution and delivery by the Company of the Operative Agreements and the performance of all obligations of the Company thereunder has been taken or will be taken prior to the closing provided for in the Asset Purchase Agreement (other than corporate actions required with respect to the transactions contemplated by the Merger Agreement, which will be taken prior to the closing provided for in the Merger Agreement). The Operative Agreements will constitute, when executed, valid and legally binding obligations of the Company, and will be enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights -6- generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by the Operative Agreements, except as described in the Asset Purchase Agreement, the Merger Agreement and the respective Schedules thereto as of the date hereof. 2.10 Intellectual Property. Except as would not have a Material Adverse Effect: (a) To its knowledge, the Company and each Operating Subsidiary owns sufficient right, title and interest in and to, or has sufficient right to use pursuant to a valid license, option, assignment or agreement, all of the Intellectual Property Rights (as defined below) used by them and which the Company believes are necessary for the operation of the business of the Company and each Operating Subsidiary as presently conducted, and the lack of which would conflict with or infringe the rights of any third party, except for such items as have yet to be conceived or developed or that are expected to be available for licensing on reasonable terms. The Company and each Operating Subsidiary has taken reasonable actions to maintain and protect the confidentiality of Intellectual Property Rights consisting of trade secrets that it owns. The Intellectual Property Rights that the Company or any Operating Subsidiary owns, consisting of patents, copyrights, trademarks, service marks and trade names, do not, to the Company's knowledge, conflict with or infringe upon the rights of third parties, except for such items as have yet to be conceived or developed or that are expected to be available for licensing on reasonable terms. Since January 1, 2006, there have been no written claims made against the Company or any subsidiary asserting the invalidity, misuse or unenforceability of any Intellectual Property Rights that the Company or any subsidiary owns and, to the Company's knowledge, there are no valid grounds for the same. Since January 1, 2006, neither the Company nor any subsidiary has received any communications alleging that the Company or any subsidiary has violated, infringed or misappropriated any Intellectual Property Rights of any other person or entity. To the Company's knowledge, neither the Company nor any subsidiary is violating, infringing or misappropriating the Intellectual Property Rights of any other person or entity. Since January 1, 2006, to the Company's knowledge, no third party has interfered with, infringed upon, violated, misappropriated, or otherwise come into conflict with any of the Company's or any of its Operating Subsidiary's Intellectual Property Rights, or of any right of any third party (to the extent licensed by or through the Company or its Operating Subsidiaries), or breached any license or agreement involving Intellectual Property Rights. Except as set forth on the Schedule of Exceptions, the Company has not brought any action, suit or proceeding or asserted any claim against any person or entity related to the foregoing. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would prevent the employee from assigning his/her inventions to the Company. -7- (b) Neither the execution nor delivery of this Agreement, the Operative Agreements or the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement or the Second Amended and Restated Investor Rights Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the employment of any employee of the Company, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated, including but not limited to, any employment contract, patent disclosure agreement, confidentiality agreement or any other contract or agreement relating to the relationship of any such employee with the Company. (c) For purposes of this Agreement, "Intellectual Property Rights" means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade names, logos and corporate names and registrations and applications for registration thereof, (iii) copyrights (registered and unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information) and (vii) other intellectual property rights. As used in this Agreement, the phrases "to the Company's knowledge" and "the Company is not aware" or any similar expression or phrase refers to the actual knowledge of the executive officers of the Company (and does not include any constructive or imputed notice of any information). 2.11 Compliance with Other Instruments. The Company is not in violation of any provision of its certificate of incorporation or Bylaws. Neither the Company nor any of its subsidiaries is in violation of any instrument, judgment, order, writ, decree or contract, statute, rule or regulation to which the Company or any subsidiary is subject and a violation of which would reasonably be expected to result in a Material Adverse Effect. The execution, delivery and performance of this Agreement, the Operative Agreements and the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation, or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or any subsidiary or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company or any subsidiary, their business or operations or any of their assets or properties, other than conflicts, defaults or other results which would not reasonably be expected to result in a Material Adverse Effect. 2.12 Agreements; Action. -8- (a) Except for agreements explicitly contemplated hereby, there are no agreements, written or oral, between the Company and any subsidiary and any of their officers, directors or affiliates. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any subsidiary is a party or by which any of them is bound that may involve the license of any Intellectual Property Rights or other proprietary right to or from the Company (other than licenses entered into in the ordinary course of business). (c) There are no agreements, commitments, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any subsidiary is a party or by which they are bound that may involve (i) obligations (contingent or otherwise), or payments to the Company or any subsidiary, in excess of $250,000, other than obligations of, or payments to, the Company or any subsidiary arising from agreements entered into in the ordinary course of business, or (ii) provisions materially restricting the development, manufacture or distribution of the Company's products or services (collectively, "Material Contracts"). The Material Contracts are valid and in full force and effect as to the Company and any Operating Subsidiary, and, to the Company's knowledge, to the other parties thereto. (d) With the exception of (i) indebtedness of the Company and its subsidiaries under that certain Credit Agreement dated as of August 1, 2007 (the "Credit Agreement") by and among the Company, Clearlake Capital Group, LP, as Administrative Agent and Collateral Agent and the Lenders party thereto, and (ii) the indebtedness contemplated by that certain Amended and Restated First Lien Debt Commitment Letter of even date herewith (the "First Lien Debt Commitment Letter") and that certain Amended and Restated Second Lien Debt Commitment Letter of even date herewith (the "Second Lien Debt Commitment Letter"), between the Company and Clearlake Capital Group, LP (the Credit Agreement, First Lien Debt Commitment Letter and Second Lien Debt Commitment Letter, collectively, the "Debt Financings"), neither the Company nor any subsidiary has outstanding any indebtedness for money borrowed (which, for clarity, the parties agree does not include accounts payables or other trade payables, capital leases or accrued expenses) in excess of $250,000 or, in the case of indebtedness for money borrowed individually less than $250,000, in excess of $5,000,000 in the aggregate, other than liabilities incurred in the ordinary course of business. (e) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 2.13 Related Party Transactions. Since the filing of the last SEC Report (as defined below), there have been no related party transactions that would be required to be disclosed in the SEC Reports pursuant to Item 404(a) of the SEC's Regulation S-K that have not been so disclosed in the SEC Reports. -9- 2.14 SEC Filings; Financial Statements. (a) The Company has timely filed all reports and proxy statements (including all information incorporated therein, amendments and supplements thereto) required to be filed by the Company with the Securities and Exchange Commission (the "SEC") since January 1, 2005 (all reports filed by the Company under the Securities Exchange Act of 1934, and the applicable rules and regulations promulgated thereunder since January 1, 2006, including any amendments thereto, collectively, the "SEC Reports"). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Exchange Act of 1934, and the applicable rules and regulations promulgated thereunder. As of the time of filing with the SEC, none of the SEC Reports so filed contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The audited consolidated financial statements of the Company (including any related notes thereto) included in the SEC Reports (the "Year-End Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof and the consolidated results of operations, cash flows and changes in stockholders' equity of the Company and its subsidiaries for the periods indicated. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the SEC Reports (together with the Year-End Statements, the "Financial Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at of the respective dates thereof and the consolidated results of operations, cash flows and changes in stockholders' equity of the Company and its subsidiaries for the periods indicated (subject to normal and recurring period-end adjustments that have not been and are not expected to be material to the Company and its subsidiaries taken as a whole). (c) To the Company's knowledge, except as set forth in the Financial Statements, the Schedule of Exceptions or the Operative Agreements, or as contemplated by the Debt Financings, the Company has no material liabilities, contingent or otherwise, other than (a) liabilities incurred in the ordinary course of business subsequent to March 31, 2007 and (b) liabilities or obligations under contracts and commitments incurred in the ordinary course of business or otherwise not required under generally accepted accounting principles to be reflected in the Financial Statements. Except as disclosed in the Financial Statements, neither the Company nor any subsidiary is a guarantor or indemnitor of any indebtedness of any other person, firm or corporation, other than the Company or any subsidiary. The Company maintains a system of accounting established and administered in accordance with generally accepted accounting principles. -10- 2.15 Changes. Since March 31, 2007, except as would not reasonably be expected to have a Material Adverse Effect and except as contemplated by the transactions associated with the Operative Agreements and the Debt Financings, there has not been: (a) any change in the assets, liabilities, financial condition or operating results of the Company and its subsidiaries, taken as a whole, from that reflected in the Financial Statements, except changes in the ordinary course of business; (b) any material change or amendment to a material contract or arrangement by which the Company or any of its assets or properties is bound or subject; (c) any sale, assignment, pledge, grant of security interest or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets; (d) any resignation or termination of employment of any key employee of the Company and its Operating Subsidiaries; (e) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company or any subsidiary, with respect to any of its material properties or assets, except liens for taxes not yet due or payable; or (f) any agreement or commitment by the Company or any subsidiary to do any of the things described in this Section 2.15. 2.16 Tax Returns, Payments and Elections. The Company has timely filed all tax returns (federal, state and local) required to be filed by it, which tax returns are true and correct in all material respects. The Company has paid all taxes and other assessments due, if any, except those contested by it in good faith that are listed in the Schedule of Exceptions. Except as set forth in the Schedule of Exceptions, none of the Company's federal income tax returns and none of its state income or franchise tax or sales or use tax returns has ever been audited by governmental authorities and, as of the date hereof, to the Company's knowledge, there is no such audit pending or threatened. Since March 31, 2007, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. Except as would not constitute a Material Adverse Effect, the Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories. 2.17 Permits. The Company and its Operating Subsidiaries have all franchises, permits, licenses and any similar authority necessary for the conduct of their respective businesses as now being conducted by them, the lack of which would result in a Material Adverse Effect. Neither the Company nor any Operating Subsidiary is in default in any material respect under any of such franchises, permits, licenses or other similar authority. To the Company's knowledge, neither the Company nor any Operating Subsidiary has received -11- notification of proceedings relating to revocation or modification of any such franchises, permits, licenses or other similar authority. 2.18 Environmental and Safety Laws. To the Company's knowledge, the Company and its subsidiaries are in compliance in all material respects with all applicable statutes, laws and regulations relating to the environment or occupational health and safety and, to the Company's knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. Neither the Company nor any subsidiary has received any written communication from a governmental authority with respect to any material violation of such statutes, laws or regulations. 2.19 Disclosure. Neither this Agreement (including all the exhibits and schedules hereto) nor any certificates made or delivered in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances under which they were made. 2.20 Title to Property and Assets. The property and assets that the Company or any subsidiary owns are owned by the Company or that subsidiary free and clear of all mortgages, liens, loans and encumbrances, except (i) for statutory liens for the payment of current taxes that are not yet delinquent, (ii) for liens, encumbrances and security interests that arise in the ordinary course of business and that do not secure indebtedness for borrowed money (which, for clarity, the parties agree does not include accounts payables or other trade payables, capital leases or accrued expenses) or guarantees thereof, (iii) defects in title, none of which, individually or in the aggregate, materially impair the Company's or the subsidiary's ownership or use of such property or assets, and (iv) liens created in connection with the Debt Financings. With respect to the property and assets the Company or any subsidiary leases, the Company or the subsidiary, as applicable, is in compliance with such leases except where the failure to be in compliance would not constitute a Material Adverse Effect and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances, subject to clauses (i), (ii) and (iii). 2.21 Employee Benefit Plans. The Company does not have or contribute to any "employee benefit plan" as such term is defined in the Employee Retirement Income Security Act of 1974 ("ERISA") that is subject to Title IV of ERISA or the funding requirements of Section 412 of the Internal Revenue Code of 1986, as amended. 2.22 Labor Agreements and Actions. Neither the Company nor any subsidiary is bound by or subject to any contract, commitment or arrangement with any labor union. Except as disclosed in the SEC Reports, neither the Company nor any subsidiary is a party to or bound by any currently effective material employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation agreement. To the Company's knowledge, the Company and each subsidiary has complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment. 2.23 Insurance. The Company and its Operating Subsidiaries have in full force and effect the insurance policies listed on Schedule D hereto. There are no claims in -12- excess of $100,000 in the aggregate pending against the Company under any insurance policies currently in effect, or by the Company against any of its insurance carriers and covering the property, business or employees of the Company, and all premiums due and payable with respect to the policies maintained by the Company have been paid. 2.24 Fees. Except as set forth in the Schedule of Exceptions, the Company has no contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement. 3. Representations and Warranties of the Investors. Each Investor severally and not jointly hereby represents, warrants and covenants that: 3.1 Authorization. Such Investor has full power and authority to enter into this Agreement, the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement, and each such agreement executed and delivered by such Investor constitutes its valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) to the extent the indemnification provisions contained in the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement and the Second Amended and Restated Investor Rights Agreement may be limited by applicable federal or state securities laws. 3.2 Purchase Entirely for Own Account. This Agreement is made with such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the Series A Preferred Stock to be received by such Investor and the Conversion Shares issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities. 3.3 Disclosure of Information. Such Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Series A Preferred Stock. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Series A Preferred Stock and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investors to rely thereon. 3.4 Investment Experience. Such Investor is an investor in public companies with relatively low market capitalizations and acknowledges that it is able to fend for -13- itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Series A Preferred Stock. If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Series A Preferred Stock. 3.5 Accredited Investor. Such Investor is an "accredited investor" within the meaning of SEC Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor understands that the Securities it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the Act only in certain limited circumstances. In the absence of an effective registration statement covering the Securities or an available exemption from registration under the Act, the Securities must be held indefinitely. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act, including without limitation the Rule 144 condition that current information about the Company be available to the public. 3.7 Further Limitations on Disposition. Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement or the Second Amended and Restated Investor Rights Agreement, as applicable, provided and to the extent that this Section 3 and the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement or the Second Amended and Restated Investor Rights Agreement are then applicable, and: (a) There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or (b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor to any affiliated venture capital fund or investment fund, or by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. -14- 3.8 Legends. It is understood that the certificates evidencing the Securities may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION." (b) Any legend required by applicable laws. 3.9 Tax Advisors. Such Investor has reviewed with such Investor's own tax advisors the federal, state and local tax consequences of this investment, where applicable, and the transactions contemplated by this Agreement. Each such Investor is relying solely on such advisors and not on any statements or representations of the Company or any of its agents and understands that each such Investor (and not the Company) shall be responsible for such Investor's own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 3.10 Legal Advisors. Such Investor acknowledges that such Investor has had the opportunity to review this Agreement, the exhibits and the schedules attached hereto and the transactions contemplated by this Agreement, the Debt Financings, the Asset Purchase Agreement and the Merger Agreement with such Investor's own legal counsel. Each such Investor is relying solely on such Investor's legal counsel and, except with respect to the opinions to be delivered to the Investors pursuant to Sections 5.5 and 8.4 hereof, not on any statements or representations of the Company or any of the Company's agents, including Lowenstein Sandler PC or Chadbourne & Parke LLP, for legal advice with respect to this investment or the transactions contemplated by this Agreement. 4. Conditions of Investors' and Company's Obligations at the Closing. The obligations of each Investor and the Company under Section 1.1(c) of this Agreement are subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions: 4.1 Stockholder Approval. At a duly convened meeting of the stockholders of the Company, the stockholders of the Company shall have approved (i) the First Restated Certificate, (ii) the issuance of the Series A Preferred Stock to be issued at the Closing and the underlying Conversion Shares, (iii) the change of control involved in issuing the Series A Preferred Stock to the Investors hereunder, (iv) the Asset Purchase Agreement and the acquisition of the TRS Business and (v) such other matters as shall be required by the rules of Nasdaq. -15- 4.2 Asset Purchase. The closing contemplated by the Asset Purchase Agreement shall have been consummated concurrently with the Closing hereunder. 4.3 No Prohibition. No law, statute, rule, regulation, executive order, decree, ruling, injunction or other order (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any United States or state court or any governmental entity which prohibits, restrains or enjoins the consummation of the transactions contemplated hereunder. 4.4 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Series A Preferred Stock in the Closing pursuant to this Agreement or that are required to consummate the closing under the Asset Purchase Agreement shall have been duly obtained and shall be effective as of the Closing, other than such authorizations, approvals or permits or other filings which may be timely made after the Closing or which, if not obtained, would not materially adversely affect the Company upon consummation of the closings contemplated by this Agreement, the Asset Purchase Agreement and the Debt Financings. 4.5 Listing. The Conversion Shares underlying the Series A Preferred Stock to be issued at the Closing, and the shares of Common Stock underlying the Series A Preferred Stock issued at the $1.5 million Stock Purchase Agreement closing, shall have been authorized for listing for quotation on Nasdaq, subject to official notice of issuance. 4.6 Restated Certificate. The First Restated Certificate shall have been filed with the Secretary of State of the State of Delaware; provided that, if the Subsequent Closing occurs simultaneously with the Closing, the Second Restated Certificate, rather than the First Restated Certificate, shall have been filed with the Secretary of State of the State of Delaware. 5. Conditions of Investors' Obligations at the Closing. The obligations of each Investor under Section 1.1(c) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects (without giving effect to any "materiality," "Material Adverse Effect" or similar qualifiers contained in any such representations and warranties, other than any qualifiers contained in any representation or warranty requiring disclosure in the Schedule of Exceptions of a list of items qualified as to materiality) as of the Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect. -16- 5.2 Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 5.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the Closing a certificate in the form attached hereto as Exhibit D stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled. 5.4 Board of Directors. The Company shall have taken all necessary corporate action such that immediately following the Closing, Behdad Eghbali and two other well respected business people designated by the Investors shall be elected to the Company's board of directors; provided that, if the Subsequent Closing occurs simultaneously with the Closing, the Company shall have taken all necessary corporate action such that immediately following the Closing, Behdad Eghbali and one other well respected business person designated by the Investors shall be elected to the Company's board of directors. 5.5 Opinion of Company Counsel. Each Investor shall have received from Lowenstein Sandler PC, counsel for the Company, an opinion, dated as of the Closing, substantially in the form attached hereto as Exhibit C. 5.6 Secretary's Certificate. Investors shall have received from the Company's Secretary a certificate in form and substance reasonably satisfactory to the Investors having attached thereto (a) the Company's Certificate of Incorporation as in effect at the time of the Closing, (b) the Company's Bylaws as in effect at the time of the Closing, and (c) resolutions approved by the Company's board of directors authorizing the transactions contemplated hereby. 5.7 Operative Agreements. Since (i) the date hereof, in the case of the Operative Agreements related to the transactions contemplated by the Merger Agreement, and (ii) August 1, 2007 in respect of all other Operative Agreements, there shall have been no material amendment of, or material waiver under, any of the Operative Agreements other than amendments and waivers approved by Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement, such approval not to be unreasonably withheld or delayed. The Operative Agreements, any agreement required to be executed pursuant to any of the Operative Agreements which is not an exhibit to one or more of the Operative Agreements and all other proceedings in connection with the transactions contemplated at the Closing shall be in form and substance acceptable to Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement, such acceptance not to be unreasonably withheld or delayed. Each Investor shall have received copies of each of the executed Operative Agreements (to the extent executed prior to or at the Closing), including any exhibits and schedules thereto. 5.8 Debt Financing. All conditions precedent to the consummation of the debt financing contemplated by the First Lien Debt Commitment Letter shall have been satisfied, unless the failure to satisfy any such condition precedent is due to any act or failure to act by the Investors. -17- 5.9 Material Adverse Effect. Since August 1, 2007, no event shall have occurred which shall have had a Material Adverse Effect. 5.10 Amendment to Bylaws. The Company's Bylaws shall have been amended to eliminate all provisions pertaining to a staggered board of directors 6. Conditions of the Company's Obligations at the Closing. The obligations of the Company under Sections 1.1(c) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions: 6.1 Representations and Warranties. The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all respects (without giving effect to any "materiality," "Material Adverse Effect" or similar qualifiers contained in any such representations and warranties as of the Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect. 6.2 Performance. The Investors shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 6.3 Payment of Purchase Price at Closing. The Investors shall have delivered to the Company the aggregate purchase price owed by such Investors for the Series A Preferred Stock being sold hereunder at the Closing. 6.4 Debt Financings. The closing of the transactions contemplated by the First Lien Debt Commitment Letter shall have been consummated concurrently with the Closing hereunder. 7. Conditions of Investors' and Company's Obligations at the Subsequent Closing. With respect to the Subsequent Closing, the obligations of each Investor and the Company under Section 1.1(d) of this Agreement are subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions: 7.1 Closing. The Closing shall have occurred. 7.2 Stockholder Approval. To the extent required by law, at a duly convened meeting of the stockholders of the Company, the stockholders of the Company shall have approved (i) the Second Restated Certificate, (ii) the issuance of the Series A Preferred Stock to be issued at the Subsequent Closing and the underlying Conversion Shares, (iii) the Merger Agreement and the acquisition of HOVRS and (iv) such other matters as shall be required by the rules of Nasdaq. -18- 7.3 Merger. The closing contemplated by the Merger Agreement shall have been consummated concurrently with the Subsequent Closing hereunder. 7.4 No Prohibition. No law, statute, rule, regulation, executive order, decree, ruling, injunction or other order (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any United States or state court or any governmental entity which prohibits, restrains or enjoins the consummation of the transactions contemplated hereunder. 7.5 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Series A Preferred Stock in the Subsequent Closing pursuant to this Agreement or that are required to consummate the closing contemplated by the Merger Agreement shall have been duly obtained and shall be effective as of the Subsequent Closing, other than such authorizations, approvals or permits or other filings which may be timely made after the Subsequent Closing or which, if not obtained, would not materially adversely affect the Company or the Investors upon consummation of the closings contemplated by this Agreement, the Merger Agreement and the Debt Financings. 7.6 Listing. The Conversion Shares underlying the Series A Preferred Stock to be issued at the Subsequent Closing shall have been authorized for listing for quotation on Nasdaq, subject to official notice of issuance. 8. Conditions of Investors' Obligations at the Subsequent Closing. The obligations of each Investor under Section 1.1(d) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions: 8.1 Representations and Warranties. The representations and warranties of the Company set forth in Section 2 of this Agreement, other than those set forth in Sections 2.8, 2.10, 2.12, 2.15, 2.17 and 2.18, shall be true and correct in all respects (without giving effect to any "materiality," "Material Adverse Effect" or similar qualifiers contained in any such representations and warranties, other than any qualifiers contained in any representation or warranty requiring disclosure in the Schedule of Exceptions of a list of items qualified as to materiality) as of the Subsequent Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect. 8.2 Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Subsequent Closing. 8.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the Subsequent Closing a certificate in the form attached hereto as Exhibit D stating that the conditions specified in Sections 8.1 and 8.2 have been fulfilled. -19- 8.4 Opinion of Company Counsel. Each Investor shall have received from Lowenstein Sandler PC, counsel for the Company, an opinion, dated as of the Subsequent Closing, substantially in the form attached hereto as Exhibit C. 8.5 Secretary's Certificate. Investors shall have received from the Company's Secretary a certificate in form and substance reasonably satisfactory to the Investors having attached thereto (a) the Company's Certificate of Incorporation as in effect at the time of the Subsequent Closing, (b) the Company's Bylaws as in effect at the time of the Subsequent Closing, and (c) resolutions approved by the Company's board of directors authorizing the transactions contemplated hereby. 8.6 Debt Financings. All conditions precedent to the consummation of the debt financing contemplated by the First Lien Debt Commitment Letter and the Second Lien Debt Commitment Letter shall have been satisfied, unless the failure to satisfy any such condition precedent is due to any act or failure to act by the Investors. 8.7 Operative Agreements. Since the date hereof, there shall have been no material amendment of, or material waiver under, any of the Operative Agreements other than amendments and waivers approved by Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement, such approval not to be unreasonably withheld or delayed. The Operative Agreements, any agreement required to be executed pursuant to any of the Operative Agreements which is not an exhibit to one or more of the Operative Agreements and all other proceedings in connection with the transactions contemplated at the Subsequent Closing shall be in form and substance acceptable to Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement, such acceptance not to be unreasonably withheld or delayed. Each Investor shall have received copies of each of the executed Operative Agreements, including any exhibits and schedules thereto. 8.8 Merger Agreement Conditions. Each of the closing conditions set forth in the Merger Agreement shall have been satisfied (unless waived with the consent of Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement, such consent not to be unreasonably withheld). 9. Conditions of the Company's Obligations. The obligations of the Company to the Investors under this Agreement in connection with the Subsequent Closing are subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions by that Investor: 9.1 Representations and Warranties. The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all respects (without giving effect to any "materiality," "Material Adverse Effect" or similar qualifiers contained in any such representations and warranties as of the Subsequent Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so -20- true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect. 9.2 Performance. The Investors shall have performed and complied in all materials respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them before the Subsequent Closing. 9.3 Payment of Purchase Price at Subsequent Closing. The Investors shall have delivered to the Company the aggregate purchase price owed by such Investors for the Series A Preferred Stock being sold hereunder at the Subsequent Closing. 9.4 Debt Financings. The closing of the transactions contemplated by the Second Lien Debt Commitment Letter shall have been consummated concurrently with the Subsequent Closing hereunder. 10. Covenants. 10.1 Documents. Subject to satisfaction of the conditions to Closing, the Company and the Investors shall execute the Amended and Restated Investor Rights Agreement at or prior to the Closing, and subject to satisfaction of the conditions to the Subsequent Closing, the Company and the Investors shall execute the Second Amended and Restated Investor Rights Agreement at or prior to the Subsequent Closing; provided that, if the Closing and the Subsequent Closing are substantially simultaneous, the Company and the Investors shall execute the Second Amended and Restated Investor Rights Agreement, rather than the Amended and Restated Investor Rights Agreement, at or prior to the Closing. 10.2 Conduct of Business of the Company Pending the Closing. Between the date of this Agreement and the Closing, except as otherwise contemplated by this Agreement, the Operative Agreements, the Debt Financings, the First Lien Debt Commitment Letter or the Second Lien Debt Commitment Letter, as disclosed in the SEC Reports filed prior to the date of this Agreement, as set forth in Section 5.1 of the Schedule of Exceptions, as required by law or unless Investors who have agreed to purchase a majority of the shares of Preferred Stock sold pursuant to this Agreement shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), (i) the business of the Company and its Operating Subsidiaries shall be conducted in the ordinary course of business and the Company shall use its commercially reasonable efforts to preserve substantially intact its business organization, and material business relationships, and (ii) neither the Company nor any of its subsidiaries shall: (a) amend or otherwise change its Certificate of Incorporation or By-Laws or any similar governing instruments (except for any subsidiaries that are not Operating Subsidiaries); (b) enter into any agreement outside the ordinary course of business; -21- (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for any dividend or distribution by a subsidiary of the Company to the Company or another wholly owned subsidiary of the Company); (d) reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any shares of capital stock of the Company (except for the acquisition of shares in connection with cashless exercises of options and warrants and customary repurchases effected in accordance with the Company's employee benefit plans); (e) authorize any material new capital expenditures which are, in the aggregate, in excess of the Company's capital expenditure budget set forth on Section 5.1 of the Schedule of Exceptions; or (f) agree to take any of the actions described in Sections 10.2(a) through 10.2(e). 10.3 Stockholders Meeting. The Company, acting through its Board of Directors, shall (a) as soon as reasonably practicable following the date of this Agreement, take all action necessary to duly call, give notice of, convene and hold a meeting of its stockholders (the "Stockholders Meeting") for the purpose of obtaining stockholder approval of the proposals contemplated by Sections 4.1 and 7.2 (the "Company Proposals"), (b) include in the Proxy Statement the recommendation of the Board of Directors that the stockholders of the Company grant such approvals (the "Recommendation") and (c) use its reasonable commercial efforts to obtain such approvals; provided that the Board of Directors of the Company may fail to make or may withdraw, modify or change the Recommendation and/or may fail to use such efforts if in the absence of an Alternate Financing Proposal, the Board of Directors of the Company determines in good faith (after having consulted with outside counsel) that such conduct is required for the Board to comply with its fiduciary duties under applicable law. Notwithstanding anything to the contrary contained in this Agreement, unless this Agreement is terminated in accordance with Section 11.1, the Company, regardless of whether the Board of Directors of the Company has approved, endorsed or recommended an Alternate Financing Proposal or has withdrawn, modified or amended the Recommendation, but in compliance with the DGCL, shall promptly call, give notice of, convene and hold the Stockholders Meeting as soon as reasonably practicable after the date of this Agreement and will submit the Company Proposals for approval by the stockholders of the Company at the Stockholders Meeting. 10.4 Proxy Statement. Promptly following the date of this Agreement, the Company shall prepare and file with the SEC a proxy statement describing the Company Proposals (the "Proxy Statement"). The Company shall use reasonable commercial efforts to resolve all SEC comments with respect to the Proxy Statement as promptly as practicable after receipt thereof and to cause the Proxy Statement in definitive form to be cleared by the SEC and mailed to the Company's stockholders as promptly as reasonably practicable following filing with the SEC. 10.5 Alternate Financing Proposals. -22- (a) The Company shall not, nor shall the Company authorize or permit any of its subsidiaries or any of the directors, officers, employees, attorneys or investment bankers (collectively, "Representatives") of the Company or any of its subsidiaries to, (i) directly or indirectly, initiate, solicit or knowingly encourage any inquiries with respect to, or the making of, any Alternate Financing Proposal, (ii) engage in any negotiations or discussions concerning, or provide access to its properties, books and records or any confidential information or data to, any person relating to an Alternate Financing Proposal, (iii) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Alternate Financing Proposal or (iv) execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement relating to any Alternate Financing Proposal; provided, however, it is understood and agreed that any determination or action by the Board of Directors of the Company permitted under Section 10.5(b) or Section 10.5(c), shall not be deemed to be a breach or violation of this Section 10.5(a) or, in the case of Section 10.5(b), give the Investors a right to terminate this Agreement pursuant to Section 11.1(e)(ii). The Company shall, and shall direct each of its Representatives to, immediately cease any solicitations, discussions or negotiations with any person (other than the parties hereto) that has made or indicated an intention to make an Alternate Financing Proposal, in each case that exist as of the date hereof, subject in each case to the rights of the Company set forth in Sections 10.5(b) and 10.5(c). (b) Notwithstanding anything to the contrary in Section 10.5(a), nothing contained in this Agreement shall prevent the Company or its Board of Directors from (i) taking and disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment of a tender offer or exchange offer) or from making any legally required disclosure to stockholders with regard to an Alternate Financing Proposal (provided that neither the Company nor its Board of Directors may recommend any Alternate Financing Proposal unless permitted by Section 10.5(c) and the Company may not fail to make, or withdraw, modify or change in a manner adverse to the Investors all or any portion of, the Recommendation unless permitted by Section 10.3); (ii) providing access to its properties, books and records and providing information or data in response to a request therefor by a person or group who has made an unsolicited Alternate Financing Proposal that the Board of Directors of the Company determines in good faith is credible if the Board of Directors receives from the person so requesting such information an executed confidentiality agreement; (iii) contacting and engaging in discussions with any person or group and their respective Representatives who has made an unsolicited Alternate Financing Proposal solely for the purpose of clarifying such Alternate Financing Proposal and any material terms thereof and the conditions to consummation so as to determine whether there is a reasonable possibility that such Alternate Financing Proposal could lead to a Superior Proposal; (iv) contacting and engaging in any negotiations or discussions with any person or group and their respective Representatives who has made an unsolicited Alternate Financing Proposal that the Board of Directors of the Company determines in good faith is credible (which negotiations or discussions are not solely for clarification purposes); or (v) prior to obtaining all necessary stockholder approvals, (A) withdrawing, modifying or changing in any adverse manner the Recommendation (which, in the event of an Alternate Financing Proposal, shall be permitted only to the extent permitted by Section 10.5(c)) or (B) recommending an unsolicited Alternate Financing Proposal that the Board of Directors of the Company determines in good faith is -23- credible, if and only to the extent that in connection with the foregoing clauses (ii), (iv) and (v)(B), the Board of Directors of the Company shall have determined in good faith, after consultation with its legal counsel and financial advisors that, (x) in the case of clause (v)(B) above only, such Alternate Financing Proposal would, if consummated, result in a Superior Proposal and (y) in the case of clauses (ii) and (iv) above only, such Alternate Financing Proposal constitutes a Superior Proposal or there is a reasonable possibility that such actions in respect of such Alternate Financing Proposal could lead to a Superior Proposal. The Company shall also promptly notify the Investors within 48 hours of the receipt of any Alternate Financing Proposal after the date hereof, which notice shall include the material terms of such Alternate Financing Proposal. (c) Notwithstanding anything in this Section 10.5 to the contrary, if (A) the Company's Board of Directors determines in good faith, after consultation with its financial advisors and outside legal counsel, in response to an unsolicited Alternate Financing Proposal that did not otherwise result from a material breach of Section 10.5(a), that such proposal is a Superior Proposal, (B) the Company notifies the Investors in writing of the terms of the Superior Proposal and the determinations described in clause (A) above and of its intent to terminate this Agreement, (C) the Company's Board of Directors takes into account any revised proposal made by the Investors to the Company (a "Revised Investor Proposal") within three business days after the Investors' receipt of such notice and again determines in good faith after consultation with its outside legal counsel and independent financial advisors that such Alternate Financing Proposal (as the same may have been modified or amended) remains a Superior Proposal, and (D) the Company's Board of Directors, if a Revised Investor Proposal has been made, and such Alternate Financing Proposal had been modified or amended prior to the Board's re-determination referred to in clause (C) above, (x) first, notifies the Investors of the revised terms of such Alternate Financing Proposal; (y) second, establishes a deadline, and notifies the Investors and the person making such Alternate Financing Proposal thereof, to occur not less than three nor more than seven business days after giving such notice, for the submission of final proposals from both the Investors and such person; and (z) within seven business days after such deadline, again determines in good faith after consultation with its outside legal counsel and independent financial advisors that such Alternate Financing Proposal remains a Superior Proposal and notifies the Investors of such determination, the Company or its Board of Directors may terminate this Agreement in order to enter into a definitive agreement with respect to such Superior Proposal and may withdraw, modify or change the Recommendation; provided, however, that the Company shall not terminate this Agreement pursuant to this Section 10.5(c), and any purported termination pursuant to this Section 10.5(c) shall be void and of no force or effect, unless the Company prior to or concurrently with such termination pursuant to this Section 10.5(c) pays to the Investors the Company Termination Fee. (d) For purposes of this Agreement, the following terms shall have the meanings assigned below: (i) "Alternate Financing Proposal" means any inquiry, proposal or offer from any Person or group of Persons (other than the Investors) relating to (i) any proposal or offer concerning an alternate financing for the transactions contemplated by the Asset Purchase Agreement together with the transactions contemplated by the Merger Agreement or (ii) any proposal or offer concerning an acquisition of all or substantially all of the -24- issued and outstanding capital stock of the Company or an acquisition of all or substantially all the assets of the Company. (ii) "Superior Proposal" means any Alternate Financing Proposal (x) on terms more favorable to the Company than the transactions contemplated by this Agreement, taking into account all of the terms and conditions of such proposal and this Agreement (including any proposal by the Investors to amend the terms of the transactions contemplated by this Agreement, the First Lien Debt Commitment Letter or the Second Lien Debt Commitment Letter), and (y) that the Board of Directors of the Company determines in good faith is reasonably capable of being completed, taking into account the identity of the person or persons making the proposal and all financial, regulatory, legal and other aspects of such proposal. The parties hereto understand and agree that an Alternate Financing Proposal consisting of a proposal or offer concerning an alternate financing for both the transactions contemplated by the Asset Purchase Agreement and the transactions contemplated by the Merger Agreement will not fail to be a Superior Proposal solely because the financing proposed with respect to either the acquisition of the TRS Business or the acquisition of HOVRS, independent of the other terms and financing comprising such Alternate Financing Proposal, is not more favorable to the Company than the corresponding portion of the financings contemplated by this Agreement, so long as such Alternate Financing Proposal, taken as a whole, is on terms more favorable to the Company than the transactions contemplated by this Agreement, taking into account all of the terms and conditions of such proposal and this Agreement (including any proposal by the Investors to amend the terms of the transactions contemplated by this Agreement, the First Lien Debt Commitment Letter or the Second Lien Debt Commitment Letter). 10.6 Further Assurances. Subject to the terms and conditions of this Agreement, each party will use its reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. 10.7 Public Statements. Each of the Company and the Investors agrees that no public release or announcement concerning the transactions contemplated hereby shall be issued without the prior written consent of the Company or the Investors, except as such release or announcement may be required by law or the rules or regulations of any applicable securities exchange or regulatory or governmental body to which the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall use its reasonable commercial efforts to provide the Company or the Investors, as the case may be, reasonable time to comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party. 11. Termination, Expenses 11.1 Termination. This Agreement may be terminated: (a) by mutual written consent of the Investors and the Company; -25- (b) by the Investors or the Company if any court of competent jurisdiction or other governmental entity shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the transactions contemplated hereunder and such order, decree, ruling or other action is or shall have become final and nonappealable; (c) by either the Investors or the Company if: (i) the Closing shall not have occurred on or before December 31, 2007; provided, however, that, if one or more Governmental Consents (as defined in the Asset Purchase Agreement as in effect on the date hereof) have not been obtained by December 31, 2007 and the Company exercises its option under the Asset Purchase Agreement to extend the Termination Date thereunder to March 31, 2008, Investors who have agreed to purchase a majority of the Shares of Series A Preferred Stock to be sold in connection with the Closing may, in their sole discretion, extend the date after which this Agreement may be terminated pursuant to this clause (c)(i) to March 31, 2008 by delivering written notice of such extension to the Company; provided, further, that the right to terminate this Agreement pursuant to this Section 11.1(c)(i) shall not be available to the party seeking to terminate unless (x) the Asset Purchase Agreement shall have terminated (or, in the case of termination by the Investors, the Asset Purchase Agreement would have terminated by its terms on or before such date except that the Company has exercised its option thereunder to extend the Termination Date to March 31, 2008) and (y) the party seeking to terminate pursuant to this Section 11.1(c)(i) shall not have been the cause of the failure of the Closing to occur on or before such date and such action or failure to perform constitutes a breach of this Agreement; or (ii) the Subsequent Closing shall not have occurred on or before February 29, 2008; provided, however, that (A) the right to terminate this Agreement pursuant to this Section 11.1(c)(ii) shall not be available to the party seeking to terminate unless the party seeking to terminate pursuant to this Section 11.1(c)(ii) shall not have been the cause of the failure of the Subsequent Closing to occur on or before such date and such action or failure to perform constitutes a breach of this Agreement, and (B) if Investors who have agreed to purchase a majority of the Shares of Series A Preferred Stock to be sold in connection with the Closing have, in their sole discretion, extended the date after which this Agreement may be terminated pursuant to Section 11.1(c)(i) to March 31, 2008, the Investors may not terminate this Agreement pursuant to this Section 11.1(c)(ii) until March 31, 2008, but from and after March 1, 2008, the conditions to the Subsequent Closing set forth in Section 8 shall be deemed not satisfied and the Investors shall have no obligation to provide the financing contemplated by Section 1.1(d) hereof. -26- (d) by the Company: (i) if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Investors such that the conditions set forth in Sections 4, 6, 7 and 9 would not be satisfied and, in either such case, such breach is not cured or curable by (A) in respect of the Closing and the conditions thereto, the date on which all conditions to consummate the Asset Purchase Agreement have been satisfied, and (B) in respect of the Subsequent Closing and the conditions thereto, the date on which all conditions to consummate the Merger Agreement have been satisfied; or (ii) in accordance with, and subject to the terms and conditions of, Section 10.5(c); (e) by Investors who have agreed to purchase a majority of the Shares of Series A Preferred Stock to be sold in connection with the Closing: (i) if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement such that the conditions set forth in Sections 4, 5, 7 and 8 would not be satisfied and, in either such case, such breach is not cured or curable by (A) in respect of the Closing and the conditions thereto, the date on which all conditions to consummate the Asset Purchase Agreement have been satisfied, and (B) in respect of the Subsequent Closing and the conditions thereto, the date on which all conditions to consummate the Merger Agreement have been satisfied; or (ii) if the Board of Directors of the Company shall have withdrawn, modified or changed the Recommendation in a manner adverse to the Investors (it being understood and agreed that, for all purposes of this Agreement (including Sections 10.3 and 10.5), a communication by the Board of Directors of the Company to the stockholders of the Company in accordance with Rule 14d-9(f) of the Exchange Act, or any similar communication to the stockholders of the Company in connection with the commencement of a tender offer or exchange offer, shall not be deemed to constitute a withdrawal, modification or change of the Recommendation) or shall have recommended to the stockholders of the Company an Alternate Financing Proposal, or shall have resolved to effect any of the foregoing (it being agreed that the taking of any action by the Company, its Board of Directors or any of its Representatives of any of the actions permitted by Section 10.5(b) shall not give rise to a right to terminate pursuant to this clause (ii)). (f) by either the Company or by Investors who have agreed to purchase a majority of the Shares of Series A Preferred Stock to be sold hereunder if, upon a vote taken on the Company Proposals at the Stockholders Meeting or any postponement or adjournment thereof, the Company Proposals shall not have been approved by the requisite vote of the stockholders of the Company. 11.2 Effect of Termination. (a) In the event of the termination of this Agreement pursuant to Section 11.1, this Agreement shall forthwith become void and there shall be no liability or -27- obligation on the part of any party hereto, except as provided in this Section 11.2 and Section 12, which shall survive such termination; provided, however, that nothing herein shall relieve any party from liability for any breach of this Agreement. (b) In the event that this Agreement is terminated by the Company pursuant to Section 11.1(d)(ii), then no later than two (2) Business Days after the execution of any letter of intent, agreement in principal, commitment letter or definitive agreement with respect to an alternative financing or similar agreement relating to any Alternate Financing Proposal, the Company shall pay $2,200,000 (the "Company Termination Fee") to the Investors, at or prior to the time of termination, payable by wire transfer of same day funds. Such amount shall be allocated among the Investors in proportion to the number of shares of Series A Preferred Stock that each Investor has agreed to purchase pursuant to this Agreement. (c) Each of the Company and the Investors acknowledges that the agreements contained in this Section 11.2 are an integral part of the transactions contemplated by this Agreement. In the event that the Company shall fail to pay the Company Termination Fee when due, the Company shall reimburse the Investors for all reasonable costs and expenses actually incurred or accrued by the Investors (including reasonable fees and expenses of one law firm) in connection any action (including the filing of any lawsuit) taken to collect payment of such amount, together with interest on such unpaid amount at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid to the date of actual payment. 12. Miscellaneous. 12.1 Survival. The warranties, representations and covenants of the Company and Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Company. 12.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any securities). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 12.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York without regard to principles of conflicts of law. 12.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 12.5 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile or by electronic mail if sent during -28- normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as set forth on the signature page hereof or at such other address as such party may designate by ten days' advance written notice to the other parties hereto. 12.6 Finder's Fee. Each party represents that, except as set forth in the Schedule of Exceptions or in this Section 12.6, it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 12.7 Expenses; Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the First Restated Certificate, the Second Restated Certificate, or the Investor Rights Agreement, the Amended and Restated Investor Rights Agreement or the Second Amended and Restated Investor Rights Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 12.8 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), (i) prior to the Closing, only with the written consent of the Company and Investors acquiring in the aggregate more than half the shares of Series A Preferred Stock to be sold pursuant hereto, (ii) after the Closing but prior to the Subsequent Closing, only with the written consent of the Company, Investors acquiring in the aggregate more than half of the shares of Series A Preferred Stock to be issued at the Subsequent Closing and the holders of a majority of the Common Stock issuable or issued upon conversion of the Series A Preferred Stock sold at the Closing pursuant to this Agreement and (iii) after the Subsequent Closing, only with the written consent of the Company and the holders of a majority of the Common Stock issuable or issued upon conversion of the Series A Preferred Stock sold pursuant to this Agreement. Any amendment or waiver effected in accordance with this Section 12.8 shall be binding upon each holder of any securities purchased under this Agreement (including securities into which such securities are convertible) at the time outstanding, each future holder of all such Series A Preferred Stock and the Company. The failure of any party to assert any rights or remedies shall not constitute a waiver of such rights or remedies. -29- 12.9 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 12.10 Aggregation of Stock. All shares of the Series A Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 12.11 Entire Agreement. This Agreement and the documents, schedules and exhibits referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. 12.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [SIGNATURE PAGES FOLLOW] -30- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. COMPANY: GOAMERICA, INC. By: /s/ Daniel R. Luis ----------------------------------------- Name: Daniel R. Luis Title: Chief Executive Officer Address: 433 Hackensack Avenue Hackensack, NJ 07601 Attn.: Chief Executive Officer With a copy to: Lowenstein Sandler PC 65 Livingston Avenue Roseland, NJ 07068 Attn.: Peter H. Ehrenberg, Esq. Fax No. (973) 597-2400 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT] INVESTOR: CCP A, L.P. By: CLEARLAKE CAPITAL PARTNERS, LLC Its General Partner By: CCG Operations, LLC Its Managing Member By: /s/ Behdad Eghbali ----------------------------------------- Name: Behdad Eghbali Title: Authorized Signatory Address: 650 Madison Avenue, 26th Floor New York, NY 10022 Fax No. (212) 610-9121 With a copy to: Milbank, Tweed, Hadley & McCloy LLP 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Attn.: Melainie K. Mansfield, Esq. Fax No. (213) 892-4711 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT] SCHEDULE A Schedule of Investors
Part I Shares of Investor Series A Preferred Stock Purchase Price ------------------------------------------ ----------------------------------- ---------------------------- CCP A, L.P. 6,479,691 $33,500,002.47 --------- -------------- Total 6,479,691 $33,500,002.47 Part II Shares of Investor Series A Preferred Stock Purchase Price ------------------------------------------ ----------------------------------- ---------------------------- CCP A, L.P. 967,118 $5,000,000.06 --------- -------------- Total 967,118 $5,000,000.06
Schedule A-1 EX-99.1 6 e28555ex99_1.txt COMMITTMENT LETTER Exhibit 99.1 [LOGO] CLEARLAKE CAPITAL 650 Madison Avenue, 23rd Floor New York, New York 10022 Tel 212.610.9000 September 12, 2007 PERSONAL AND CONFIDENTIAL GoAmerica, Inc. 433 Hackensack Avenue, Hackensack, NJ 07601 Attn: Daniel R. Luis, Chief Executive Officer Re: Amended and Restated First Lien Debt Commitment Letter Ladies and Gentlemen: You have advised Clearlake Capital Group, LP (together with the funds and accounts managed or advised by it, "Clearlake") that GoAmerica, Inc. (together with its subsidiaries, the "Company"), intends to acquire all or substantially all of the assets of the Tele Relay Services division of Verizon Communications Inc. (the "TRS Division" and such acquisition, the "Acquisition") pursuant to a definitive asset purchase agreement for the Acquisition (the "Acquisition Agreement"). Upon the terms, and subject to satisfaction of the conditions, set forth herein, CCP A, L.P., a fund managed by Clearlake, hereby commits to provide certain debt financing for the Company to finance the Acquisition, for the Company's expenses and working capital purposes and for the repayment of certain of the Company's existing secured debt. The requested financing will be structured as a $30 million first lien term loan or note issuance (the "First Lien Debt Financing") having the terms set forth in Annex A, and will be subject to the conditions set forth in this letter and in the attached Annexes A and B hereto (collectively, the "Commitment Letter"). This Commitment Letter amends and restates that certain First Lien Debt Commitment Letter, dated as of August 1, 2007, by and between the Company and CCP A, L.P. On August 1, 2007, the parties hereto (or their affiliates) entered into (i) that certain $3,500,000 Credit Agreement (the "Bridge Credit Agreement") and (ii) that certain $1,500,000 Stock Purchase Agreement (the "$1,500,000 Stock Purchase Agreement"). On the date hereof, the parties hereto (or their affiliates) are also entering into (x) an Amended and Restated Stock Purchase Agreement covering 7,446,809 shares of the Company's Series A Preferred Stock (the "Amended and Restated Stock Purchase Agreement") and (y) an amended and restated Second Lien Debt Commitment Letter (the "Second Lien Debt Commitment Letter" and together with the $1,500,000 Stock Purchase Agreement, the Amended and Restated Stock Purchase Agreement and the Bridge Credit Agreement, the "Other Financing Documents"). GoAmerica, Inc. September 12, 2007 Page 2 1. Indemnification; Exclusivity; Commitment Fee. (a) The Company agrees to the provisions with respect to Clearlake's indemnity and other matters set forth in Annex B, which is incorporated by reference into this Commitment Letter. (b) Except as expressly permitted by Section 10.5 of the Amended and Restated Stock Purchase Agreement: (I) the Company hereby agrees to exclusively negotiate the First Lien Debt Financing with Clearlake in good faith and will not enter into any discussions with third parties with respect to the First Lien Debt Financing or any other financing relating to the Acquisition (other than the financings contemplated by the Other Financing Documents) until the earliest of (A) the Exclusivity Termination Date (defined below), (B) the execution of definitive agreements evidencing the First Lien Debt Financing, and (C) the date this Commitment Letter is terminated pursuant to a Termination Notice (as defined below); and (II) the parties hereto hereby agree to work together in good faith and to use reasonable commercial efforts to execute the First Lien Debt Financing Documents (defined below) within 60 days of the signing of the Acquisition Agreement, provided that consummation of the closing provided for in the First Lien Debt Financing Documents shall be subject only to the conditions set forth in Section 3 hereof (other than the condition set forth in paragraph (a)(1) of Section 3), to customary conditions concerning the perfection of Clearlake's security interest in the collateral thereunder, and to such stockholder approvals as shall be required by the rules of The Nasdaq Stock Market, Inc. ("Nasdaq"). As used herein, "Exclusivity Termination Date" shall mean December 31, 2007; provided that, if one or more Governmental Consents (as defined in the Acquisition Agreement as in effect on August 1, 2007) have not been obtained by December 31, 2007 and the Company exercises its option (the "Option") under the Acquisition Agreement to extend the Exclusivity Termination Date to March 31, 2008, Clearlake may, in its sole discretion, extend the Exclusivity Termination Date to March 31, 2008 by delivering written notice of such extension to the Company. (c) The Company heretofore paid Clearlake a commitment fee of 1.66% of the face amount of the First Lien Debt Financing (the "Commitment Fee"). The Company hereby acknowledges and agrees that the Commitment Fee is fully earned and non-refundable on August 1, 2007 and is in addition to any other fees payable by the Company in connection with the First Lien Debt Financing. 2. Closing; Obligations. Subject to the satisfaction of the conditions set forth in this Commitment Letter, the closing of the First Lien Debt Financing would occur no later than the closing of the Acquisition. Clearlake's obligation under this Commitment Letter (but not under the Definitive Agreement described below) will terminate upon the earliest of (a) the termination of the Amended and Restated Stock Purchase Agreement by the Company pursuant to Section 11.1(d)(ii) thereof, (b) the termination of the Acquisition Agreement, and (c) the later of (i) one day following Clearlake's delivery to the Company of written notice (which notice (a "Termination Notice") may be delivered at any time on or after December 31, 2007, except that if the Company exercises the Option and Clearlake elects to extend the Exclusivity Termination Date to March 31, 2008, such date shall be March 31, 2008 and not December 31, 2007) that Clearlake desires to terminate its obligation to close the First Lien Debt Financing, or (ii) the date that is specifically set forth as the termination date for this Commitment Letter in such Termination Notice. 3. Conditions. GoAmerica, Inc. September 12, 2007 Page 3 Clearlake's obligation to provide the First Lien Debt Financing is subject to the following conditions: (a) The Company and Clearlake shall have negotiated, executed and delivered (or, in the case of clause (3) below, the Company shall have provided) (1) a definitive debt issuance and sale document with respect to the First Lien Debt Financing (the "Definitive Agreement"), (2) all documents related to the Definitive Agreement, including without limitation legal opinions, a solvency certificate from the Company and officers' certificates, and (3) corporate records, customary documents from public officials and customary evidence that the collateral agent shall have a valid and perfected first priority lien and security interest in the collateral (the documents referred to in this paragraph, collectively, the "First Lien Debt Financing Documents"), which First Lien Debt Financing Documents shall be in form and substance acceptable to Clearlake and its counsel (such acceptance not to be unreasonably withheld or delayed) and shall be based upon the Bridge Credit Agreement and the Loan Documents referenced therein. (b) The closing of the Acquisition in accordance with the Acquisition Agreement (except to the extent that the Acquisition Agreement is subsequently amended or any term or condition thereof waived, in either case without Clearlake's consent, such consent not to be unreasonably withheld or delayed) shall have occurred concurrently with the closing of the First Lien Debt Financing; (c) There shall have been no amendment of the managed services agreement between Stellar Nordia Services LLC (together with its affiliates, "Nordia") and the Company (the "Managed Services Agreement") executed as of August 1, 2007 other than (i) amendments reasonably acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed), and (ii) an amendment of the Company's existing services agreement with Nordia in form and substance acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed); (d) In respect of Acquisition-related documents entered into on or before August 1, 2007 or attached as exhibits to agreements entered into on or before August 1, 2007, there shall have been no amendment to any such Acquisition-related documents other than amendments in form and substance acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed), and in respect of other Acquisition-related documents, the Company shall have executed and delivered any such Acquisition-related documents in form and substance acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed); (e) The Company shall have received not less than $33,500,000 in gross cash proceeds from the Investors under and as defined in the Amended and Restated Stock Purchase Agreement as a result of the consummation of the Acquisition (unless the Investors are in material breach of their obligations under the Amended and Restated Stock Purchase Agreement); (f) The Company, Verizon Communications Inc. and Clearlake shall have received all necessary and material state and federal regulatory approvals (other than approvals that GoAmerica, Inc. September 12, 2007 Page 4 the Company and Clearlake agree should be waived, the consent to such waiver not to be unreasonably withheld or delayed) for the First Lien Debt Financing and the Acquisition, the Company's shareholders shall have approved the transactions contemplated by the Amended and Restated Stock Purchase Agreement with respect to the Acquisition in accordance with applicable law and the rules of Nasdaq, and the Company and Verizon Communications Inc. shall have received all other material consents required to consummate the Acquisition and the First Lien Debt Financing; and (g) There shall have occurred no material adverse change in the assets, liabilities, customer or supplier relationships, financial condition, operations or results of operations of the Company and the TRS Division taken as a whole, provided, however, in each case, not including any change that (A) is generally applicable to the U.S. economy, (B) is generally applicable to Internet protocol data and voice providers, (C) results from the execution of the Acquisition Agreement, the announcement of the Acquisition Agreement or the consummation of the transactions contemplated by the Acquisition Agreement or (D) relates to changes in generally accepted accounting principles generally applicable to companies serving as Internet protocol data and voice providers occurring after the date of the Acquisition Agreement, and there shall exist no action, suit, investigation, litigation or proceeding pending or threatened that (i) would reasonably be expected to have a material adverse effect on the assets, liabilities, customer or supplier relationships, financial condition, operations or results of operations of the Company and the TRS Division taken as a whole, (ii) would be of the type described in Section 6.1.2 of the Acquisition Agreement, or (iii) are for the purpose of enjoining or preventing the First Lien Debt Financing. 4. Miscellaneous. Except for the integration of Section 10.5 of the Amended and Restated Stock Purchase Agreement, the provisions of Sections 1 and 4 hereof shall remain in full force and effect unless otherwise specifically stated in the definitive documentation for the First Lien Debt Financing that is executed and delivered, and notwithstanding the termination of this Commitment Letter or any commitment or undertaking hereunder. This Commitment Letter shall not be assignable by the Company without Clearlake's prior written consent (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter may not be amended or any term or provision hereof waived or modified except by an instrument in writing signed by each of the parties hereto. This letter agreement shall be governed by the internal laws of the State of New York, without regard to conflict of laws principles, except for applicable Federal law. EACH OF THE PARTIES TO THIS LETTER AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED GoAmerica, Inc. September 12, 2007 Page 5 UPON OR ARISING OUT OF THIS LETTER AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LETTER AGREEMENT. Clearlake hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the "Act"), Clearlake and each other investor party (each an "Investor") to the definitive First Lien Debt Financing Documents are required to obtain, verify and record information that identifies the Company, which information includes the Company's name and address and other information that will allow Clearlake and the Investors to identify the Company in accordance with the Act. This notice is given in accordance with the requirements of the Act and is effective for Clearlake and each other Investor. Please note that neither Clearlake nor any of its affiliates provides accounting, tax or legal advice. Notwithstanding anything herein to the contrary, Clearlake (and each of its members, officers, directors, employees, affiliates, agents, advisors and attorneys) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this potential transaction and all materials of any kind (including tax opinions or other tax analyses) that are provided to Clearlake relating to such tax treatment and tax structure. However, the foregoing sentence shall not apply to any information relating to the tax treatment or tax structure to the extent nondisclosure of such information is reasonably necessary to enable any person to comply with applicable securities laws. For this purpose, "tax treatment" means U.S. federal income tax treatment, and "tax structure" is limited to any facts relevant to the U.S. federal tax treatment of the First Lien Debt Financing. This Commitment Letter may be executed in any number of counterparts, each of which when executed shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter is the only agreement that has been entered into among the parties hereto with respect to the First Lien Debt Financing and sets forth the entire understanding of the parties with respect thereto and supersedes any prior written or oral agreements among the parties hereto with respect to the First Lien Debt Financing. THIS COMMITMENT LETTER REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [Remainder of page intentionally left blank] Please confirm that the foregoing is in accordance with your understanding by signing and returning to Clearlake the enclosed copy of this Commitment Letter, whereupon this Commitment Letter shall become a binding agreement between us. Notwithstanding the foregoing, this letter shall be void if not signed and returned by you by 11:59 pm New York time on September 12, 2007. We look forward to working with you on this assignment. Very truly yours, CCP A, L.P. By: Clearlake Capital Partners, LLC Its: General Partner By: CCG Operations, LLC Its: Managing Member By: /s/ Behdad Eghbali ------------------------------------ Name: Behdad Eghbali Title: Authorized Signatory Accepted as of the date above: GOAMERICA, INC. By: /s/ Daniel R. Luis ----------------------------------------- Name: Daniel R. Luis Title: Chief Executive Officer ANNEX A GOAMERICA, INC. SUMMARY OF TERMS AND CONDITIONS This Summary of Terms and Conditions of the Proposed First Lien Debt Financing does not purport to summarize all the terms, conditions, representations, warranties and other provisions with respect to the transactions referred to herein. Certain capitalized terms used herein are defined in the Commitment Letter. Terms of the First Lien Debt Financing Issuer: GoAmerica, Inc. ("GOAM", or the "Issuer"). Guarantors: All of GOAM's direct and indirect domestic subsidiaries, other than non-material subsidiaries (determined on a basis consistent with the terms of the Bridge Credit Agreement). Notes/Loan: Senior secured notes or a senior secured loan in the principal amount of $30,000,000 (the "Senior Debt"). Security: The Senior Debt will be secured by perfected first priority pledges of all of the equity interests of GOAM's direct and indirect domestic subsidiaries other than the non-material subsidiaries referenced above (GOAM and such subsidiaries, collectively, the "Loan Parties"), and perfected first priority security interests in and mortgages on all tangible and intangible assets (including, without limitation, accounts receivable, inventory, equipment, general intangibles, intercompany notes, insurance policies (other than directors and officers liability insurance policies), investment property, intellectual property, real property, cash and proceeds of the foregoing) of the Loan Parties, wherever located, now or hereafter owned, subject to such exceptions as are agreed. Proposed Closing Closing of the Acquisition. Date: Maturity: One week before the date that is four years and six months from the closing of the Acquisition. Interest Rate: LIBOR + 700 bps per annum, payable quarterly in cash. Ranking: GOAM will ensure that its obligations with respect to the Senior Debt will at all times constitute general, direct, 1 unsubordinated and unconditional obligations of the Loan Parties ranking at all times at least pari passu in priority of payment, and senior in right of security and in all other respects, with other senior indebtedness of GOAM now or hereafter outstanding. Amortization: None, bullet at Maturity. Prepayment Premium: 102% during year 1 following issuance; 101% during years 2 through 4 following issuance; and no prepayment premium thereafter. Covenants: The type of covenants will be customary for transactions of this nature, including, but not limited to, a limitation on debt incurrence, limitation on sale of assets, restricted payments and investments, consolidations, mergers and change of control, issuance of subsidiary securities, joint ventures and transactions with affiliates. The documents governing the Senior Debt will also contain covenants requiring that the Company maintain: o Minimum Liquidity of $5 million at all times, o Maximum CapEx in any fiscal year (excluding capitalized labor) of 30% over a plan agreed between the parties; and o Maximum Total Leverage Ratio (Total Debt to Pro-Forma Adjusted EBITDA) of 3.5x, which covenant shall be tested quarterly from and after Q1 2009 on a TTM basis. Use of Proceeds: Acquisition of the TRS Division, general working capital purposes of GOAM and repayment of certain of the Company's existing secured debt. Governing Law: The agreements contemplated hereby shall be governed by the internal laws of the State of New York, without regard to conflicts of laws principles. Assignability: Clearlake and its assignees and transferees may assign or transfer their interests in the First Lien Debt Financing at their discretion (i) to Reservoir Capital Group, L.L.C. and its affiliates and affiliates of Clearlake, without the consent of GOAM, (ii) in connection with the primary syndication of the First Lien Debt Financing, without the consent of GOAM (provided, however, that Clearlake shall remain primarily and fully liable hereunder if the conditions set forth herein are satisfied and, for any reason, such syndication does not provide 2 the financing contemplated hereunder) and (iii) otherwise, with the consent of GOAM, which consent shall not be unreasonably withheld, conditioned or delayed; provided that GOAM's consent to any such assignment or transfer shall not be required following the occurrence and during the continuance of a default or event of default under the First Lien Debt Financing Documents. 3 ANNEX B In the event that Clearlake becomes involved involuntarily in any capacity in any action, proceeding or investigation brought by or against any person, including stockholders or other equity holders of the Company, in connection with the transactions contemplated by this Commitment Letter (the "Letter"), the Company periodically will reimburse Clearlake for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Company also will indemnify and hold Clearlake harmless against any and all losses, claims, damages or liabilities to any such person in connection with the transactions contemplated by the Letter, and without regard to the exclusive or contributory negligence of Clearlake or its affiliates, or the members, directors, agents, employees and controlling persons (if any), as the case may be, of Clearlake and any such affiliate, except to the extent that a court shall have found (in a judgment not subject to further appeal or for which the time for appeal has expired) that any such loss, claim, damage or liability results from the bad faith, gross negligence or willful misconduct of Clearlake in performing obligations that are the subject of the Letter. If for any reason the foregoing indemnification is unavailable to Clearlake or is insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by Clearlake as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Company and its stockholders or other equity holders on the one hand and Clearlake on the other hand in the matters contemplated by the Letter as well as the relative fault of the Company and Clearlake with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any affiliate of Clearlake and the members, directors, agents, employees and controlling persons (if any), as the case may be, of Clearlake and any such affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Clearlake, any such affiliate and any such person. The Company also agrees that neither any indemnified party nor any of such affiliates, partners, directors, agents, employees or controlling persons shall have any liability based on its or their exclusive or contributory negligence or otherwise to the Company or any person asserting claims on behalf of or in right of the Company or any other person in connection with the transactions contemplated by the Letter except to the extent that a court shall have found (in a judgment not subject to further appeal or for which the time for appeal has expired) that any losses, claims, damages, liabilities or expenses incurred by the Company resulted from the bad faith, gross negligence or willful misconduct of such indemnified party in performing the services that are the subject of the Letter; provided, however, that in no event shall such indemnified party or such other parties have any liability for any indirect, consequential or punitive damages in connection with or as a result of such indemnified party's or such other parties' activities related to the Letter. 4 EX-99.2 7 e28555ex99_2.txt COMMITTMENT LETTER Exhibit 99.2 [LOGO] CLEARLAKE CAPITAL 650 Madison Avenue, 23rd Floor New York, New York 10022 Tel 212.610.9000 September 12, 2007 PERSONAL AND CONFIDENTIAL GoAmerica, Inc. 433 Hackensack Avenue, Hackensack, NJ 07601 Attn: Daniel R. Luis, Chief Executive Officer Re: Amended and Restated Second Lien Debt Commitment Letter Ladies and Gentlemen: You have advised Clearlake Capital Group, LP (together with the funds and accounts managed or advised by it, "Clearlake") that GoAmerica, Inc. (together with its subsidiaries, the "Company") (A) intends to acquire all or substantially all of the assets of the Tele Relay Services division of Verizon Communications Inc. (the "TRS Division" and such acquisition, the "TRS Acquisition") pursuant to a definitive asset purchase agreement for the TRS Acquisition (the "TRS Acquisition Agreement"), (B) intends to acquire Hands On Video Relay Services, Inc., a Delaware corporation, and its subsidiaries (collectively, "HOVRS" and such acquisition, the "HOVRS Acquisition") pursuant to a definitive merger agreement for the HOVRS Acquisition (the "HOVRS Acquisition Agreement") and (C) desires to procure financing for additional working capital purposes and to finance the HOVRS Acquisition. Upon the terms, and subject to satisfaction of the conditions, set forth herein, CCP A, L.P., a fund managed by Clearlake, hereby commits to provide certain debt financing for the Company for the Company's working capital purposes and to finance the HOVRS Acquisition. The requested financing will be structured as a $40 million second lien term loan or note issuance (the "Second Lien Debt Financing") having the terms set forth in Annex A, and will be subject to the conditions set forth in this letter and in the attached Annexes A and B hereto (collectively, the "Amended and Restated Commitment Letter"). This Amended and Restated Commitment Letter amends and restates that certain Second Lien Debt Commitment Letter, dated as of August 1, 2007, by and between the Company and CCP A, L.P. On the date hereof, the parties hereto (or their affiliates) are entering into (x) that certain Amended and Restated Stock Purchase Agreement related to the purchase of 7,446,809 shares of the Company's Series A Preferred Stock (the "7,446,809 Share Stock Purchase Agreement"), and (y) that certain Amended and Restated First Lien Debt Commitment Letter (the "First Lien Debt Commitment Letter"). On August 1, 2007, the parties hereto (or their affiliates) entered into (i) that certain $3,500,000 Credit GoAmerica, Inc. September 12, 2007 Page 2 Agreement (the "Bridge Credit Agreement") and (ii) that certain $1,500,000 Stock Purchase Agreement (the "$1,500,000 Stock Purchase Agreement" and together with the First Lien Debt Commitment Letter, the 7,446,809 Share Stock Purchase Agreement and the Bridge Credit Agreement, the "Other Financing Documents"). 1. Indemnification; Exclusivity; Commitment Fee. (a) The Company agrees to the provisions with respect to Clearlake's indemnity and other matters set forth in Annex B, which is incorporated by reference into this Amended and Restated Commitment Letter. (b) Except as expressly permitted by Section 10.5 of the 7,446,809 Share Stock Purchase Agreement, the Company hereby agrees to exclusively negotiate the Second Lien Debt Financing with Clearlake in good faith and will not enter into any discussions with third parties with respect to the Second Lien Debt Financing or any other financing for any proposed investment or acquisition (other than the financings contemplated by the Other Financing Documents) until the earlier of (A) the execution of definitive agreements evidencing the Second Lien Debt Financing, and (B) the date this Amended and Restated Commitment Letter is terminated. (c) The Company hereby agrees to pay Clearlake a commitment fee of $664,000.00 (the "Commitment Fee"), which shall be due and payable in full on the date hereof. The Company hereby acknowledges and agrees that the Commitment Fee shall be fully earned and non-refundable on such date and shall be in addition to any other fees payable by the Company in connection with the Second Lien Debt Financing. 2. Closing; Obligations. Subject to the satisfaction of the conditions set forth in this Amended and Restated Commitment Letter, the closing of the Second Lien Debt Financing would occur no later than the closing of the HOVRS Acquisition. Clearlake's obligation under this Amended and Restated Commitment Letter (but not under the Definitive Agreement described below) will terminate upon the earliest of (a) the termination of the 7,446,809 Share Stock Purchase Agreement by the Company pursuant to Section 11.1(d)(ii) thereof, (b) the termination of the HOVRS Acquisition Agreement, and (c) the later of (i) one day following Clearlake's delivery to the Company of written notice (which notice (a "Termination Notice") may be delivered at any time on or after February 28, 2008) that Clearlake desires to terminate its obligation to close the Second Lien Debt Financing, or (ii) the date that is specifically set forth as the termination date for this Amended and Restated Commitment Letter in such Termination Notice. 3. Conditions. Clearlake's obligation to provide the Second Lien Debt Financing is subject to the following conditions: (a) The Company and Clearlake shall have negotiated, executed and delivered (or, in the case of clause (3) below, the Company shall have provided) (1) a definitive debt issuance and sale document with respect to the Second Lien Debt Financing (the "Definitive Agreement"), (2) all documents related to the Definitive Agreement, including without GoAmerica, Inc. September 12, 2007 Page 3 limitation legal opinions, a solvency certificate from the Company and officers' certificates, and (3) corporate records, customary documents from public officials and customary evidence that the collateral agent shall have a valid and perfected first priority lien and security interest in the collateral (the documents referred to in this paragraph, collectively, the "Second Lien Debt Financing Documents"), which Second Lien Debt Financing Documents shall be in form and substance acceptable to Clearlake and its counsel (such acceptance not to be unreasonably withheld or delayed) and shall be based upon the Bridge Credit Agreement and the Loan Documents referenced therein; provided, however, the parties agree that the terms of the Second Lien Debt Financing Documents will contain looser "carve-outs" to the covenants to be agreed upon by the parties; (b) The closing of the TRS Acquisition in accordance with the TRS Acquisition Agreement (except to the extent that the TRS Acquisition Agreement is subsequently amended or any term or condition thereof waived without Clearlake's consent, such consent not to be unreasonably withheld or delayed) shall have occurred concurrently with the closing of the First Lien Debt Financing; (c) The Company shall have received not less than $38,500,000 in gross cash proceeds from the Investors under and as defined in the 7,446,809 Share Stock Purchase Agreement as a result of the consummation of the transactions contemplated thereby, including receipt of shareholder approval for such share issuances (unless the Investors are in material breach of their obligations under the 7,446,809 Share Stock Purchase Agreement); (d) There shall exist no action, suit, investigation, litigation or proceeding pending or threatened that is for the purpose of enjoining or preventing the Second Lien Debt Financing; (e) The closing of the HOVRS Acquisition in accordance with the HOVRS Acquisition Agreement (except to the extent that the HOVRS Acquisition Agreement is subsequently amended or any term or condition thereof waived without Clearlake's consent, such consent not to be unreasonably withheld or delayed) shall have occurred concurrently with the closing of the Second Lien Debt Financing; (f) In respect of HOVRS Acquisition-related documents entered into on or before the date hereof or attached as exhibits to agreements entered into on or before the date hereof, there shall have been no amendment to any such HOVRS Acquisition-related documents other than amendments in form and substance acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed), and in respect of other HOVRS Acquisition-related documents, the Company shall have executed and delivered any such HOVRS Acquisition-related documents in form and substance acceptable to Clearlake (such acceptance not to be unreasonably withheld or delayed); and (g) The Company, Verizon Communications Inc., HOVRS and Clearlake shall have received all necessary and material state and federal regulatory approvals (other than approvals that the Company and Clearlake agree should be waived, the consent to such waiver not to be unreasonably withheld or delayed) for the Second Lien Debt Financing, the TRS GoAmerica, Inc. September 12, 2007 Page 4 Acquisition and the HOVRS Acquisition, the Company's shareholders shall have approved the transactions contemplated by the 7,446,809 Share Stock Purchase Agreement in accordance with applicable law and the rules of Nasdaq, and the Company, Verizon Communications Inc. and HOVRS shall have received all other material consents required to consummate the TRS Acquisition, the HOVRS Acquisition and the Second Lien Debt Financing. Miscellaneous. Except for the integration of Section 10.5 of the 7,446,809 Share Stock Purchase Agreement, the provisions of Sections 1 and 4 hereof shall remain in full force and effect unless otherwise specifically stated in the definitive documentation for the Second Lien Debt Financing that is executed and delivered, and notwithstanding the termination of this Amended and Restated Commitment Letter or any commitment or undertaking hereunder. This Amended and Restated Commitment Letter shall not be assignable by the Company without Clearlake's prior written consent (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Amended and Restated Commitment Letter may not be amended or any term or provision hereof waived or modified except by an instrument in writing signed by each of the parties hereto. This letter agreement shall be governed by the internal laws of the State of New York, without regard to conflict of laws principles, except for applicable Federal law. EACH OF THE PARTIES TO THIS LETTER AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LETTER AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LETTER AGREEMENT. Clearlake hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the "Act"), Clearlake and each other investor party (each an "Investor") to the definitive Second Lien Debt Financing Documents are required to obtain, verify and record information that identifies the Company, which information includes the Company's name and address and other information that will allow Clearlake and the Investors to identify the Company in accordance with the Act. This notice is given in accordance with the requirements of the Act and is effective for Clearlake and each other Investor. Please note that neither Clearlake nor any of its affiliates provides accounting, tax or legal advice. Notwithstanding anything herein to the contrary, Clearlake (and each of its members, officers, directors, employees, affiliates, agents, advisors and attorneys) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this potential transaction and all materials of any kind (including tax opinions or other tax analyses) that are provided to Clearlake relating to such tax treatment and tax structure. However, the foregoing sentence shall not apply to any information relating to the tax treatment or tax structure to the extent nondisclosure of such information is reasonably necessary to enable any person to comply with applicable securities laws. For this purpose, "tax GoAmerica, Inc. September 12, 2007 Page 5 treatment" means U.S. federal income tax treatment, and "tax structure" is limited to any facts relevant to the U.S. federal tax treatment of the Second Lien Debt Financing. This Amended and Restated Commitment Letter may be executed in any number of counterparts, each of which when executed shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Amended and Restated Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. This Amended and Restated Commitment Letter is the only agreement that has been entered into among the parties hereto with respect to the Second Lien Debt Financing and sets forth the entire understanding of the parties with respect thereto and supersedes any prior written or oral agreements among the parties hereto with respect to the Second Lien Debt Financing. THIS COMMITMENT LETTER REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [Remainder of page intentionally left blank] Please confirm that the foregoing is in accordance with your understanding by signing and returning to Clearlake the enclosed copy of this Amended and Restated Commitment Letter, whereupon this Amended and Restated Commitment Letter shall become a binding agreement between us. Notwithstanding the foregoing, this letter shall be void if not signed and returned by you by 11:59 pm New York time on September 12, 2007. We look forward to working with you on this assignment. Very truly yours, CCP A, L.P. By: Clearlake Capital Partners, LLC Its: General Partner By: CCG Operations, LLC Its: Managing Member By: /s/ Behdad Eghbali ----------------------------------- Name: Behdad Eghbali Title: Authorized Signatory Accepted as of the date above: GOAMERICA, INC. By: /s/ Daniel R. Luis ------------------------------- Name: Daniel R. Luis Title: Chief Executive Officer ANNEX A GOAMERICA, INC. SUMMARY OF TERMS AND CONDITIONS This Summary of Terms and Conditions of the Proposed Second Lien Debt Financing does not purport to summarize all the terms, conditions, representations, warranties and other provisions with respect to the transactions referred to herein. Certain capitalized terms used herein are defined in the Amended and Restated Commitment Letter. Terms of the Second Lien Debt Financing Issuer: GoAmerica, Inc. ("GOAM", or the "Issuer"). Guarantors: All of GOAM's direct and indirect domestic subsidiaries, other than non-material subsidiaries (determined on a basis consistent with the terms of the Bridge Credit Agreement). Notes/Loan: Senior secured notes or a senior secured loan in the principal amount of $40,000,000 (the "Second Lien Debt"). Security: The Second Lien Debt will be secured by perfected second priority pledges of all of the equity interests of GOAM's direct and indirect domestic subsidiaries other than the non-material subsidiaries referenced above (GOAM and such subsidiaries, collectively, the "Loan Parties"), and perfected second priority security interests in and mortgages on all tangible and intangible assets (including, without limitation, accounts receivable, inventory, equipment, general intangibles, intercompany notes, insurance policies (other than directors and officers liability insurance policies), investment property, intellectual property, real property, cash and proceeds of the foregoing) of the Loan Parties, wherever located, now or hereafter owned, subject to such exceptions as are agreed. Proposed Closing Date: Closing of the HOVRS Acquisition. Maturity: One week before the date that is five years from the closing of the Second Lien Debt Financing. Interest Rate: LIBOR + 900 bps per annum, payable quarterly in cash. Ranking: GOAM will ensure that its obligations with respect to the Second Lien Debt will at all times constitute general, direct, 1 unsubordinated and unconditional obligations of the Loan Parties ranking at all times at least pari passu in priority of payment, and senior in right of security and in all other respects, with other senior indebtedness of GOAM now or hereafter outstanding; provided that the Second Lien Debt will be subordinated in right of security only to the indebtedness contemplated by the First Lien Debt Commitment Letter pursuant to an intercreditor agreement in form and substance reasonably satisfactory to the Lenders. Amortization: None, bullet at Maturity. Prepayment Premium: 102% during year 1 following issuance; 101% during years 2 through 4 following issuance; and no prepayment premium thereafter. Covenants: The type of covenants will be customary for transactions of this nature, including, but not limited to, a limitation on debt incurrence, limitation on sale of assets, restricted payments and investments, consolidations, mergers and change of control, issuance of subsidiary securities, joint ventures and transactions with affiliates. The documents governing the Second Lien Debt will also contain covenants requiring that the Company maintain: o Minimum Liquidity of $5 million at all times; o Maximum CapEx in any fiscal year (excluding capitalized labor) of 30% over a plan agreed between the parties; and o Maximum Total Leverage Ratio (Total Debt to Pro-Forma Adjusted EBITDA) of 3.5x, which covenant shall be tested quarterly from and after Q1 2009 on a TTM basis. Use of Proceeds: For the Company's working capital purposes and to finance the HOVRS Acquisition Governing Law: The agreements contemplated hereby shall be governed by the internal laws of the State of New York, without regard to conflicts of laws principles. Assignability: Clearlake and its assignees and transferees may assign or transfer their interests in the Second Lien Debt Financing at their discretion (i) to Reservoir Capital Group, L.L.C. and its affiliates and affiliates of Clearlake, without the consent of GOAM, (ii) in connection with the primary syndication of the Second Lien Debt Financing, without the consent of GOAM 2 (provided, however, that Clearlake shall remain primarily and fully liable hereunder if the conditions set forth herein are satisfied and, for any reason, such syndication does not provide the financing contemplated hereunder), and (iii) otherwise, with the consent of GOAM, which consent shall not be unreasonably withheld, conditioned or delayed; provided that GOAM's consent to any such assignment or transfer shall not be required following the occurrence and during the continuance of a default or event of default under the Second Lien Debt Financing Documents. 3 ANNEX B In the event that Clearlake becomes involved involuntarily in any capacity in any action, proceeding or investigation brought by or against any person, including stockholders or other equity holders of the Company, in connection with the transactions contemplated by this Amended and Restated Commitment Letter (the "Letter"), the Company periodically will reimburse Clearlake for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Company also will indemnify and hold Clearlake harmless against any and all losses, claims, damages or liabilities to any such person in connection with the transactions contemplated by the Letter, and without regard to the exclusive or contributory negligence of Clearlake or its affiliates, or the members, directors, agents, employees and controlling persons (if any), as the case may be, of Clearlake and any such affiliate, except to the extent that a court shall have found (in a judgment not subject to further appeal or for which the time for appeal has expired) that any such loss, claim, damage or liability results from the bad faith, gross negligence or willful misconduct of Clearlake in performing obligations that are the subject of the Letter. If for any reason the foregoing indemnification is unavailable to Clearlake or is insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by Clearlake as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Company and its stockholders or other equity holders on the one hand and Clearlake on the other hand in the matters contemplated by the Letter as well as the relative fault of the Company and Clearlake with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any affiliate of Clearlake and the members, directors, agents, employees and controlling persons (if any), as the case may be, of Clearlake and any such affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Clearlake, any such affiliate and any such person. The Company also agrees that neither any indemnified party nor any of such affiliates, partners, directors, agents, employees or controlling persons shall have any liability based on its or their exclusive or contributory negligence or otherwise to the Company or any person asserting claims on behalf of or in right of the Company or any other person in connection with the transactions contemplated by the Letter except to the extent that a court shall have found (in a judgment not subject to further appeal or for which the time for appeal has expired) that any losses, claims, damages, liabilities or expenses incurred by the Company resulted from the bad faith, gross negligence or willful misconduct of such indemnified party in performing the services that are the subject of the Letter; provided, however, that in no event shall such indemnified party or such other parties have any liability for any indirect, consequential or punitive damages in connection with or as a result of such indemnified party's or such other parties' activities related to the Letter. 4 EX-99.3 8 e28555ex99_3.txt ESCROW AGREEMENT Exhibit 99.3 EXECUTION VERSION ESCROW AGREEMENT This ESCROW AGREEMENT (this "Escrow Agreement") is entered into as of __________, 2007, by and among GoAmerica, Inc., a Delaware corporation ("Acquirer"), Bill M. McDonagh, as the agent of the stockholders of HOVRS (the "Stockholders' Agent"), and American Stock Transfer & Trust Company, as the escrow agent (the "Escrow Agent"). RECITALS A. Reference is made to that certain Agreement and Plan of Merger dated as of September 12, 2007 (the "Merger Agreement") by and among Acquirer, HOVRS Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Acquirer ("HOVRS Merger Sub"), Hands On Video Relay Services, Inc., a Delaware corporation ("HOVRS"), and the Stockholders' Agent, pursuant to which, and subject to the terms and conditions whereof, (i) HOVRS Merger Sub will merge with and into HOVRS and the separate corporate existence of HOVRS Merger Sub will cease, (ii) each share of HOVRS Common Stock will be converted into the right to receive Common Merger Consideration, and (iii) each share of HOVRS Preferred Stock will be converted into the right to receive Preferred Merger Consideration (such transaction is referred to herein as the "Merger"). Capitalized terms used herein without being defined have the same meanings that they are given in the Merger Agreement; B. The Merger Agreement provides that a portion of the Merger Consideration equal to Five Million Dollars ($5,000,000) in cash (the "Escrow Cash") will be placed in escrow to secure the indemnification obligations of the former HOVRS Stockholders to Acquirer; C. The Stockholders' Agent has been appointed to represent the former HOVRS Stockholders pursuant to Section 9.8 of the Merger Agreement; and D. The parties desire to confirm the terms and conditions pursuant to which the Escrow Cash will be deposited and held in and disbursed from escrow. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises herein contained, and intending to be legally bound, the parties hereto agree as follows: 1. Appointment of Agents. (a) Pursuant to Section 9.8 of the Merger Agreement, Bill M. McDonagh has been appointed to act as the Stockholders' Agent hereunder, and Bill M. McDonagh hereby accepts such appointment for the purpose of representing the interests of the Stockholders of HOVRS, all in accordance with the terms and conditions set forth herein. (b) The parties hereto hereby appoint American Stock Transfer & Trust Company to act as Escrow Agent hereunder, and American Stock Transfer & Trust Company hereby accepts such appointment for the purpose of receiving and disbursing the Escrow Cash, plus all plus all interest earned thereon (the "Escrow Fund"), to be held in escrow pursuant to this Escrow Agreement, all in accordance with the terms and conditions set forth herein. 2. Escrow Fund; Investment. (a) As of the Closing, pursuant to and in accordance with Sections 2.8(g) and 9.1 of the Merger Agreement, Acquirer shall cause to be delivered to the Escrow Agent cash in the aggregate amount of Five Million Dollars ($5,000,000) as the Escrow Cash. The Escrow Agent shall make distributions from the Escrow Fund in accordance with the terms of this Escrow Agreement. (b) Pending disbursement of the Escrow Funds, the Escrow Agent shall invest the Escrow Funds in one or more money market accounts or other interest bearing investment account, as directed by the Stockholders' Agent. Neither the Escrow Agent, the Acquirer nor the Stockholders' Agent will be liable for any loss of principal or income resulting from any deposit made pursuant to this Section 2(b). 3. Indemnification; Incorporation of Section 9 of Merger Agreement. Each of the provisions of Section 9 of the Merger Agreement, which describes the indemnification obligations of the various parties, is incorporated herein by reference as if expressly stated herein. In the event of any inconsistency between the provisions of this Escrow Agreement and the provisions of Section 9 of the Merger Agreement, the provisions of Section 9 of the Merger Agreement shall govern; provided, however, that the provisions of Section 6 hereof shall not be superseded by any provision in the Merger Agreement. 4. Procedure for Acquirer to Make Claims on the Escrow Fund. (a) If, prior to the Termination Date, Acquirer delivers to the Escrow Agent and the Stockholders' Agent an Officer's Certificate in accordance with Section 9 of the Merger Agreement, for a period of thirty (30) days after such delivery, the Escrow Agent shall make no delivery of any property in the Escrow Fund unless the Escrow Agent shall have received written authorization from the Stockholders' Agent to make such delivery. (b) The Stockholders' Agent may object to the claim made in the Officer's Certificate by delivery of a written statement of objection (an "Objection Notice") to Acquirer and the Escrow Agent prior to the expiration of such 30-day period. If the Escrow Agent has not received an Objection Notice during such 30-day period, the Escrow Agent shall, promptly after the expiration of such 30-day period, deliver cash in the amount of Damages claimed in the Officer's Certificate from the Escrow Fund to Acquirer in order to compensate Acquirer for such Damages, in accordance with Section 9.4 of the Merger Agreement. (c) If the Stockholders' Agent objects to the claims set forth in the Officer's Certificate by delivery of an Objection Notice as set forth in Section 4(b) above, Acquirer shall have thirty (30) days from the Stockholders' Agent's delivery of such Objection Notice to respond in a written statement to the Stockholders' Agent objections. If after such 30-day period there remains a dispute as to any claims contained in the Officer's Certificate, the Stockholders' Agent and Acquirer shall attempt in good faith for sixty (60) days from the Stockholders' -2- Agent's delivery of the Objection Notice to agree upon the rights of the respective parties with respect to each of such claims. If the Stockholders' Agent and Acquirer should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and shall distribute property from the Escrow Fund in accordance with the terms of such memorandum. If no agreement can be reached after good faith negotiation between Acquirer and the Stockholders' Agent, either Acquirer or the Stockholders' Agent may, by written notice to the other, demand arbitration of the matter in accordance with the provisions of Section 9.7 of the Merger Agreement. (d) The maximum amount payable by the Escrow Agent to Acquirer pursuant to this Section 4 shall be Five Million Dollars ($5,000,000). 5. Termination. (a) Subject to the following requirements, the Escrow Fund shall be in existence as of the Effective Time and shall terminate at 5:00 p.m., Pacific Daylight Time on the Termination Date (the "Escrow Period"), and the Escrow Agent shall release and distribute the Escrow Fund within three (3) Business Days after the expiration of the Escrow Period to the HOVRS Stockholders on a pro rata basis in accordance with the percentages set forth on Schedule I to the Escrow Agreement; provided, however, that (i) 100% of the amount of any unsatisfied claims for Damages (other than in connection with the FCC Subpoena) specified in any Officer's Certificate delivered in good faith to the Escrow Agent prior to the expiration of the Escrow Period with respect to claims existing prior to the expiration of the Escrow Period (the "Unresolved Claim Amount"), shall not be released until such claims are resolved in accordance with Section 9.5 hereof, and (ii) subject to Section 5(b), the Reserved Escrow Amount shall be retained in the Escrow Fund and shall not be released if the FCC Investigation is not Terminated or if actual Damages have been incurred in connection with the FCC Investigation but have not been resolved in accordance with Section 9.5 hereof. (b) The FCC Investigation shall be terminated or deemed terminated, if (i) the FCC has issued a notice of termination of the FCC Investigation, (ii) the FCC has not issued a notice of apparent liability or similar order seeking forfeiture in connection with the FCC Investigation, or (iii) HOVRS has not entered into a tolling agreement to extend the statute of limitations in connection with the FCC Investigation ( these conditions being individually or collectively referred to as "Terminated"). At the end of the Escrow Period, if the FCC Investigation is Terminated, the Escrow Agent shall release and distribute the Escrow Fund to the HOVRS Stockholders in accordance with Schedule I of the Escrow Agreement. At the end of the Escrow Period, if the FCC Investigation has not been Terminated, a portion of the Escrow Fund equal to the lesser of Two Million Dollars ($2,000,000) or if determinable the amount of potential Damages reasonably specified by Acquirer in consultation with the Stockholders' Agent and agreed upon by the Stockholders' Agent as the potential Damages in connection with the FCC Investigation (the "Reserved Escrow Amount") shall remain in existence until and terminate on the earlier of (i) twenty-four (24) months after the Closing Date, (ii) the date on which the FCC has issued a notice of termination of the FCC Investigation, or (iii) the date on which all actual Damages incurred in connection with the FCC Investigation and resolved in -3- accordance with Section 9.5 have been paid in full (the "Reserved Escrow Period"); provided, however, that in the event that prior to the end of the Reserved Escrow Period the FCC has issued a notice of apparent liability or similar order specifying alleged Damages, the amount of such specified Damages shall remain in the Escrow Fund until a final order resolving such matter has been issued and Acquirer has determined to pay any amount due. At the expiration of the Reserved Escrow Period (or any other period during which funds remain in the Escrow Fund pursuant to this Section 9.3(b)), the Escrow Agent shall promptly (and in any event no later than three (3) Business Days following the date of expiration) release all property remaining in the Escrow Fund to the HOVRS Stockholders in accordance with Schedule I of the Escrow Agreement. 6. Exculpation and Indemnification of the Escrow Agent. It is understood and agreed that the Escrow Agent shall: (a) be under no duty to accept information from any person other than Acquirer or the Stockholders' Agent, and then only to the extent and in the manner provided in this Escrow Agreement; (b) be protected in acting upon any written notice, opinion, request, certificate, consent or other document believed by it to be genuine and to be signed by the proper party or parties; (c) be deemed conclusively to have given and delivered any notice required to be given or delivered hereunder if the same is in writing, signed by any one of its authorized officers if such notice is delivered in accordance with Section 8 of this Escrow Agreement; (d) be indemnified and held harmless, jointly and severally by the parties hereto against any claim made against it by reason of its acting or failing to act in connection with any of the transactions contemplated hereby and against any loss, liability or expense, including the cost of defending itself against any claim of liability it may sustain in carrying out the terms of this Escrow Agreement, except such claims which are occasioned by its bad faith, gross negligence, willful misconduct or fraud, it being understood that the Escrow Agent and each director, officer, employee, agent or affiliate of the Escrow Agent shall be so indemnified; (e) have no duty to inquire into the terms and conditions of any agreements to which the Escrow Agent is not a party, its duties under this Escrow Agreement being understood to be purely ministerial in nature; (f) be permitted to consult with counsel of its choice, and shall not be liable for any action taken, suffered or omitted by it in good faith in accordance with the written advice of such counsel; provided, however, that nothing contained in this Section 6(f), nor any action taken by the Escrow Agent, or of any counsel, shall relieve the Escrow Agent from liability for all claims that are occasioned by its bad faith, gross negligence, willful misconduct or fraud, all as provided in Section 6(d) above; (g) not be bound by any modification, amendment, termination, cancellation, -4- rescission or superseding of this Escrow Agreement, unless the same shall be in writing and signed by all of the parties hereto; (h) be entitled to refrain from taking any action other than to keep all property held by it in escrow until it shall be directed otherwise in writing in accordance with this Escrow Agreement, or by a final judgment of a court of competent jurisdiction; (i) have no liability for any act or omission done pursuant to the instructions contained or expressly provided for herein; (j) have the right, at any time, to resign hereunder by giving written notice of its resignation to Acquirer and the Stockholders' Agent, in accordance with Section 8 of this Escrow Agreement, at least thirty (30) days prior to the date specified for such resignation to take effect, in which case, upon the effective date of such resignation: (i) property in the Escrow Fund shall be delivered to such person as may be designated in writing by Acquirer and the Stockholders' Agent; or (ii) if no such person has been designated by such date, the Escrow Agent's sole responsibility thereafter shall be to keep all property then held by it in the Escrow Fund and to deliver the same to a person designated in writing by Acquirer and the Stockholders' Agent or, if no such person shall have been so designated, in accordance with the directions of a final order or judgment of a court of competent jurisdiction, and the provisions of Section 6(f), 6(j) and 6(k) of this Escrow Agreement shall remain in effect; and (k) be reimbursed upon its request for all reasonable expenses, disbursements and advances incurred or made by it in accordance with any of the provisions of this Escrow Agreement (which expenses, disbursements and advances shall be shared equally between Acquirer on the one hand and the former HOVRS Stockholders on the other hand, with the amount due from such stockholders to be paid out of the Escrow Fund), except any expenses, disbursements or advances as may be attributable to its bad faith, gross negligence, willful misconduct or fraud. 7. Tax. For income tax purposes, all earnings on investment of the Escrow Cash shall be reported by Acquirer. The parties hereto acknowledge and agree that upon the release of the Escrow Fund in accordance with this Escrow Agreement, a portion of the payment will be treated as a payment of interest to the HOVRS Stockholders, and the Acquirer will be permitted a corresponding interest deduction, determined by treating the entire payment under the rules set forth in Section 1.1275-4(c)(4) of the Treasury Regulations. The Escrow Agent shall make a distribution within (30) thirty days following the end of each calendar year of all interest and other amounts earned with respect to the Escrow Cash to the HOVRS Stockholders in accordance with their pro rata portion of the Escrow Cash, as set forth on Schedule I attached to the Escrow Agreement. 8. Notices. All notices, requests, demands and other communications under this -5- Agreement shall be in writing and shall be deemed to have been duly given (a) on the day of service if served personally on the party to whom notice is to be given, (b) on the day of transmission if sent via telecopy transmission to the facsimile number given below, (c) on the day after the day of delivery to an overnight courier service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid and properly addressed, to the party as follows: (a) If to the Escrow Agent: American Stock Transfer & Trust Company 6201 15th Avenue Brooklyn, NY 11219 Attention: _________________________________ Fax: _________________________________ Tel: _________________________________ (b) If to Acquirer: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Attention: Daniel R. Luis Fax: (201) 996-1772 Tel: (201) 996-1717 with a copy to: Chadbourne & Parke LLP 1200 New Hampshire Avenue, N.W. Washington, DC 20036 Attention: Dana Frix Fax: (973) 974-679 Tel: (202) 974-5691 (c) if to the Stockholders' Agent: 23 Park Ridge Road San Rafael, CA 94903 Attention: William M. McDonagh Fax: (415) 391-7262 Tel: (415) 273-4287 with a copy to: Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, CA 94105 Attention: Richard Smith Fax: (415) 773-5759 Tel: (415) 773-5830 -6- 9. Section Headings. The headings of the sections of this Escrow Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Escrow Agreement. 10. Successors and Assigns. This Escrow Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. 11. Governing Law. This Escrow Agreement shall be construed, performed, governed and enforced in accordance with the laws of the State of Delaware, without regard to conflict of law principles. 12. Resolution of Conflicts. Any dispute arising under or in connection with this Agreement shall be resolved in accordance with the conflict resolution procedure set forth in Section 9.7 of the Merger Agreement. 13. Severability. In the event that any provision of this Escrow Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Escrow Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Escrow Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. 14. Amendment; Waiver. Any amendment or waiver of any of the terms or conditions of this Escrow Agreement must be in writing and must be duly executed by or on behalf of the party to be charged with such waiver. The failure of a party to exercise any of its rights hereunder or to insist upon strict adherence to any term or condition hereof on any one occasion shall not be construed as a waiver or deprive that party of the right thereafter to insist upon strict adherence to the terms and conditions of this Escrow Agreement at a later date. Further, no waiver of any of the terms and conditions of this Escrow Agreement shall be deemed to or shall constitute a waiver of any other term of condition hereof (whether or not similar). 15. Attorneys' Fees. If any court proceeding is brought in connection with this Escrow Agreement, or any document, agreement, instrument or certificate delivered under or pursuant to this Escrow Agreement, the prevailing party in such proceeding (whether at trial or on appeal) shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incidental to any such proceeding. The term "prevailing party" as used herein shall mean the party in whose favor a final judgment or award is entered in any such judicial proceeding; provided, however, that if such proceeding is resolved prior to a final judgment or award on the merits, the party in whose favor the proceeding is settled may by motion may apply -7- to the court for an award of the aforementioned costs, fees and expenses, and may take judgment therefor. 16. Counterparts. This Escrow Agreement, any amendment hereto and any notices hereunder may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. [Signatures on following page] -8- IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date first above written. GOAMERICA, INC. By: _____________________________________ Daniel R. Luis President and Chief Executive Officer STOCKHOLDERS' AGENT _________________________________________ Bill M. McDonagh, as Stockholders' Agent AMERICAN STOCK TRANSFER & TRUST COMPANY, as ESCROW AGENT By: _____________________________________ -9- Schedule I [To be updated immediately prior to closing to include all HOVRS Stockholders (including option holders who exercise prior to closing)] - ------------------------------------------------------------------------------- Percentage Amount of Name and Address of HOVRS Stockholder Interest Escrow Cash - ------------------------------------------------------------------------------- [Name] [Address] - ------------------------------------------------------------------------------- [Name] [Address] - ------------------------------------------------------------------------------- [Name] [Address] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TOTAL 100.00% $5,000,000 - ------------------------------------------------------------------------------- EX-99.4 9 e28555ex99_4.txt LOCKUP AND REGISTRATION RIGHTS AGREEMENT Exhibit 99.4 EXECUTION VERSION LOCK-UP AND REGISTRATION RIGHTS AGREEMENT This LOCK-UP AND REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of __________, 200__, by and among GoAmerica, Inc., a Delaware corporation (the "Company"), and certain former stockholders of Hands On Video Relay Services, Inc., a Delaware corporation ("HOVRS"), that are now stockholders of the Company and are identified on the signature pages hereto (each a "Stockholder," and collectively, the "Stockholders"). RECITALS A. Reference is hereby made to that certain Agreement and Plan of Merger dated as of September 12, 2007 (as it may be amended from time to time, the "Merger Agreement"), by and among Acquirer, HOVRS Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Acquirer ("HOVRS Merger Sub"), and HOVRS, pursuant to which, and subject to the terms and conditions whereof, (i) HOVRS Merger Sub merged with and into HOVRS and the separate corporate existence of HOVRS Merger Sub ceased, (ii) each share of HOVRS Common Stock converted into the right to receive the Common Merger Consideration, and (iii) each share of HOVRS Preferred Stock converted into the right to receive the Preferred Merger Consideration (such transactions are referred to herein as the "Merger"). Capitalized terms used herein without being defined have the same meanings that they are given in the Merger Agreement. B. The Stockholders received cash and the shares of Acquirer Common Stock as set forth on Schedule A attached hereto (the "Shares") as Common Merger Consideration and Preferred Merger Consideration, as the case may be, pursuant to the Merger Agreement. C. The Company has requested that the Stockholders enter into this Agreement to provide for a lock-up of the Shares, and such parties are willing to enter into this Agreement for such purpose and for purposes of obtaining the registration rights set forth herein. AGREEMENT The parties hereby agree as follows: 1. Lock-Up. Each Stockholder agrees that, following the Effective Time, such Stockholder shall not, with respect to the Shares received by such Stockholder pursuant to the Merger, (A) during the first one-year period immediately following the Effective Time, sell, transfer or otherwise dispose of any such Shares, and (B) during the second one-year period following the Effective Time, sell, transfer or otherwise dispose of Shares within any preceding three (3) month period representing more than the greater of (i) one percent (1%) of the number of shares of Acquirer Common Stock then outstanding as shown by the most recent report or statement published by Acquirer, (ii) the average weekly reported volume of trading in Acquirer Common Stock reported on Nasdaq Capital Market during the four (4) calendar weeks preceding the filing of Form 144 with the SEC, by the selling Stockholder, as required by Rule 144 of the Securities Act, or if no such notice is required the date of receipt of the order to execute the transaction by the broker or the date of execution of the transaction directly with a market maker, or (iii) the average weekly volume of trading in Acquirer Common Stock reported pursuant to an effective transaction reporting plan or an effective national market system plan during the four-week period specified above. 2. Registration Rights. The Company and the Stockholders covenant and agree as follows: 2.1 Definitions. For purposes of this Agreement: (a) "Average Closing Price" shall mean the average closing price of Acquirer Common Stock as reported on the Nasdaq Capital Market over any ninety (90) day period. (b) "Clearlake Holders" shall have the meaning given thereto in the Investor Rights Agreement. (c) "Clearlake Registrable Securities" shall have the meaning given thereto in the Investor Rights Agreement. (d) "Exchange Act" means the Securities Exchange Act of 1934, as amended (and any successor thereto), and the rules and regulations promulgated thereunder; (e) "Excluded Registration" means a registration statement relating solely to the sale of securities of participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, or a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities which are also being registered; (f) "Form S-3" means such form under the Securities Act as in effect on the date hereof or any successor form under the Securities Act that permits significant incorporation by reference of the Company's subsequent public filings under the Exchange Act; (g) "Holder" means any Stockholder owning Registrable Securities or any permitted assignee thereof in accordance with Section 2.12 of this Agreement; (h) "Investor Rights Agreement" shall mean that certain Amended and Restated Investor Rights Agreement in substantially the form attached as Exhibit B-3 to the Amended and Restated Stock Purchase Agreement of even date herewith, between the Company and the Investors party thereto, as the same may be amended or modified from time to time so long as such amendment or modification does not conflict with the terms of this Agreement. (i) "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with 2 the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document; (j) "Registrable Securities" means (i) the Shares held by a Holder and any assignee thereof in accordance with Section 2.12 of this Agreement, and (ii) any other shares of Acquirer Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the Shares identified in (i); (k) The number of shares of "Registrable Securities then outstanding" shall be determined by the number of Shares outstanding which are, and the number of shares of Acquirer Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities; (l) "SEC" means the Securities and Exchange Commission; and (m) "Securities Act" means the Securities Act of 1933, as amended (and any successor thereto), and the rules and regulations promulgated thereunder. 2.2 Request for Registration in Secondary Offering. (a) Notwithstanding the provisions of Section 1 above, if after the one (1) year anniversary of the Effective Time the Acquirer Common Stock has an Average Closing Price of $20.00 per share, and if the Company shall receive a written request from the Holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding (the "Initiating Holders") that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities, then, subject to the qualifications set forth herein and to any limitations that the SEC may impose, the Company shall, within twenty (20) days after receiving such request, give written notice of such request to all Holders and all Clearlake Holders and shall, subject to the limitations of subsection 2.2(b), use commercially reasonable efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder and all of the Clearlake Registrable Securities that each such Clearlake Holder has requested to be registered as expeditiously as possible. (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request and the Company shall include such information in the written notice referred to in subsection 2.2(a). The underwriter will be selected by the Company, which underwriter shall be reasonably acceptable to a majority in interest of the Holders whose Registrable Securities are to be included in the underwriting. In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. The Company and all Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such 3 underwriting. Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Company in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities and all holders of Clearlake Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities and Clearlake Registrable Securities that may be included in the underwriting shall be allocated among all participating Clearlake Holders and Holders thereof, including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities and Clearlake Registrable Securities of the Company owned by each participating Holder and Clearlake Holder. In no event shall any Registrable Securities or Clearlake Registrable Securities be excluded from such underwriting unless all other securities are first excluded from such offering. Any Registrable Securities or Clearlake Registrable Securities excluded from or withdrawn from such underwriting shall be withdrawn from registration. (c) Notwithstanding the foregoing, if the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed, the Company shall have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right or the similar right set forth in Section 2.4(b)(iii) more than once in any 12-month period, and provided, further, that the Company shall not register any securities for the account of itself or any other stockholder during such 60-day period (other than in an Excluded Registration). 2.3 Company Registration. (a) Notwithstanding the provisions of Section 1 above, if after the one (1) year anniversary of the Effective Time the Acquirer Common Stock has an Average Closing Price of $20.00 per share, and if (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock under the Securities Act in connection with the public offering of such securities solely for cash (other than an Excluded Registration), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 5.5, the Company shall, subject to the provisions of Section 2.8, use commercially reasonable efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered if any stock of the Company is registered. (b) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such registration shall be borne by the Company, in accordance with Section 2.7 hereof. 2.4 Form S-3 Registration. Notwithstanding the provisions of Section 1 above, if after the one (1) year anniversary of the Effective Time the Acquirer Common Stock 4 has an Average Closing Price of $20.00 per share, and if the Company shall receive from any Holder or Holders of not less than 25% of the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then, subject to the qualifications set forth herein and to any limitations that the SEC may impose, the Company will: (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities and to all holders of Clearlake Registrable Securities; (b) use commercially reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders and all or such portion of the Clearlake Registrable Securities of any other Clearlake Holder or Clearlake Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 2.4: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000; (iii) if the Company shall furnish to the Holders and the Clearlake Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed, the Company shall have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, however, that the Company shall not utilize this right or the similar right set forth in Section 2.2(c) more than twice in any twelve (12) month period; (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registration on Form S-3 for the Holders pursuant to this Section 2.4; (v) in any jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already qualified to do business or subject to service of process in that jurisdiction; and (vi) during the period ending one hundred eighty (180) days after the effective date of a registration statement subject to Section 2.3; and (c) subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. 2.5 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 5 (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to sixty (60) days and in the case of a registration request pursuant to Section 2.4 one hundred eighty (180) days, or until the distribution described in such registration statement is completed, if earlier. (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for up to sixty (60) days and in the case of a registration request pursuant to Section 2.4 one hundred eighty (180) days, or until the distribution described in such registration statement is completed, if earlier. (c) Promptly notify the Holders of the effectiveness of such registration statement, and furnish to the Holders such numbers of copies of a prospectus, including any supplement to the prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Following the effective date of such registration statement, notify the Holders of any request by the SEC that the Company amend or supplement such registration statement, or the associated prospectus. (e) Use all reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Company is already qualified to do business or subject to service of process in that jurisdiction. (f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder and other security holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (g) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for sixty (60) days and in the case of a registration request pursuant to Section 2.4 one hundred eighty (180) days or until the distribution described in such registration statement is completed, if earlier. 6 (h) Cause all such Registrable Securities registered pursuant to this Section 2 to be listed on each national securities exchange or trading system on which similar securities issued by the Company are then listed. (i) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (j) Make generally available to its security holders, and to deliver to each Holder participating in the registration statement, an earnings statement of the Company that will satisfy the provisions of Section 11(a) of the Securities Act covering a period of twelve (12) months beginning after the effective date of such registration statement as soon as reasonably practicable after the termination of such twelve (12) month period. 2.6 Information From Holders. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding such Holder, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. The Company shall have no obligation with respect to any registration requested pursuant to Section 2.4 of this Agreement if, as a result of the application of the preceding sentence, the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the anticipated aggregate offering price required to originally trigger the Company's obligation to initiate such registration as specified in subsection 2.4(b)(ii), whichever is applicable. 2.7 Expenses of Registration. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 2.2, 2.3 and 2.4 including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, selected by them, shall be borne by the Company. 2.8 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 2.3 to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities and Clearlake Registrable Securities, requested by Holders and Clearlake Holders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities and Clearlake Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so 7 included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder which is a holder of Registrable Securities and which is a venture capital fund, or a partnership or corporation, the affiliated funds, partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling stockholder," and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "selling stockholder," as defined in this sentence. 2.9 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 2.10 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 2: (a) The Company will indemnify and hold harmless each Holder, each person, if any, who controls such Holder, the partners, members, officers and directors, of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, partner, member, officer, director, agent, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 2.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder, underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, partner, member, officer, director, agent, underwriter or controlling person. 8 (b) Each selling Holder will indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) 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 by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 2.10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 2.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld, and provided, further, that in no event shall any indemnification obligation by a Holder under this Subsection 2.10(b) exceed the net proceeds from the offering received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 2.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.10, 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 the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.10. (d) If the indemnification provided for in this Section 2.10 is determined to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable 9 considerations; provided, that in no event shall any contribution by a Holder under this Subsection 2.10(d) exceed the lesser of (A) the net proceeds from the offering received by such Holder or (B) the extent to which such Holder is at fault. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) The obligations of the Company and Holders under this Section 2.10 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 2, and otherwise. 2.11 Reports Under the Exchange Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of any public offering of the Company's securities so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; (b) take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective; (c) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (d) furnish to any Holder upon request, so long as the Holder owns any Registrable Securities, (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (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, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 2.12 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee (i) that is a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a Holder, (ii) that is an affiliated fund, (iii) who is a Holder's child, stepchild, grandchild, parent, stepparent, 10 grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (such a relation, a Holder's "Immediate Family Member", which term shall include adoptive relationships), or (iv) that is a trust for the benefit of an individual Holder or such Holder's Immediate Family Member, provided the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if the transferee agrees in writing to be bound by this Agreement and immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferees and assignees of (x) a partnership who are partners or retired partners of such partnership or (y) a limited liability company who are members or retired members of such limited liability company (including Immediate Family Members of such partners or members who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership or limited liability company; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under Section 2. 2.13 Rule 415 Limitations. Notwithstanding anything in this Agreement to the contrary, if the SEC refuses to declare a registration statement filed pursuant to this Agreement effective as a valid secondary offering under Rule 415 promulgated under the Securities Act due to the number of Registrable Securities sought to be included in such registration statement relative to the number of shares of Acquirer Common Stock outstanding or the number of outstanding shares of Acquirer Common Stock held by non-affiliates or for any other reason, then, without any liability under this Agreement or any further obligation to register such excess Registrable Securities, the Company shall be permitted to reduce the number of Registrable Securities included in such registration statement to an amount that does not exceed an amount that the SEC allows for the offering thereunder to qualify as a valid secondary offering under Rule 415. The Company shall not be liable for damages under this Agreement as to any Registrable Securities that are not permitted by the SEC to be included in a registration statement due to SEC guidance relating to Rule 415. 2.14 Clearlake Limitations. Notwithstanding anything in this Agreement to the contrary, the rights and obligations of the parties hereunder shall be subject to their respective rights and obligations set forth in the Investor Rights Agreement. In the event of any conflict between this Agreement and the Investor Rights Agreement, the Investor Rights Agreement shall be controlling. 11 3. Permitted Transfers. Notwithstanding the provisions of Section 1 or anything to the contrary herein, any Stockholder may transfer all or part of such Stockholder's Shares to (i) his ancestors, descendants, siblings, or spouse, any executor or administrator of his estate, or to a custodian, trustee, executor, or other fiduciary primarily for the account of the Stockholder or his ancestors, descendants, siblings, or spouse, (ii) an affiliate (as defined in Rule 405 of Regulation D under the Securities Act), or (iii) to any other Stockholder who is a party to this Agreement (collectively, an "Exempted Transferee"); provided, that this Agreement shall be binding upon each such Exempted Transferee and, prior to the completion of such transfer, each Exempted Transferee or his or its legal representative shall have executed documents in form and substance reasonably satisfactory to the Company, evidenced by their written acknowledgment of such satisfaction, assuming the obligations of the Stockholder under this Agreement with respect to the transferred Shares. Such transferred shares shall remain "Shares" hereunder, and references to a "Stockholder" hereunder shall be deemed thereafter to apply to and include the transferor or transferees of any such Shares. 4. Release of Claims. In consideration for the benefits provided hereunder and under the Merger Agreement, effective as of the consummation of the Merger, each of the Stockholders do hereby release and forever discharge (the "Release") HOVRS, the Surviving Corporation and Acquirer and their officers, directors, employees, affiliates and agents (the "Released Parties") from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, contracts, agreements, promises, liability, claims, demands, damages, attorneys' fees or expense, of any nature whatsoever, known or unknown, fixed or contingent, arising out of or related to the ownership of securities of HOVRS by the undersigned holders or by reason of the undersigned holders' status as holders of the capital stock of HOVRS (other than actions, causes of action, in law or in equity, suits, contracts, agreements, promises, liability, claims, demands, damages, attorneys' fees or expenses to the extent they arise pursuant to or in connection with the Merger, the Merger Agreement and the other Merger Documents). Stockholder hereby expressly waives any rights or benefits available under the provisions of Section 1542 of the California Code, which is quoted as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HER SETTLEMENT WITH THE DEBTOR." Stockholder fully understands the statutory language of said section and nevertheless elects to and hereby does release each of the Released Parties from all claims it may have against any of them, whether known or unknown, arising from the subject matter of the Release, and specifically waives any rights which it may have under said section. Stockholder fully understands that if the facts with respect to this Release are found hereafter to be other than or different from the facts now believed to be true, it expressly accepts and assumes the risk of such possible difference in fact notwithstanding any such differences. 12 5. Miscellaneous. 5.1 Notice. All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) upon receipt if delivered personally; (ii) three business days after being mailed by registered or certified mail, postage prepaid, return receipt requested; (iii) one business day after it is sent by commercial overnight courier service; or (iv) upon transmission if sent via facsimile with confirmation of receipt to the parties at the following address (or at such other address for a party as shall be specified upon like notice): If to the Company to: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Attention: Daniel R. Luis Fax: (201) 996-1772 Tel: (201) 996-1717 with a copy to: Chadbourne & Parke LLP 1200 New Hampshire Avenue, N.W. Washington, DC 20036 Attention: Dana Frix Fax: (973) 974-679 Tel: (202) 974-5691 If to any Stockholder, to the address set forth below such Stockholder's name on Schedule A hereto with a copy to: Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, CA 94105 Attention: Richard Smith Fax: (415) 773-5759 Tel: (415) 773-5830 5.2. Entire Agreement. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. 13 5.3. No Other Rights. Nothing in this Agreement shall be considered to give any person other than the parties any legal or equitable right, claim or remedy under or in respect of this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the sole and exclusive benefit of the parties and their respective successors and permitted assigns. 5.4. Equitable Relief. Each of the parties hereto acknowledges that a breach by it of any provision contained in this Agreement will cause the other parties to sustain damage for which they would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach, the aggrieved party shall be entitled to the remedy of specific performance of such agreement and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 5.5 Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement which is held invalid or unenforceable only in part shall remain in full force and effect to the extent not held invalid or unenforceable. 5.6 Headings. All references in this Agreement to "section" or "sections" refer to the corresponding numbered paragraph or paragraphs of this Agreement. All words used in this Agreement shall be construed to be of the appropriate gender or number as the context requires. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 5.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original copy of this Agreement and all of which, when taken together, shall be considered to constitute one and the same agreement. 5.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to that state's conflicts of laws principles. 5.9 Amendments; Waivers. Any amendment or modification of or to any provision of this Agreement, and any consent to any departure of any party from the terms of any provision of this Agreement, shall be effective only if it is made or given in writing and signed by each party. Notwithstanding the foregoing sentence, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by any party entitled to the benefits thereof only by a written instrument signed by such party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. 5.10 Successors and Assigns. This Agreement shall apply to, be binding in all 14 respects upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign any of its rights under this Agreement without the prior written consent of each of the other parties. [Signatures on following page] 15 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. GOAMERICA, INC. By: _____________________________________ Daniel R. Luis President and Chief Executive Officer STOCKHOLDERS: _________________________________________ Ronald Obray _________________________________________ Denise Obray _________________________________________ Edmond Routhier CAYMUS INVESTMENT GROUP II, LLC By: _____________________________________ Its: ____________________________________ CAYMUS OBRAY, LLC By: _____________________________________ Its: ____________________________________ [Signature page to Lock-up and Registration Rights Agreement] 16 [To be updated immediately prior to closing to include all HOVRS Stockholders (including option holders who exercise prior to closing)] STOCKHOLDERS: _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ [Signature page to Lock-up and Registration Rights Agreement] 17 SCHEDULE A [To be updated immediately prior to closing to include all HOVRS Stockholders (including option holders who exercise prior to closing)] - -------------------------------------------------------------------------------- Shares of Name and Address of Stockholder Acquirer Common Stock - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL - -------------------------------------------------------------------------------- EX-99.5 10 e28555ex99_5.txt INVESTOR RIGHTS AGREEMENT Exhibit 99.5 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT GOAMERICA, INC. Dated as of ____________, 200_ TABLE OF CONTENTS Page ---- 1. DEMAND REGISTRATIONS...................................................... 1 1.1. Requests for Registration........................................ 1 1.2. Demand Notice.................................................... 2 1.3. Demand Registration Expenses..................................... 2 1.4. Short-Form Registrations......................................... 2 1.5. Priority on Demand Registrations................................. 3 1.6. Restrictions on Demand Registrations............................. 3 1.7. Selection of Underwriters........................................ 3 1.8. Other Registration Rights........................................ 3 2. PIGGYBACK REGISTRATIONS................................................... 4 2.1. Right to Piggyback............................................... 4 2.2. Piggyback Expenses............................................... 4 2.3. Priority on Primary Registrations................................ 4 2.4. Priority on Secondary Registrations.............................. 4 3. REGISTRATION GENERALLY.................................................... 5 3.1. Registration Procedures.......................................... 5 3.2. Registration Expenses............................................ 9 3.3. Participation in Underwritten Offerings.......................... 10 3.4. Holdback Agreements.............................................. 10 3.4.1. Securityholder Holdback................................. 10 3.4.2. Company Holdback........................................ 11 3.5. Current Public Information....................................... 11 4. REGISTRATION INDEMNIFICATION.............................................. 12 4.1. Indemnification by the Company................................... 12 4.2. Indemnification by Holders of Registrable Securities............. 12 4.3. Procedure........................................................ 13 4.4. Entry of Judgment; Settlement.................................... 13 4.5. Contribution..................................................... 13 4.6. Other Rights..................................................... 14 5. TRANSFER RESTRICTiONS..................................................... 15 5.1. General Transfer Restrictions.................................... 15 5.2. Restrictions on Transfer......................................... 15 5.2.1. Private Transfers....................................... 15 5.2.2. Public Transfers........................................ 15 5.2.3. Pledge of Shares........................................ 15 6. PREEMPTIVE RIGHTS......................................................... 15 6.1. Offering......................................................... 15 6.2. Expiration of Subscription Period................................ 16 i 6.3. New Securities................................................... 16 7. INFORMATION RIGHTS........................................................ 17 8. DEFINITIONS............................................................... 18 9. MISCELLANEOUS............................................................. 21 9.1. No Inconsistent Agreements....................................... 21 9.2. Remedies......................................................... 21 9.3. Amendment and Waiver............................................. 21 9.4. Successors and Assigns; Transferees.............................. 21 9.5. Severability..................................................... 22 9.6. Counterparts..................................................... 22 9.7. Descriptive Headings............................................. 22 9.8. Notices.......................................................... 22 9.9. Delivery by Facsimile............................................ 23 9.10. Governing Law.................................................... 23 9.11. Jurisdiction; Submission to Jurisdiction; Waivers................ 23 9.12. Waiver of Jury Trial............................................. 23 9.13. Termination...................................................... 24 ii AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT This Amended and Restated Investor Rights Agreement (this "Agreement") is made as of ____________, 200_ (the "Effective Date") by and among: (i) GoAmerica, Inc., a Delaware corporation (together with its successors and permitted assigns, the "Company"); (ii) Each of the shareholders of the Company listed on Schedule A to this Agreement (each a "Sponsor" and, collectively the "Sponsors"); and (iii) such other Persons, if any, that from time to time become parties hereto pursuant to Section 9.4 hereof (collectively, together with the Sponsors, the "Shareholders"). RECITALS WHEREAS, the Company and the Sponsors are parties to that certain Stock Purchase Agreement dated as of August 1, 2007 (the "Initial Stock Purchase Agreement"), pursuant to which the Company issued to the Sponsors 290,135 shares of Series A Preferred Stock of the Company, par value $.01 per share. WHEREAS, the Company and the Sponsors are parties to that certain Amended and Restated Stock Purchase Agreement dated as of September 12, 2007 (the "Acquisition Stock Purchase Agreement" and, collectively with the Initial Stock Purchase Agreement, the "Clearlake Stock Purchase Agreements"), pursuant to which the Company has agreed to sell to the Sponsors, subject to the satisfaction or waiver of the conditions specified therein, 7,446,809 additional shares of Series A Preferred Stock of the Company. WHEREAS, the parties hereto desire to enter into this Agreement to provide for the investor rights set forth herein. Unless otherwise noted in this Agreement, capitalized terms used herein shall have the meanings set forth in Section 8. AGREEMENT NOW, THEREFORE, the parties to this Agreement hereby agree as follows: 1. DEMAND REGISTRATIONS. 1.1. Requests for Registration. At any time a Sponsor may initiate the registration of Common Stock to be sold in a Public Offering (a "Demand Registration"). Subject to the other provisions of this Section 1, a Sponsor may initiate (on behalf of itself and any of its Affiliate) three (3) registrations of all or part of their Registrable Securities on Form S-1 or any similar or successor long-form registration ("Long-Form Registrations"), and, if the Company is eligible to utilize a registration statement on Form S-3 for resales by selling stockholders, an unlimited (but no more than two such registrations in any twelve month period) number of registrations of all or part of their Registrable Securities on Form S-3 or any similar or successor short-form registration ("Short-Form Registrations"); provided in each case that the aggregate gross offering 1 price of the Registrable Securities requested to be registered in any Long Form Registration pursuant to this Section must be at least $5,000,000 unless the Registrable Securities requested to be registered constitute all of the Registrable Securities then held by such Sponsor and its Affiliates; and provided, further, that the Company shall have no liability to any Shareholder with respect to any conditions that the Securities and Exchange Commission may impose with respect to any such registration, including any conditions that the Securities and Exchange Commission may impose upon the utilization of Rule 415 in connection with any such registration. 1.2. Demand Notice. All requests for Demand Registrations shall be made by giving written notice to the Company (a "Demand Notice"). Each Demand Notice shall specify the approximate number of Registrable Securities requested to be registered. Within ten (10) days after receipt of any such Demand Notice, the Company will give written notice of such requested registration to all other holders of Registrable Securities and, subject to Section 1.5, will use its commercially reasonable efforts to include in such registration (and in all related registrations and qualifications under blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the delivery of the Company's notice. 1.3. Demand Registration Expenses. The Company will pay all Registration Expenses in connection with any registration initiated as a Demand Registration, whether or not it has become effective. 1.4. Short-Form Registrations. Subject to the qualifications set forth herein and subject to any limitations that the Securities and Exchange Commission may impose, (i) Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short-form (unless the managing underwriter(s) of such offering requests the Company to use a Long-Form Registration in order to sell all of the Registrable Securities requested to be sold) and (ii) the Sponsors may, in connection with any Demand Registration requested by such holders that is a Short-Form Registration, require the Company to use its commercially reasonable efforts to file such Short-Form Registration with the Securities and Exchange Commission in accordance with and pursuant to Rule 415 under the Securities Act (or any successor rule then in effect) including, if the Company is then eligible, as an automatic shelf registration statement (any such Short-Form Registration, a "Shelf Registration"). Notwithstanding anything in this Agreement to the contrary, if the Securities and Exchange Commission refuses to declare a registration statement filed pursuant to this Agreement effective as a valid secondary offering under Rule 415 due to the number of Registrable Securities included in such registration statement relative to the number of shares of Common Stock outstanding or the number of outstanding shares of Common Stock held by non-affiliates or for any other reason, then, without any liability under this Agreement or any further obligation to register such excess Registrable Securities, the Company shall be permitted to reduce the number of Registrable Securities included in such registration statement to an amount that does not exceed an amount that the Securities and Exchange Commission allows for the offering thereunder to qualify as a valid secondary offering under Rule 415. The Company shall not be liable for damages under this Agreement as to any Registrable Securities which are not permitted 2 by the Securities and Exchange Commission to be included in a registration statement due to Securities and Exchange Commission guidance relating to Rule 415. 1.5. Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities which are not Registrable Securities without the prior receipt of Majority Sponsor Approval. If a Demand Registration is an underwritten offering and the managing underwriter(s) advises the Company that in its opinion the number of Registrable Securities and, if permitted hereunder, other securities, requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, then the Company shall include in such registration, (a) prior to the inclusion of any securities that are not Registrable Securities, the number of Registrable Securities requested to be included in such offering that, in the opinion of such managing underwriter, can be sold without adversely affecting the marketability of the offering, pro rata (based on the number of shares requested to be registered) among the respective holders thereof, provided that if the number of securities that are Registrable Securities that are included in such offering are less than 75% of the number of securities that are Registrable Securities requested to be included in such offering, such offering shall not count for purposes of calculating the number of Long-Form Registrations initiated by a Majority Sponsor, and (b) only then securities that are not Registrable Securities, if the managing underwriter(s) has advised that such securities may be included. 1.6. Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within 90 days after the closing of a Public Offering (other than on Form S-4 or Form S-8 or any successor or similar form, but including the closing of an underwritten distribution pursuant to a Shelf Registration), except that if such Public Offering is an underwritten offering and the managing underwriter of such Public Offering determines that a longer period, not to exceed 180 days, is reasonably necessary in its opinion, then such restricted period shall continue for the period designated by the managing underwriter, provided that such period shall not extend beyond 180 days after the closing of such Public Offering. The Company may postpone for up to 45 days (from the date of the request) the filing or the effectiveness of a registration statement for a Demand Registration if and so long as the Company determines that such Demand Registration would reasonably be expected to have an adverse effect on any proposal or plan by the Company or any of the Subsidiaries to engage in any acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, registration or issuance of securities, financing or other material transaction. The Company may not postpone a Demand Registration more than two (2) times in any twelve-month period. 1.7. Selection of Underwriters. The Sponsor(s) selling a majority of the Registrable Securities to be sold by all Sponsors in a Demand Registration will have the right to select the underwriter or underwriters to administer the offering, provided that such selection will be subject to the approval of the board of directors of the Company (the "Board"), which approval will not be unreasonably withheld. 1.8. Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any equity securities of the Company, other than this Agreement. Except 3 as provided in this Agreement, the Company shall not grant to any Person the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, without Majority Sponsor Approval approving the grant of registration rights for such securities; provided that without such approval, subject to Section 6, (a) the Company may grant rights to other Persons to participate in Demand Registrations and Piggyback Registrations so long as such rights are subordinate to the rights of the holders of Registrable Securities with respect to such Demand Registrations and Piggyback Registrations; and (b) the Company may grant rights to other Persons to request registrations so long as the holders of Registrable Securities are entitled to participate in any such registrations with such Persons pro rata on the basis of the number of Common Stock owned by each such holder. 2. PIGGYBACK REGISTRATIONS. 2.1. Right to Piggyback. Whenever the Company proposes to register any of its equity securities under the Securities Act (other than (a) pursuant to a Demand Registration, (b) in connection with registration on Form S-4 or Form S-8 or any successor or similar form or (c) in connection with the registration of shares on Form S-3 with respect to a dividend reinvestment plan) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Sections 2.3 and 2.4 below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the delivery of the Company's notice. Each such Company notice shall specify the approximate number of Company equity securities to be registered and the anticipated per share price range for such offering. 2.2. Piggyback Expenses. The Company will pay all Registration Expenses in connection with all Piggyback Registrations, whether or not any such registration becomes effective. 2.3. Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriter(s) advises the Company that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration: (a) first, the securities the Company proposes to sell, (b) second, the Registrable Securities requested to be included in such registration, pro rata (based on the number of shares requested to be registered) among the holders of such Registrable Securities, and (c) third, but only if all of the Registrable Securities requested to be included in such registration are included in such registration, the other securities requested to be included in the such registration in the manner determined by the Company and such shareholders. 2.4. Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of Company securities (other than the holders of Registrable Securities), and the managing underwriter(s) advises the Company that in its opinion the number of securities requested to be included in such registration exceeds the number which 4 can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration: (a) first, the securities requested to be included therein by the holders requesting registration, (b) second, but only if all of the securities described in clause (a) are included in such registration, securities requested by the Company to be included in such registration to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering, and (c) third, but only if all of the securities described in clauses (a) and (b) are included in such registration, Registrable Securities and other securities requested to be included in such registration, pro rata among the holders of such Registrable Securities and the holders of such other securities permitted to have their securities included in such registration on the basis of the number of shares owned by each such holder, to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering. 3. REGISTRATION GENERALLY. 3.1. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof and pursuant thereto the Company will as expeditiously as reasonably practicable: (a) prepare and (within 60 days after the end of the period within which requests for inclusion in such registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use commercially reasonable efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to counsel selected by the Sponsors owning the Registrable Securities to be included in any Demand Registration copies of all such documents proposed to be filed, which documents will be subject to review by such counsel); (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary (i) to keep such registration statement effective for a period (A) of not less than 180 days (subject to extension pursuant to Section 3.3(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (B) in the case of a Shelf Registration, ending on the earliest of (I) the date on which all Registrable Securities have been sold pursuant to the Shelf Registration or have otherwise ceased to be Registrable Securities, (II) the second anniversary of the effective date of such Shelf Registration, (III) such other date determined by the Majority Sponsors and (IV) when all such Registrable Securities are freely saleable under Rule 144(k) under the Securities Act, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all securities 5 covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (c) cause (i) any issuer free writing prospectus to comply with the information and legending requirements under paragraph (c) of Rule 433 and to be accompanied or preceded by a statutory prospectus to the extent required under Rule 433, and (ii) any free writing prospectus or issuer information contained in a free writing prospectus required to be filed by the Company with the Securities and Exchange Commission under paragraph (d) under Rule 433 to be so filed in accordance with such requirements; (d) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, in each case, to the extent not available on EDGAR, the prospectus included in such registration statement (including each preliminary prospectus), each free writing prospectus used in connection with such registration, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller, but in all cases only if such documents are not available on EDGAR; (e) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such States as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in respect of doing business in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (f) promptly notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the prospective purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; 6 (g) use best efforts to cause all such Registrable Securities to be listed on each securities exchange or market system on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use commercially reasonable efforts to secure designation of all such Registrable Securities covered by such registration statement as a "NMS Security" within the meaning of Rule 600(b)(46) of Regulation NMS of the Securities and Exchange Commission or, failing that, to secure NASDAQ authorization for such Registrable Securities; (h) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (i) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Sponsors owning a majority of the Registrable Securities to be included in the registration or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (which might include effecting a share split or a combination of shares); (j) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and to cooperate and participate as reasonably requested by any such seller in road show presentations, in the preparation of the registration statement, each amendment and supplement thereto, the prospectus included therein, and other activities as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (k) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (l) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any 7 Securities included in such registration statement for sale in any jurisdiction, the Company will use commercially reasonable efforts promptly to obtain the withdrawal of such order; (m) obtain one or more comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company's independent registered public accounting firm in the then-current customary form and covering such matters of the type customarily covered from time to time by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request; (n) provide a legal opinion of the Company's outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in the then-current customary form and covering such matters of the type customarily covered from time to time by legal opinions of such nature (in a form reasonably acceptable to the holders of a majority of the Registrable Securities included in the registration); (o) cooperate with the sellers of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or such holders may request; (p) notify counsel for the sellers of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (ii) of the receipt of any comments from the Securities and Exchange Commission, (iii) of any request of the Securities and Exchange Commission to amend the registration statement or amend or supplement the prospectus or for additional information, and (iv) of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes; 8 (q) use its reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment; (r) if requested by the managing underwriter or agent or any holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such holder reasonably requests to be included therein, including, without limitation, with respect to the number of Registrable Securities being sold by such holder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment; (s) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; and (t) cause its appropriate officers to attend and participate in presentations to and meetings with prospective purchasers of the Registrable Securities, or a "roadshow", as reasonably requested by the underwriters, if any. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information relating to the sale or registration of such Securities regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing, prior to including such seller's Registrable Securities in such registration. 3.2. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), will be paid by the Company in respect of each Demand Registration and each Piggyback Registration, whether or not it has become effective, including that the Company will pay its internal expenses (including, without limitation, all salaries and expenses of its officers and 9 employees performing legal or accounting duties), the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system or any other quotation system. (b) In connection with each Demand Registration and each Piggyback Registration, whether or not it has become effective, the Company will pay, and reimburse the holders of Registrable Securities covered by such registration for the payment of, the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration, such amount not to exceed $25,000 for each registration, and such expenses shall be considered Registration Expenses hereunder. 3.3. Participation in Underwritten Offerings. (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s), provided that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1(f) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person's receipt of the copies of a supplemented or amended prospectus as contemplated by such Section 3.1(f). In the event the Company shall give any such notice, the applicable time period mentioned in Section 3.1(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this paragraph to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 3.1(f). 3.4. Holdback Agreements. 3.4.1. Securityholder Holdback. To the extent not inconsistent with applicable law, each holder of Registrable Securities shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Common 10 Stock, or any options or warrants to purchase any Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive Common Stock, whether now owned or hereinafter acquired, owned directly by the holder (including holding as a custodian) or with respect to which the holder has beneficial ownership within the rules and regulations of the Securities and Exchange Commission, during (a) with respect to any other underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included, the seven days prior to and the 90-day period (or such longer period not to exceed 180 days if reasonably necessary in the opinion of such underwriter) beginning on the effective date of such registration, and (b) upon notice from the Company of the commencement of an underwritten distribution in connection with any Shelf Registration, the seven days prior to and the 90-day period (or such longer period not to exceed 180 days if reasonably necessary in the opinion of such underwriter) beginning on the date of commencement of such distribution, in each case except as part of such underwritten registration, and in each case unless the underwriters managing the registered public offering otherwise agree (in each case, such period, the "Lock-Up Period"); provided, however, if (i) during the period that begins on the date that is 15 calendar days plus three Business Days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16 day period beginning on the last day of the Lock-Up Period, the restrictions imposed shall continue to apply until the expiration of the date that is 15 calendar days plus three Business Days after the date on which the issuance of the earnings release or the material news or material event occurs. Any waiver by the underwriters of the foregoing restrictions on transfers by the holders shall be granted to all holders on equal terms. 3.4.2. Company Holdback. The Company shall not offer, sell, contract to sell or otherwise dispose of any securities of the Company that are substantially similar to the Common Stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Stock or any such substantially similar securities, during (a) with respect to any other underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included, the seven days prior to and the 90-day period beginning on the effective date of such registration, and (b) upon notice from any holder(s) of Registrable Securities subject to a Shelf Registration that such holder(s) intend to effect an underwritten distribution of Registrable Securities pursuant to such Shelf Registration (upon receipt of which, the Company will promptly notify all other holders of Registrable Securities of the date of the commencement of such distribution), the seven days prior to and the 90-day period beginning on the date of the commencement of such distribution, in each case except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8, and in each case unless the underwriters managing the registered public offering otherwise agree. 3.5. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will use 11 its commercially reasonable efforts to timely file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. 4. REGISTRATION INDEMNIFICATION. 4.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities and, as applicable, its officers, directors, trustees, employees, shareholders, holders of beneficial interests, members, and general and limited partners (collectively, such holder's "Indemnitees") and each Person who controls such holder (within the meaning of the Securities Act) against any and all losses, claims, damages, liabilities, joint or several, to which such holder or any such Indemnitee may become subject under the Securities Act, equivalent foreign securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (a) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus, preliminary prospectus or free writing prospectus or any amendment thereof or supplement thereto, together with any documents incorporated therein by reference or, (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each of its Indemnitees for any legal or any other expenses, including any amounts paid in any settlement effected with the consent of the Company, which consent will not be unreasonably withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or free writing prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. 4.2. Indemnification by Holders of Registrable Securities. In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement, prospectus or free writing prospectus, and, to the extent permitted by law, will indemnify and hold harmless the Company and its Indemnitees against any losses, claims, damages or liabilities, joint or several, to which the Company or any such Indemnitee may become subject under the Securities Act, 12 equivalent foreign securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (a) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus, preliminary prospectus or free writing prospectus or any amendment thereof or supplement thereto or in any application, together with any documents incorporated therein by reference or (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, any such prospectus, preliminary prospectus or free writing prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such Indemnitee for any legal or any other expenses including any amounts paid in any settlement effected with the consent of such holder, which consent will not be unreasonably withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the obligation to indemnify will be individual (and not joint and several) to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, less any other amounts paid by such holder in respect of such untrue statement, alleged untrue statement, omission or alleged omission. 4.3. Procedure. Any Person entitled to indemnification hereunder will (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided, however, that the failure of any indemnified party to give such notice shall not relieve the indemnifying party of its obligations hereunder, except to the extent that the indemnifying party is actually prejudiced by such failure to give such notice), and (b) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. 4.4. Entry of Judgment; Settlement. The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party. 4.5. Contribution. If the indemnification provided for in this Section 4 is, other than expressly pursuant to its terms, unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such 13 indemnified party as a result of such losses, claims, damages or liabilities (a) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand from the sale of Registrable Securities pursuant to the registered offering of securities as to which indemnity is sought or (b) if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefits referred to in clause (a) above but also the relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand in connection with the statement or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be determined by reference to, among other things, whether the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The obligation to provide contribution will be individual (and not joint and several) to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, less any other amounts paid by such holder, including pursuant to Section 4.2 hereof, in respect of such untrue statement, alleged untrue statement, omission or alleged omission. The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4, no seller of Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such Seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto, less any other amounts paid by such holder in respect of such untrue statement, alleged untrue statement, omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 4.6. Other Rights. The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the 14 indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. 5. TRANSFER RESTRICTIONS 5.1. General Transfer Restrictions. Each Shareholder understands and agrees that the Shares held by such Shareholder on the date hereof have not been registered under the Securities Act or registered or qualified under any state law. No Shareholders shall Transfer Shares (or solicit any offers in respect of any Transfer of such Shares), except in compliance with the Securities Act, any applicable state law or in accordance with agreements applicable to such Transfer. 5.2. Restrictions on Transfer. No Shareholder shall Transfer any of such Shareholder's Shares to any other Person except as follows: 5.2.1. Private Transfers. Any Sponsor may Transfer any or all of such Sponsor's Shares to such Sponsor's Permitted Transferees and such transferee shall be deemed to be a Sponsor hereunder and shall deliver a signature page hereto agreeing to be bound hereby, simultaneously with the Transfer of such Shares. Any transferring Sponsor under this Section shall provide prompt written notice to the Company of any such Transfer, indicating its reliance on this provision and the identity and contact information of the Permitted Transferee. 5.2.2. Public Transfers. (a) Any Shareholder may Transfer any or all of such Shareholders' Shares, to the extent they constitute Common Stock, in a Public Offering undertaken in accordance with this Agreement without the consent of the Company or the other Shareholders. (b) A Shareholder may Transfer any or all of such Shareholder's Shares pursuant to Rule 144 of the Securities Act. 5.2.3. Pledge of Shares. Any Shareholder may Transfer any or all of such Shareholder's Shares to a lender to such Shareholder pursuant to a bona fide pledge of all of such Shareholder's assets. 6. PREEMPTIVE RIGHTS 6.1. Offering. (a) If the Company issues or sells or authorizes the issuance or sale of any New Securities (as defined in Section 6.3 below) after the date hereof, the Company shall offer to each Sponsor by written notice (a "Subscription Notice") a percentage of such New Securities pro rata based on the relative number of Shares held by such Sponsor as compared to the number of Shares and then-exercisable stock options and warrants outstanding held by all holders of the Company's Shares, stock options and warrants. Each such Sponsor shall be entitled to purchase such New Securities at the most favorable price and on the 15 most favorable terms as such New Securities are to be sold or issued; provided that if a Person participating in such purchase of New Securities is required in connection therewith also to purchase other securities of the Company, the Sponsors exercising their rights pursuant to this Section 6.1 shall also be required to purchase such other securities on substantially the same economic terms and conditions as those on which the offeree of the New Securities is required to purchase such other securities. Each Sponsor participating in such purchase shall also be obligated to execute agreements in the form presented to such Sponsor by the Company, so long as such agreements are substantially similar to those to be executed by the purchasers of New Securities (without taking into consideration any rights which do not entitle such a purchaser to a higher economic return on the New Securities than the economic return to which other Sponsors participating in such transaction will be entitled with respect to New Securities). Notwithstanding anything to the contrary contained herein, the Company shall not have any obligation to issue equity securities or to offer to issue any equity securities under this Section 6 to any Sponsor who is not an "accredited investor" as such term is defined in Regulation D of the Securities Act. (b) Each Subscription Notice delivered by the Company to a Sponsor in respect of any proposed issuance or sale of New Securities shall describe in reasonable detail the type, class and number of New Securities being offered, the purchase price thereof, the payment terms therefor and the percentage thereof offered to such holder pursuant to this Section 6. In order to exercise its purchase rights hereunder in respect of any issuance or sale of New Securities described in a Subscription Notice, a Sponsor must deliver to the Company during the fifteen (15) day period commencing upon such holder's receipt of such Subscription Notice (the "Subscription Period"), a written commitment describing its election hereunder (an "Election Notice"). If a Sponsor fails for any reason to deliver an Election Notice to the Company during the Subscription Period with respect to a proposed issuance or sale of New Securities, such Sponsor shall be deemed to have waived its rights pursuant to this Section 6 in respect of such issuance or sale of New Securities. 6.2. Expiration of Subscription Period. Within the 180-day period immediately following the Subscription Period, the Company shall be entitled to sell, or enter into any agreement to sell, any New Securities which any Sponsor has not elected to purchase, on terms and conditions no more favorable to the offeree of such New Securities than those offered to the Sponsors pursuant to Section 6.1. Any New Securities offered or sold by the Company after such 180-day period must be reoffered to each Sponsor pursuant to the terms of this Section 6. 6.3. New Securities. For purposes hereof, "New Securities" means any shares of the Company's Capital Stock, or any options, convertible securities or other rights to acquire shares of the Company's Capital Stock, other than (a) the issuance and sale of Series A Preferred Stock in connection with the Clearlake Stock Purchase Agreements, (b) Common Stock (or options to acquire Common Stock) issued or issuable to any employee, director or consultant of the Company or any of its subsidiaries pursuant to any equity incentive plan or other arrangement approved by the Company's Board, (c) Common Stock or other securities issued directly or 16 indirectly upon the conversion, exchange or exercise of any securities previously subjected to this Section 6 or outstanding on the date hereof, (d) Common Stock or other securities issued in connection with or in furtherance of the acquisition of or investment in another company or business (whether through a purchase of securities, a merger, consolidation, purchase of assets or otherwise), (e) Common Stock or other securities issued in connection with or in furtherance of the incurrence of any indebtedness for borrowed money or for equipment lease financings by the Company or its subsidiaries, (f) Common Stock or other securities issued or issuable in a Public Offering, (g) Common Stock or other securities issued in connection with any stock split, dividend, combination, recapitalization or similar transaction, (h) Common Stock issued or issuable upon the exercise of warrants or other securities or rights to persons or entities with which the Company has or is entering into a technology or other strategic relationship not for the purpose of raising money or providing financing, (i) Common Stock issued or issuable upon conversion of Series A Preferred Stock or as dividends or distributions on the Series A Preferred Stock and (j) Common Stock or other securities issued directly or indirectly upon the conversion, exchange or exercise of any securities issued pursuant to any of the clauses of this Section 6.3. 7. INFORMATION RIGHTS. (a) The books and records of the Company shall be available for inspection by the Sponsors at the principal office and place of business of the Company. The Sponsors shall have the right to receive, upon request therefor, (a) audited annual consolidated financial statements of the Company promptly following such statements becoming available to the Company, (b) unaudited quarterly consolidated financial statements of the Company promptly following such statements becoming available to the Company, (c) an annual budget of the Company with respect to each fiscal year within thirty (30) days following presentation thereof to the Board or, if the Board approves such budget, approval thereof, (d) unaudited monthly consolidated income statements, balance sheets, and cashflow statements of the Company promptly following the preparation thereof and (e) such other information as may be reasonably requested by a Sponsor relating to the Company which the Company is permitted to disclose; provided, however, that any such Person gaining access to information regarding the Company pursuant to this Section 7(a) shall agree to hold in strict confidence, and shall not make any disclosure of, any information regarding the Company which the Company determines in good faith to be confidential, and of which determination such Person is notified, unless (w) the release of such information is requested or required (by deposition, interrogatory, requests for information or documents by a governmental entity, subpoena or similar process), (x) such information is or becomes publicly known without a breach of this Agreement, (y) such information is or becomes available to such Person on a non-confidential basis from a source other than the Company or (z) such information is independently developed by such Person. (b) The rights of the Sponsors under Section 7(a) hereof shall terminate at such time that the Sponsors cease to own at least 145,067 shares of Common Stock (as adjusted for stock dividends, splits, combinations or similar events and including all shares of Common Stock issuable to the Sponsors upon the conversion and/or exercise of all securities held by the Sponsors that are convertible and/or exerciseable for shares of Common Stock). 17 8. DEFINITIONS. "Acquisition Stock Purchase Agreement" shall have the meaning set forth in the Recitals. "Affiliate" means, with respect to any Person, (i) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person (for the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); provided, however, that neither the Company nor any of its Subsidiaries shall be deemed an Affiliate of any of the Shareholders (and vice versa) and none of the Shareholders shall be deemed Affiliates of each other solely as a result of their relationship with respect to the Company. "Agreement" shall have the meaning set forth in the Preamble. "Amendment" shall have the meaning set forth in Section 6.3. "automatic shelf registration statement" has the meaning set forth in Rule 405 under the Securities Act. "Board" shall have the meaning set forth in Section 1.7. "Business Day" shall mean any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the states of Delaware or New York. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; and (ii) with respect to any other Person, any and all partnership, membership or other equity interests of such Person. "Clearlake Stock Purchase Agreements" shall have the meaning set forth in the Recitals. "Common Stock" shall mean the common stock of the Company, par value $.01 per share. "Company" shall have the meaning set forth in the Preamble. "Demand Notice" shall have the meaning set forth in Section 1.2. "Demand Registrations" means Long-Form Registrations and Short-Form Registrations requested pursuant to Section 1.1. "EDGAR" means the Security Exchange Commission's Electronic Data Gathering, Analysis and Retrieval system. 18 "Election Notice" shall have the meaning set forth in Section 6.1(b). "Effective Date" shall have the meaning set forth in the Preamble. "Family Member" means, with respect to any natural Person, such Person's spouse and descendants (whether or not adopted) and any trust, family limited partnership or limited liability company that is and remains at all times solely for the benefit of such Person's spouse and/or descendants. "free writing prospectus" has the meaning ascribed to such term under Rule 405 under the Securities Act. "Indemnitees" shall have the meaning set forth in Section 4.1. "Initial Stock Purchase Agreement" shall have the meaning set forth in the Recitals. "issuer free writing prospectus" has the meaning ascribed to such term under Rule 433(h) under the Securities Act. "Lock-Up Period" shall have the meaning set forth in Section 3.4.1. "Long-Form Registrations" shall have the meaning set forth in Section 1.1. "Majority Sponsor Approval" means the written approval of Persons holding a majority of Sponsor Registrable Securities. "New Securities" shall have the meaning set forth in Section 6.3. "Person" means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof. "Permitted Transferee" shall mean, with respect to any Sponsor, (a) if any Transfer involves less than all of a Sponsor's Registrable Securities, any Affiliate of a Sponsor or Reservoir Capital Group or its Affiliates, or (b) if any Transfer involves all of a Sponsor's Registrable Securities, to any Person other than a direct competitor of the Company. "Piggyback Registration" shall have the meaning set forth in Section 2.1. "Public Offering" means a public offering and sale of Common Stock pursuant to an effective registration statement under the Securities Act. "Registrable Securities" means (i) any share of Common Stock issued to any Shareholder (or any Affiliate thereof) as of the Effective Date or thereafter acquired, including upon conversion of the Company's Series A Preferred Stock by any Shareholder, and (ii) any equity securities issued or issuable directly or indirectly with respect to any of the foregoing securities referred to in clause (i) by way of share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any 19 particular shares constituting Registrable Securities, such shares will cease to be Registrable Securities when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) sold to the public pursuant to Rule 144 under the Securities Act or sold in a block sale to a financial institution in the ordinary course of its trading business. For purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. "Registration Expenses" shall have the meaning set forth in Section 3.2. "Rule 433" means Rule 433 under the Securities Act or any successor federal law then in force. "Series A Preferred Stock" means the Series A Preferred Stock of the Company, par value $.01 per share. "Securities Act" means the United States Securities Act of 1933, as amended, or any successor federal law then in force. "Securities and Exchange Commission" means the United States Securities and Exchange Commission and any governmental body or agency succeeding to the functions thereof. "Securities Exchange Act" means the United States Securities Exchange Act of 1934, as amended, or any successor federal law then in force. "Shareholders" shall have the meaning set forth in the Preamble. "Shares" shall mean collectively any shares of the Company's equity securities outstanding from time to time, including, but not limited to the Common Stock and the Series A Preferred Stock. "Shelf Registration" shall have the meaning set forth in Section 1.4. "Short-Form Registrations" shall have the meaning set forth in Section 1.1. "Sponsor" has the meaning set forth in the Preamble. "Sponsor Registrable Securities" shall mean all of the Registrable Securities held by any Sponsor from time to time. "Subscription Notice" shall have the meaning set forth in Section 6.1(a). "Subscription Period" shall have the meaning set forth in Section 6.1(b). "Transfer" shall mean any sale, pledge, assignment, encumbrance or other transfer or disposition of any shares of Registrable Securities to any other Person, whether directly, 20 indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. 9. MISCELLANEOUS. 9.1. No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. 9.2. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies at law or in equity existing in its favor, any party shall be entitled to seek specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement. 9.3. Amendment and Waiver. (a) Except as otherwise provided herein, this Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and Persons holding a majority of Sponsor Registrable Securities, provided, that the admission of new parties pursuant to the terms of Section 9.4 shall not constitute an amendment of this Agreement for purposes of this Section 9.3. Notwithstanding the foregoing, if any amendment, modification, extension, termination or waiver (an "Amendment") would treat any Shareholder or group of Shareholders in a manner different from, and materially adverse relative to, the Sponsors voting in favor of such Amendment, then such Amendment will require the consent of the Shareholder or Shareholders holding a majority of the Registrable Securities of such group adversely treated. (b) Each such Amendment shall be binding upon each party hereto and each Shareholder subject hereto. In addition, each party hereto and each Shareholder subject hereto may waive any right hereunder, as to itself, by an instrument in writing signed by such party or Shareholder. The failure of any party to enforce any provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. To the extent the Amendment of any Section of this Agreement would require a specific consent pursuant to this Section 9.3, any Amendment to definitions to the extent used in such Section shall also require such specified consent. (c) It is acknowledged that this Agreement amends and restates in its entirety that certain Investor Rights Agreement dated as of August 1, 2007 between the Company and the Sponsors, as the same may have been amended, supplemented or otherwise modified from time to time prior to the date hereof. 9.4. Successors and Assigns; Transferees. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Registrable Securities shall continue to be Registrable Securities after any Transfer (except if such securities were effectively registered under the Securities Act and disposed of in 21 accordance with the registration statement covering them, sold to the public pursuant to Rule 144 under the Securities Act or sold in a block sale to a financial institution in the ordinary course of its trading business). Any transferee receiving shares of Registrable Securities in a Transfer effected in compliance with the terms of this Agreement shall become a Shareholder party to this Agreement and shall be subject to the terms and conditions of, and be entitled to enforce, this Agreement to the same extent, and in the same capacity, as the Person that Transfers such Registrable Securities to such transferee; provided that only a Permitted Transferee of a Sponsor will be deemed to be a Sponsor for purposes of this Agreement. For the avoidance of doubt, any transferee receiving Registrable Securities in a Transfer that is not a Sponsor or a Permitted Transferee of a Sponsor or its Affiliates will become a party to this Agreement without the benefit of the right to initiate Demand Registrations or other rights afforded to the Sponsors hereunder. Other than with respect to a pledge permitted pursuant to Section 5.2.3 hereof, prior to the Transfer of any Registrable Securities to any transferee, and as a condition thereto, each Shareholder effecting such Transfer shall (a) cause such transferee to deliver to the Company and each of the Shareholders its written agreement, in form and substance reasonably satisfactory to the Company, to be bound by the terms and conditions of this Agreement to the extent described in the preceding sentence and (b) if such Transfer is to a Permitted Transferee, remain directly liable for the performance by such Permitted Transferee of all obligations of such transferee under this Agreement. 9.5. 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 provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 9.6. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same Agreement. 9.7. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 9.8. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given, delivered and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 9.8 prior to 5:00 p.m. (Eastern time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 5:00 p.m. (Eastern time) on any Business Day and earlier than 11:59 p.m. (Eastern time) on the day preceding the next Business Day, or (iii) one (1) Business Day after when sent, if sent by nationally recognized overnight courier service (charges prepaid). The address for such notices and communications shall be as follows: 22 If to the Company: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Facsimile: (201) 527-1081 Attention: General Counsel and Chief Financial Officer with a copy to: Lowenstein Sandler PC 65 Livingston Avenue Roseland, NJ 07068 Facsimile: (973) 587-2351 Attention: Peter H. Ehrenberg If to any Sponsor: to the addressee specified on Schedule A hereto. 9.9. Delivery by Facsimile. This Agreement and any signed agreement or instrument entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation of a contract and each such party forever waives any such defense. 9.10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to a contract executed and performed in such state, without giving effect to the conflicts of laws principles thereof. 9.11. Jurisdiction; Submission to Jurisdiction; Waivers. Each party hereto irrevocably agrees that any proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect thereof brought by the other party hereto or its successors or assigns, may be brought and determined in the Supreme Court of the State of New York in New York County or in the United States District Court for the Southern District of New York, and each party hereto hereby irrevocably submits with regard to any such proceeding for itself and in respect to its properties, generally and unconditionally, for all purposes of this Agreement. 9.12. Waiver of Jury Trial. To the extent not prohibited by applicable law that cannot be waived, each party hereto waives, and covenants that such party will not assert (whether as plaintiff, defendant or otherwise), any right to trail by jury in any forum in respect of any issue, claim or proceeding arising out of this Agreement or the subject matter hereof or in any way connected with the dealings of any party hereto in connection with any of the above, in each case whether now existing or hereafter arising and whether in contract, tort or otherwise. Any party to this Agreement may file a copy of this Section 23 9.12 with any court as written evidence of the consent of the parties hereto to the waiver of their rights to trial by jury. 9.13. Termination. The provisions of Section 9 of this Agreement shall terminate as to any Shareholder at such time as such Shareholder ceases to own any Series A Preferred Stock or shares issued upon conversion thereof or in exchange therefor. * * Signature pages follow * * 24 IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement on the day and year first above written. COMPANY: GOAMERICA, INC. By: ___________________________ Name: ___________________________ Title: ___________________________ SHAREHOLDERS CCP A, L.P. By: CLEARLAKE CAPITAL PARTNERS, LLC Its: General Partner By: CCG Operations, LLC Its: Managing Member By: ______________________________ Name: Title: Manager Schedule A: Sponsors CCP A, L.P. Address for Notice: Clearlake Capital Group, LP 650 Madison Ave. 23rd Floor New York, NY 10022 Attention: Behdad Eghbali Facsimile: (212) 610-9121 With a copy to: Milbank, Tweed, Hadley & McCloy LLP 601 S. Figueroa, 30th Floor Los Angeles, CA 90017 Attention: Melainie K. Mansfield, Esq. Facsimile: (213) 892-4711 EX-99.6 11 e28555ex99_6.txt INVESTOR RIGHTS AGREEMENT Exhibit 99.6 [FORM OF] SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT GOAMERICA, INC. Dated as of ______________, 200__ TABLE OF CONTENTS Page ---- 1. DEMAND REGISTRATIONS..................................................... 1 1.1. Requests for Registration....................................... 1 1.2. Demand Notice................................................... 2 1.3. Demand Registration Expenses.................................... 2 1.4. Short-Form Registrations........................................ 2 1.5. Priority on Demand Registrations................................ 3 1.6. Restrictions on Demand Registrations............................ 3 1.7. Selection of Underwriters....................................... 4 1.8. Other Registration Rights....................................... 4 2. PIGGYBACK REGISTRATIONS.................................................. 4 2.1. Right to Piggyback.............................................. 4 2.2. Piggyback Expenses.............................................. 4 2.3. Priority on Primary Registrations............................... 4 2.4. Priority on Secondary Registrations............................. 5 3. REGISTRATION GENERALLY................................................... 6 3.1. Registration Procedures......................................... 6 3.2. Registration Expenses........................................... 10 3.3. Participation in Underwritten Offerings......................... 11 3.4. Holdback Agreements............................................. 11 3.4.1. Securityholder Holdback.................................. 11 3.4.2. Company Holdback......................................... 12 3.5. Current Public Information...................................... 12 4. REGISTRATION INDEMNIFICATION............................................. 12 4.1. Indemnification by the Company.................................. 12 4.2. Indemnification by Holders of Registrable Securities............ 13 4.3. Procedure....................................................... 14 4.4. Entry of Judgment; Settlement................................... 14 4.5. Contribution.................................................... 14 4.6. Other Rights.................................................... 15 5. TRANSFER RESTRICTiONS.................................................... 15 5.1. General Transfer Restrictions................................... 15 5.2. Restrictions on Transfer........................................ 15 5.2.1. Private Transfers........................................ 16 5.2.2. Public Transfers......................................... 16 5.2.3. Pledge of Shares......................................... 16 6. PREEMPTIVE RIGHTS........................................................ 16 6.1. Offering........................................................ 16 6.2. Expiration of Subscription Period............................... 17 i 6.3. New Securities.................................................. 17 7. INFORMATION RIGHTS....................................................... 18 8. STOCKHOLDER AGREEMENTS................................................... 18 8.1. Board Composition............................................... 18 8.2. Amendment to the Certificate of Incorporation................... 19 8.3. No Company Obligations.......................................... 19 9. EXPENSES................................................................. 19 10. DEFINITIONS.............................................................. 19 11. MISCELLANEOUS............................................................ 23 11.1. No Inconsistent Agreements...................................... 23 11.2. Remedies ....................................................... 23 11.3. Amendment and Waiver............................................ 23 11.4. Successors and Assigns; Transferees............................. 24 11.5. Severability.................................................... 25 11.6. Counterparts.................................................... 25 11.7. Descriptive Headings............................................ 25 11.8. Notices ........................................................ 25 11.9. Delivery by Facsimile........................................... 26 11.10. Governing Law................................................... 26 11.11. Jurisdiction; Submission to Jurisdiction; Waivers............... 26 11.12. Waiver of Jury Trial............................................ 26 11.13. Termination..................................................... 27 ii SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT This Second Amended and Restated Investor Rights Agreement (this "Agreement") is made as of ____________, 200__ (the "Effective Date") by and among: (i) GoAmerica, Inc., a Delaware corporation (together with its successors and permitted assigns, the "Company"); (ii) Each of the shareholders of the Company listed on Schedule A to this Agreement (each a "Clearlake Investor" and, collectively the "Clearlake Investors"); (iii) Each of the shareholders of the Company listed on Schedule B to this Agreement (each a "HOVRS Party" and, collectively the "HOVRS Parties"); and (iv) such other Persons, if any, that from time to time become parties hereto pursuant to Section 11.4 hereof (collectively, together with the Clearlake Investors, the "Investors"). RECITALS WHEREAS, the Company and the Clearlake Investors are parties to that certain Stock Purchase Agreement dated as of August 1, 2007 (the "Initial Stock Purchase Agreement"), pursuant to which the Company issued to the Clearlake Investors 290,135 shares of Series A Preferred Stock of the Company, par value $.01 per share. WHEREAS, the Company and the Clearlake Investors are parties to that certain Amended and Restated Stock Purchase Agreement dated as of September 12, 2007 (the "Acquisition Stock Purchase Agreement" and, collectively with the Initial Stock Purchase Agreement, the "Clearlake Stock Purchase Agreements"), pursuant to which the Company has agreed to sell to the Clearlake Investors, subject to the satisfaction or waiver of the conditions specified therein, 7,446,809 additional shares of Series A Preferred Stock of the Company. WHEREAS, the parties hereto desire to enter into this Agreement to provide for the investor and governance rights set forth herein. Unless otherwise noted in this Agreement, capitalized terms used herein shall have the meanings set forth in Section 10. AGREEMENT NOW, THEREFORE, the parties to this Agreement hereby agree as follows: 1. DEMAND REGISTRATIONS. 1.1. Requests for Registration. At any time a Clearlake Investor may initiate the registration of Common Stock to be sold in a Public Offering (a "Demand Registration"). Subject to the other provisions of this Section 1, a Clearlake Investor may initiate (on behalf of itself and any of its Affiliates) three (3) registrations of all or part of their Registrable Securities on Form S-1 or any similar or successor long-form registration ("Long-Form Registrations"), and, if the Company is eligible to utilize a registration statement on Form S-3 for resales by 1 selling stockholders, an unlimited (but no more than two such registrations in any twelve month period) number of registrations of all or part of their Registrable Securities on Form S-3 or any similar or successor short-form registration ("Short-Form Registrations"); provided in each case that the aggregate gross offering price of the Registrable Securities requested to be registered in any Long Form Registration pursuant to this Section must be at least $5,000,000 unless the Registrable Securities requested to be registered constitute all of the Registrable Securities then held by such Clearlake Investor and its Affiliates; and provided, further, that the Company shall have no liability to any Investor or HOVRS Party with respect to any conditions that the Securities and Exchange Commission may impose with respect to any such registration, including any conditions that the Securities and Exchange Commission may impose upon the utilization of Rule 415 in connection with any such registration. 1.2. Demand Notice. All requests for Demand Registrations shall be made by giving written notice to the Company (a "Demand Notice"). Each Demand Notice shall specify the approximate number of Registrable Securities requested to be registered. Within ten (10) days after receipt of any such Demand Notice, the Company will give written notice of such requested registration to (i) all other holders of Registrable Securities and (ii) to all Holders under and as defined in that certain Lock-Up and Registration Rights Agreement, dated as of ________, 200_, by and among the Company and certain of the HOVRS Parties (the "HOVRS Registration Rights Agreement" and each such Holder, a "HOVRS Holder"), and, subject to Section 1.5, the Company will use its commercially reasonable efforts to include in such registration (and in all related registrations and qualifications under blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities and all Registrable Securities under and as defined in the HOVRS Registration Rights Agreement ("HOVRS Registrable Securities") with respect to which the Company has received written requests for inclusion therein within 15 days after the delivery of the Company's notice. 1.3. Demand Registration Expenses. The Company will pay all Registration Expenses in connection with any registration initiated as a Demand Registration, whether or not it has become effective. 1.4. Short-Form Registrations. Subject to the qualifications set forth herein and subject to any limitations that the Securities and Exchange Commission may impose, (i) Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short-form (unless the managing underwriter(s) of such offering requests the Company to use a Long-Form Registration in order to sell all of the Registrable Securities and HOVRS Registrable Securities requested to be sold) and (ii) the Clearlake Investors may, in connection with any Demand Registration requested by such holders that is a Short-Form Registration, require the Company to use its commercially reasonable efforts to file such Short-Form Registration with the Securities and Exchange Commission in accordance with and pursuant to Rule 415 under the Securities Act (or any successor rule then in effect) including, if the Company is then eligible, as an automatic shelf registration statement (any such Short-Form Registration, a "Shelf Registration"). Notwithstanding anything in this Agreement to the contrary, if the Securities and Exchange Commission refuses to declare a registration statement filed pursuant to this Agreement effective as a valid secondary offering under Rule 415 due to the number of Registrable Securities and HOVRS Registrable Securities included in such registration statement relative to the number of shares of Common Stock outstanding or the 2 number of outstanding shares of Common Stock held by non-affiliates or for any other reason, then, without any liability under this Agreement or any further obligation to register such excess Registrable Securities and HOVRS Registrable Securities, the Company shall be permitted to reduce the number of Registrable Securities and HOVRS Registrable Securities included in such registration statement (pro rata, based on the number of shares requested to be registered, among the holders of such Registrable Securities and HOVRS Registrable Securities) to an amount that does not exceed an amount that the Securities and Exchange Commission allows for the offering thereunder to qualify as a valid secondary offering under Rule 415. The Company shall not be liable for damages under this Agreement as to any Registrable Securities or HOVRS Registrable Securities which are not permitted by the Securities and Exchange Commission to be included in a registration statement due to Securities and Exchange Commission guidance relating to Rule 415. 1.5. Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities which are not Registrable Securities or HOVRS Registrable Securities without the prior receipt of Majority Clearlake Investor Approval. If a Demand Registration is an underwritten offering and the managing underwriter(s) advises the Company that in its opinion the number of Registrable Securities and HOVRS Registrable Securities and, if permitted hereunder, other securities, requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, then the Company shall include in such registration, (a) prior to the inclusion of any securities that are not Registrable Securities or HOVRS Registrable Securities, the number of Registrable Securities and HOVRS Registrable Securities requested to be included in such offering that, in the opinion of such managing underwriter, can be sold without adversely affecting the marketability of the offering, pro rata (based on the number of shares requested to be registered) among the respective holders thereof, provided that if the number of securities that are Registrable Securities and HOVRS Registrable Securities that are included in such offering are less than 75% of the number of securities that are Registrable Securities and HOVRS Registrable Securities requested to be included in such offering, such offering shall not count for purposes of calculating the number of Long-Form Registrations initiated by a Majority Clearlake Investor, and (b) only then securities that are not Registrable Securities or HOVRS Registrable Securities, if the managing underwriter(s) has advised that such securities may be included. 1.6. Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within 90 days after the closing of a Public Offering (other than on Form S-4 or Form S-8 or any successor or similar form, but including the closing of an underwritten distribution pursuant to a Shelf Registration), except that if such Public Offering is an underwritten offering and the managing underwriter of such Public Offering determines that a longer period, not to exceed 180 days, is reasonably necessary in its opinion, then such restricted period shall continue for the period designated by the managing underwriter, provided that such period shall not extend beyond 180 days after the closing of such Public Offering. The Company may postpone for up to 45 days (from the date of the request) the filing or the effectiveness of a registration statement for a Demand Registration if and so long as the Company determines that such Demand Registration would reasonably be expected to have an adverse effect on any proposal or plan by the Company or any of the Subsidiaries to engage in any acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, 3 tender offer, registration or issuance of securities, financing or other material transaction. The Company may not postpone a Demand Registration more than two (2) times in any twelve-month period. 1.7. Selection of Underwriters. The Clearlake Investor(s) selling a majority of the Registrable Securities to be sold by all Clearlake Investors in a Demand Registration will have the right to select the underwriter or underwriters to administer the offering, provided that such selection will be subject to the approval of the board of directors of the Company (the "Board"), which approval will not be unreasonably withheld. 1.8. Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any equity securities of the Company, other than this Agreement and the HOVRS Registration Rights Agreement. Except as provided in this Agreement, the Company shall not grant to any Person the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, without Majority Clearlake Investor Approval approving the grant of registration rights for such securities; provided that without such approval, subject to Section 6, (a) the Company may grant rights to other Persons to participate in Demand Registrations and Piggyback Registrations so long as such rights are subordinate to the rights of the holders of Registrable Securities with respect to such Demand Registrations and Piggyback Registrations; (b) the Company may grant rights to other Persons to request registrations so long as the holders of Registrable Securities are entitled to participate in any such registrations with such Persons pro rata on the basis of the number of Common Stock owned by each such holder; and (c) the Company may enter into the HOVRS Registration Rights Agreement. 2. PIGGYBACK REGISTRATIONS. 2.1. Right to Piggyback. Whenever the Company proposes to register any of its equity securities under the Securities Act (other than (a) pursuant to a Demand Registration, (b) in connection with registration on Form S-4 or Form S-8 or any successor or similar form or (c) in connection with the registration of shares on Form S-3 with respect to a dividend reinvestment plan) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Sections 2.3 and 2.4 below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the delivery of the Company's notice. Each such Company notice shall specify the approximate number of Company equity securities to be registered and the anticipated per share price range for such offering. 2.2. Piggyback Expenses. The Company will pay all Registration Expenses in connection with all Piggyback Registrations, whether or not any such registration becomes effective. 2.3. Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriter(s) advises the 4 Company that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration: (a) first, the securities the Company proposes to sell, (b) second, the Registrable Securities and HOVRS Registrable Securities requested to be included in such registration, pro rata (based on the number of shares requested to be registered) among the holders of such Registrable Securities and HOVRS Registrable Securities, and (c) third, but only if all of the Registrable Securities and HOVRS Registrable Securities requested to be included in such registration are included in such registration, the other securities requested to be included in the such registration in the manner determined by the Company and such shareholders. 2.4. Priority on Secondary Registrations. (a) If a Piggyback Registration is an underwritten secondary registration on behalf of holders of HOVRS Registrable Securities, and the managing underwriter(s) advises the Company that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration: (a) first, the Registrable Securities and HOVRS Registrable Securities requested to be included therein by the holders requesting registration, pro rata among the holders of such Registrable Securities and HOVRS Registrable Securities (based on the number of shares requested to be registered), (b) second, but only if all of the Registrable Securities and HOVRS Registrable Securities requested to be included in such registration are included in such registration, securities requested by the Company to be included in such registration to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering, and (c) third, but only if all of the Registrable Securities and HOVRS Registrable Securities requested to be included in such registration and all securities requested by the Company to be included in such registration are included in such registration, other securities requested to be included in such registration, pro rata among the holders of such other securities permitted to have their securities included in such registration on the basis of the number of shares owned by each such holder, to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering. (b) If a Piggyback Registration is an underwritten secondary registration on behalf of holders of Company securities (other than the holders of Registrable Securities or the holders of HOVRS Registrable Securities), and the managing underwriter(s) advises the Company that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration: (a) first, the securities requested to be included therein by the holders requesting registration, (b) second, but only if all of the securities described in clause (a) are included in such registration, securities requested by the Company to be included in such registration, to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering, and (c) third, but only if all of the securities described in clauses (a) and (b) are included in such registration, Registrable Securities, HOVRS Registrable Securities and other securities requested to be included in such registration, pro rata among the holders of such Registrable Securities, the holders of such HOVRS Registrable Securities and the holders of such other securities permitted 5 to have their securities included in such registration on the basis of the number of shares owned by each such holder, to the extent the managing underwriter(s) advises the Company that such inclusion will not adversely affect the marketability of the offering. 3. REGISTRATION GENERALLY. 3.1. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof and pursuant thereto the Company will as expeditiously as reasonably practicable: (a) prepare and (within 60 days after the end of the period within which requests for inclusion in such registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use commercially reasonable efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to counsel selected by the Clearlake Investors owning the Registrable Securities to be included in any Demand Registration copies of all such documents proposed to be filed, which documents will be subject to review by such counsel); (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary (i) to keep such registration statement effective for a period (A) of not less than 180 days (subject to extension pursuant to Section 3.3(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (B) in the case of a Shelf Registration, ending on the earliest of (I) the date on which all Registrable Securities have been sold pursuant to the Shelf Registration or have otherwise ceased to be Registrable Securities, (II) the second anniversary of the effective date of such Shelf Registration, (III) such other date determined by the Majority Clearlake Investors and (IV) when all such Registrable Securities are freely saleable under Rule 144(k) under the Securities Act, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (c) cause (i) any issuer free writing prospectus to comply with the information and legending requirements under paragraph (c) of Rule 433 and to be accompanied or preceded by a statutory prospectus to the extent required under Rule 433, and (ii) any free writing prospectus or issuer information contained in a free writing prospectus required to be filed by the Company with the Securities 6 and Exchange Commission under paragraph (d) under Rule 433 to be so filed in accordance with such requirements; (d) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, in each case, to the extent not available on EDGAR, the prospectus included in such registration statement (including each preliminary prospectus), each free writing prospectus used in connection with such registration, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller, but in all cases only if such documents are not available on EDGAR; (e) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such States as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in respect of doing business in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (f) promptly notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the prospective purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; (g) use best efforts to cause all such Registrable Securities to be listed on each securities exchange or market system on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use commercially reasonable efforts to secure designation of all such Registrable Securities covered by such registration statement as a "NMS Security" within the meaning of Rule 600(b)(46) of Regulation NMS of the Securities and Exchange Commission or, failing that, to secure NASDAQ authorization for such Registrable Securities; 7 (h) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (i) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Clearlake Investors owning a majority of the Registrable Securities to be included in the registration or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (which might include effecting a share split or a combination of shares); (j) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and to cooperate and participate as reasonably requested by any such seller in road show presentations, in the preparation of the registration statement, each amendment and supplement thereto, the prospectus included therein, and other activities as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (k) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (l) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Securities included in such registration statement for sale in any jurisdiction, the Company will use commercially reasonable efforts promptly to obtain the withdrawal of such order; (m) obtain one or more comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company's independent registered public accounting firm in the then-current customary form and covering such matters of the type customarily covered from time to time by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request; 8 (n) provide a legal opinion of the Company's outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in the then-current customary form and covering such matters of the type customarily covered from time to time by legal opinions of such nature (in a form reasonably acceptable to the holders of a majority of the Registrable Securities included in the registration); (o) cooperate with the sellers of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or such holders may request; (p) notify counsel for the sellers of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (ii) of the receipt of any comments from the Securities and Exchange Commission, (iii) of any request of the Securities and Exchange Commission to amend the registration statement or amend or supplement the prospectus or for additional information, and (iv) of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes; (q) use its reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment; (r) if requested by the managing underwriter or agent or any holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such holder reasonably requests to be included therein, including, without limitation, with respect to the number of Registrable Securities being sold by such holder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and 9 with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment; (s) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; and (t) cause its appropriate officers to attend and participate in presentations to and meetings with prospective purchasers of the Registrable Securities, or a "roadshow", as reasonably requested by the underwriters, if any. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information relating to the sale or registration of such Securities regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing, prior to including such seller's Registrable Securities in such registration. 3.2. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), will be paid by the Company in respect of each Demand Registration and each Piggyback Registration, whether or not it has become effective, including that the Company will pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system or any other quotation system. (b) In connection with each Demand Registration and each Piggyback Registration, whether or not it has become effective, the Company will pay, and reimburse the holders of Registrable Securities covered by such registration for the payment of, the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration, such amount not to exceed $25,000 for each registration, and such expenses shall be considered Registration Expenses hereunder. 10 3.3. Participation in Underwritten Offerings. (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s), provided that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1(f) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person's receipt of the copies of a supplemented or amended prospectus as contemplated by such Section 3.1(f). In the event the Company shall give any such notice, the applicable time period mentioned in Section 3.1(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this paragraph to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 3.1(f). 3.4. Holdback Agreements. 3.4.1. Securityholder Holdback. To the extent not inconsistent with applicable law, each holder of Registrable Securities shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Common Stock, or any options or warrants to purchase any Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive Common Stock, whether now owned or hereinafter acquired, owned directly by the holder (including holding as a custodian) or with respect to which the holder has beneficial ownership within the rules and regulations of the Securities and Exchange Commission, during (a) with respect to any other underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included, the seven days prior to and the 90-day period (or such longer period not to exceed 180 days if reasonably necessary in the opinion of such underwriter) beginning on the effective date of such registration, and (b) upon notice from the Company of the commencement of an underwritten distribution in connection with any Shelf Registration, the seven days prior to and the 90-day period (or such longer period not to exceed 180 days if reasonably necessary in the opinion of such underwriter) beginning on the date of commencement of such distribution, in each case except as part of such underwritten registration, and in 11 each case unless the underwriters managing the registered public offering otherwise agree (in each case, such period, the "Lock-Up Period"); provided, however, if (i) during the period that begins on the date that is 15 calendar days plus three Business Days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16 day period beginning on the last day of the Lock-Up Period, the restrictions imposed shall continue to apply until the expiration of the date that is 15 calendar days plus three Business Days after the date on which the issuance of the earnings release or the material news or material event occurs. Any waiver by the underwriters of the foregoing restrictions on transfers by the holders shall be granted to all holders on equal terms. 3.4.2. Company Holdback. The Company shall not offer, sell, contract to sell or otherwise dispose of any securities of the Company that are substantially similar to the Common Stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Stock or any such substantially similar securities, during (a) with respect to any other underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included, the seven days prior to and the 90-day period beginning on the effective date of such registration, and (b) upon notice from any holder(s) of Registrable Securities subject to a Shelf Registration that such holder(s) intend to effect an underwritten distribution of Registrable Securities pursuant to such Shelf Registration (upon receipt of which, the Company will promptly notify all other holders of Registrable Securities of the date of the commencement of such distribution), the seven days prior to and the 90-day period beginning on the date of the commencement of such distribution, in each case except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8, and in each case unless the underwriters managing the registered public offering otherwise agree. 3.5. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will use its commercially reasonable efforts to timely file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. 4. REGISTRATION INDEMNIFICATION. 4.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities and, as applicable, its officers, directors, trustees, employees, shareholders, holders of beneficial 12 interests, members, and general and limited partners (collectively, such holder's "Indemnitees") and each Person who controls such holder (within the meaning of the Securities Act) against any and all losses, claims, damages, liabilities, joint or several, to which such holder or any such Indemnitee may become subject under the Securities Act, equivalent foreign securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (a) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus, preliminary prospectus or free writing prospectus or any amendment thereof or supplement thereto, together with any documents incorporated therein by reference or, (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each of its Indemnitees for any legal or any other expenses, including any amounts paid in any settlement effected with the consent of the Company, which consent will not be unreasonably withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or free writing prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. 4.2. Indemnification by Holders of Registrable Securities. In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement, prospectus or free writing prospectus, and, to the extent permitted by law, will indemnify and hold harmless the Company and its Indemnitees against any losses, claims, damages or liabilities, joint or several, to which the Company or any such Indemnitee may become subject under the Securities Act, equivalent foreign securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (a) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus, preliminary prospectus or free writing prospectus or any amendment thereof or supplement thereto or in any application, together with any documents incorporated therein by reference or (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, any such prospectus, preliminary prospectus or free writing prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such Indemnitee for any legal or any other expenses including any amounts paid in any settlement effected with the consent of such holder, which consent will not be unreasonably 13 withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the obligation to indemnify will be individual (and not joint and several) to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, less any other amounts paid by such holder in respect of such untrue statement, alleged untrue statement, omission or alleged omission. 4.3. Procedure. Any Person entitled to indemnification hereunder will (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided, however, that the failure of any indemnified party to give such notice shall not relieve the indemnifying party of its obligations hereunder, except to the extent that the indemnifying party is actually prejudiced by such failure to give such notice), and (b) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. 4.4. Entry of Judgment; Settlement. The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party. 4.5. Contribution. If the indemnification provided for in this Section 4 is, other than expressly pursuant to its terms, unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (a) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand from the sale of Registrable Securities pursuant to the registered offering of securities as to which indemnity is sought or (b) if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefits referred to in clause (a) above but also the relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand in connection with the statement or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (before 14 deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be determined by reference to, among other things, whether the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The obligation to provide contribution will be individual (and not joint and several) to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, less any other amounts paid by such holder, including pursuant to Section 4.2 hereof, in respect of such untrue statement, alleged untrue statement, omission or alleged omission. The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4, no seller of Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such Seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto, less any other amounts paid by such holder in respect of such untrue statement, alleged untrue statement, omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 4.6. Other Rights. The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. 5. TRANSFER RESTRICTIONS 5.1. General Transfer Restrictions. Each Investor understands and agrees that the Shares held by such Investor on the date hereof have not been registered under the Securities Act or registered or qualified under any state law. No Investors shall Transfer Shares (or solicit any offers in respect of any Transfer of such Shares), except in compliance with the Securities Act, any applicable state law or in accordance with agreements applicable to such Transfer. 5.2. Restrictions on Transfer. No Investor shall Transfer any of such Investor's Shares to any other Person except as follows: 15 5.2.1. Private Transfers. Any Clearlake Investor may Transfer any or all of such Clearlake Investor's Shares to such Clearlake Investor's Permitted Transferees and such transferee shall be deemed to be a Clearlake Investor hereunder and shall deliver a signature page hereto agreeing to be bound hereby, simultaneously with the Transfer of such Shares. Any transferring Clearlake Investor under this Section shall provide prompt written notice to the Company of any such Transfer, indicating its reliance on this provision and the identity and contact information of the Permitted Transferee. 5.2.2. Public Transfers. (a) Any Investor may Transfer any or all of such Investor's Shares, to the extent they constitute Common Stock, in a Public Offering undertaken in accordance with this Agreement without the consent of the Company or the other Investors. (b) Any Investor may Transfer any or all of such Investor's Shares pursuant to Rule 144 of the Securities Act. 5.2.3. Pledge of Shares. Any Investor may Transfer any or all of such Investor's Shares to a lender to such Investor pursuant to a bona fide pledge of all of such Investor's assets. 6. PREEMPTIVE RIGHTS 6.1. Offering. (a) If the Company issues or sells or authorizes the issuance or sale of any New Securities (as defined in Section 6.3 below) after the date hereof, the Company shall offer to each Clearlake Investor by written notice (a "Subscription Notice") a percentage of such New Securities pro rata based on the relative number of Shares held by such Clearlake Investor as compared to the number of Shares and then-exercisable stock options and warrants outstanding held by all holders of the Company's Shares, stock options and warrants. Each such Clearlake Investor shall be entitled to purchase such New Securities at the most favorable price and on the most favorable terms as such New Securities are to be sold or issued; provided that if a Person participating in such purchase of New Securities is required in connection therewith also to purchase other securities of the Company, the Clearlake Investors exercising their rights pursuant to this Section 6.1 shall also be required to purchase such other securities on substantially the same economic terms and conditions as those on which the offeree of the New Securities is required to purchase such other securities. Each Clearlake Investor participating in such purchase shall also be obligated to execute agreements in the form presented to such Clearlake Investor by the Company, so long as such agreements are substantially similar to those to be executed by the purchasers of New Securities (without taking into consideration any rights which do not entitle such a purchaser to a higher economic return on the New Securities than the economic return to which other Clearlake Investors participating in such transaction will be entitled with respect to New Securities). 16 Notwithstanding anything to the contrary contained herein, the Company shall not have any obligation to issue equity securities or to offer to issue any equity securities under this Section 6 to any Clearlake Investor who is not an "accredited investor" as such term is defined in Regulation D of the Securities Act. (b) Each Subscription Notice delivered by the Company to a Clearlake Investor in respect of any proposed issuance or sale of New Securities shall describe in reasonable detail the type, class and number of New Securities being offered, the purchase price thereof, the payment terms therefor and the percentage thereof offered to such holder pursuant to this Section 6. In order to exercise its purchase rights hereunder in respect of any issuance or sale of New Securities described in a Subscription Notice, a Clearlake Investor must deliver to the Company during the fifteen (15) day period commencing upon such holder's receipt of such Subscription Notice (the "Subscription Period"), a written commitment describing its election hereunder (an "Election Notice"). If a Clearlake Investor fails for any reason to deliver an Election Notice to the Company during the Subscription Period with respect to a proposed issuance or sale of New Securities, such Clearlake Investor shall be deemed to have waived its rights pursuant to this Section 6 in respect of such issuance or sale of New Securities. 6.2. Expiration of Subscription Period. Within the 180-day period immediately following the Subscription Period, the Company shall be entitled to sell, or enter into any agreement to sell, any New Securities which any Clearlake Investor has not elected to purchase, on terms and conditions no more favorable to the offeree of such New Securities than those offered to the Clearlake Investors pursuant to Section 6.1. Any New Securities offered or sold by the Company after such 180-day period must be reoffered to each Clearlake Investor pursuant to the terms of this Section 6. 6.3. New Securities. For purposes hereof, "New Securities" means any shares of the Company's Capital Stock, or any options, convertible securities or other rights to acquire shares of the Company's Capital Stock, other than (a) the issuance and sale of Series A Preferred Stock in connection with the Clearlake Stock Purchase Agreements, (b) Common Stock (or options to acquire Common Stock) issued or issuable to any employee, director or consultant of the Company or any of its subsidiaries pursuant to any equity incentive plan or other arrangement approved by the Company's Board, (c) Common Stock or other securities issued directly or indirectly upon the conversion, exchange or exercise of any securities previously subjected to this Section 6 or outstanding on the date hereof, (d) Common Stock or other securities issued in connection with or in furtherance of the acquisition of or investment in another company or business (whether through a purchase of securities, a merger, consolidation, purchase of assets or otherwise), including, without limitation, Common Stock or other securities issued pursuant to the Merger Agreement (as defined in the Acquisition Stock Purchase Agreement), (e) Common Stock or other securities issued in connection with or in furtherance of the incurrence of any indebtedness for borrowed money or for equipment lease financings by the Company or its subsidiaries, (f) Common Stock or other securities issued or issuable in a Public Offering, (g) Common Stock or other securities issued in connection with any stock split, dividend, combination, recapitalization or similar transaction, (h) Common Stock issued or issuable upon 17 the exercise of warrants or other securities or rights to persons or entities with which the Company has or is entering into a technology or other strategic relationship not for the purpose of raising money or providing financing, (i) Common Stock issued or issuable upon conversion of Series A Preferred Stock or as dividends or distributions on the Series A Preferred Stock and (j) Common Stock or other securities issued directly or indirectly upon the conversion, exchange or exercise of any securities issued pursuant to any of the clauses of this Section 6.3. 7. INFORMATION RIGHTS. (a) The books and records of the Company shall be available for inspection by the Clearlake Investors at the principal office and place of business of the Company. The Clearlake Investors shall have the right to receive, upon request therefor, (a) audited annual consolidated financial statements of the Company promptly following such statements becoming available to the Company, (b) unaudited quarterly consolidated financial statements of the Company promptly following such statements becoming available to the Company, (c) an annual budget of the Company with respect to each fiscal year within thirty (30) days following presentation thereof to the Board or, if the Board approves such budget, approval thereof, (d) unaudited monthly consolidated income statements, balance sheets, and cashflow statements of the Company promptly following the preparation thereof and (e) such other information as may be reasonably requested by a Clearlake Investor relating to the Company which the Company is permitted to disclose; provided, however, that any such Person gaining access to information regarding the Company pursuant to this Section 7(a) shall agree to hold in strict confidence, and shall not make any disclosure of, any information regarding the Company which the Company determines in good faith to be confidential, and of which determination such Person is notified, unless (w) the release of such information is requested or required (by deposition, interrogatory, requests for information or documents by a governmental entity, subpoena or similar process), (x) such information is or becomes publicly known without a breach of this Agreement, (y) such information is or becomes available to such Person on a non-confidential basis from a source other than the Company or (z) such information is independently developed by such Person. (b) The rights of the Clearlake Investors under Section 7(a) hereof shall terminate at such time that the Clearlake Investors cease to own at least 145,067 shares of Common Stock (as adjusted for stock dividends, splits, combinations or similar events and including all shares of Common Stock issuable to the Clearlake Investors upon the conversion and/or exercise of all securities held by the Clearlake Investors that are convertible and/or exerciseable for shares of Common Stock). 8. STOCKHOLDER AGREEMENTS 8.1. Board Composition. The Clearlake Investors and the HOVRS Parties hereby agree as follows: (a) The Clearlake Investors and the HOVRS Parties shall take all Necessary Action to cause the Board to be comprised of up to eight (8) directors, two (2) of whom shall be designated by the Clearlake Investors; provided that, if the Clearlake Investors at any time cease to own at least 1,600,000 shares of Common Stock (as adjusted for stock dividends, splits, combinations or similar 18 events), then the Clearlake Investors shall only be entitled to designate one (1) director, and if the Clearlake Investors at any time cease to own any Common Stock, then the Clearlake Investors shall cease to be entitled to designate a director. (b) If the number of directors that the Clearlake Investors have the right to designate to the Board is decreased pursuant to Section 8.1(a), then the designees appointed by such party shall resign or, if such person fails to resign, the Clearlake Investors and HOVRS Parties shall take all Necessary Action to immediately remove such director or directors, as the case may be, from the Board. (c) Except as provided above, the Clearlake Investors shall have the exclusive right to appoint and remove their designees to the Board, as well as the exclusive right to fill vacancies created by reason of death, removal or resignation of such designees, and the Clearlake Investors and the HOVRS Parties shall take all Necessary Action to cause the Board to be so constituted. (d) For purposes of this Section 8.1, the number of shares of Common Stock held by any Person shall include all shares of Common Stock issuable to such Person upon the conversion and/or exercise of all securities held by such Person that are convertible and/or exerciseable for shares of Common Stock. 8.2. Amendment to the Certificate of Incorporation. Each of the HOVRS Parties and the Clearlake Investors agree to use all Necessary Action to cause the Company's Amended and Restated Certificate of Incorporation to be amended, within one year of the date hereof, to delete the provisions set forth in Article VII of the Amended and Restated Certificate of Incorporation filed on or about the date hereof.. 8.3. No Company Obligations. Notwithstanding anything to the contrary set forth herein, the Company shall have no rights or obligations with respect to any provision in this Section 8. 9. EXPENSES. The Company shall reimburse the directors for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the Board, including without limitation, travel, lodging and meal expenses. 10. DEFINITIONS. "Acquisition Stock Purchase Agreement" shall have the meaning set forth in the Recitals. "Affiliate" means, with respect to any Person, (i) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person (for the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the 19 power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); provided, however, that neither the Company nor any of its Subsidiaries shall be deemed an Affiliate of any of the Investors (and vice versa) and none of the Investors shall be deemed Affiliates of each other solely as a result of their relationship with respect to the Company. "Agreement" shall have the meaning set forth in the Preamble. "Amendment" shall have the meaning set forth in Section 6.3. "automatic shelf registration statement" has the meaning set forth in Rule 405 under the Securities Act. "Board" shall have the meaning set forth in Section 1.7. "Business Day" shall mean any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the states of Delaware or New York. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; and (ii) with respect to any other Person, any and all partnership, membership or other equity interests of such Person. "Clearlake Investor" has the meaning set forth in the Preamble. "Clearlake Investor Registrable Securities" shall mean all of the Registrable Securities held by any Clearlake Investor from time to time. "Clearlake Stock Purchase Agreements" shall have the meaning set forth in the Recitals. "Common Stock" shall mean the common stock of the Company, par value $.01 per share. "Company" shall have the meaning set forth in the Preamble. "Demand Notice" shall have the meaning set forth in Section 1.2. "Demand Registrations" means Long-Form Registrations and Short-Form Registrations requested pursuant to Section 1.1. "EDGAR" means the Security Exchange Commission's Electronic Data Gathering, Analysis and Retrieval system. "Election Notice" shall have the meaning set forth in Section 6.1(b). "Effective Date" shall have the meaning set forth in the Preamble. 20 "Family Member" means, with respect to any natural Person, such Person's spouse and descendants (whether or not adopted) and any trust, family limited partnership or limited liability company that is and remains at all times solely for the benefit of such Person's spouse and/or descendants. "free writing prospectus" has the meaning ascribed to such term under Rule 405 under the Securities Act. "HOVRS Holder" shall have the meaning set forth in Section 1.2. "HOVRS Registration Rights Agreement" shall have the meaning set forth in Section 1.2. "HOVRS Registrable Securities" shall have the meaning set forth in Section 1.2. "Indemnitees" shall have the meaning set forth in Section 4.1. "Initial Stock Purchase Agreement" shall have the meaning set forth in the Recitals. "Investors" shall have the meaning set forth in the Preamble. "issuer free writing prospectus" has the meaning ascribed to such term under Rule 433(h) under the Securities Act. "Lock-Up Period" shall have the meaning set forth in Section 3.4.1. "Long-Form Registrations" shall have the meaning set forth in Section 1.1. "Majority Clearlake Investor Approval" means the written approval of Persons holding a majority of Clearlake Investor Registrable Securities. "Necessary Action" shall mean, with respect to a specified result, all actions (to the extent such actions are permitted by law) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Capital Stock of the Company, (ii) causing the adoption of shareholders' resolutions or proxy with respect to the Capital Stock of the Company, (iii) causing members of the Board (to the extent such members were nominated or designated by the Person obligated to take such Necessary Action, and subject to any fiduciary duties that such members may have as directors of the Company) to act in a certain manner or causing them to be removed in the event that they fail to act in such a manner, (iv) executing agreements and instruments to effect such result and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result; provided that an obligation to take all Necessary Action shall not include any obligation to acquire or dispose of Capital Stock or other securities of the Company or any other Person. "New Securities" shall have the meaning set forth in Section 6.3. 21 "Person" means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof. "Permitted Transferee" shall mean, with respect to any Clearlake Investor, (a) if any Transfer involves less than all of a Clearlake Investor's Registrable Securities, any Affiliate of a Clearlake Investor or Reservoir Capital Group or its Affiliates, or (b) if any Transfer involves all of a Clearlake Investor's Registrable Securities, to any Person other than a direct competitor of the Company. "Piggyback Registration" shall have the meaning set forth in Section 2.1. "Public Offering" means a public offering and sale of Common Stock pursuant to an effective registration statement under the Securities Act. "Registrable Securities" means (i) any share of Common Stock issued to any Investor (or any Affiliate thereof) as of the Effective Date or thereafter acquired, including upon conversion of the Company's Series A Preferred Stock, by any Investor, and (ii) any equity securities issued or issuable directly or indirectly with respect to any of the foregoing securities referred to in clause (i) by way of share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares constituting Registrable Securities, such shares will cease to be Registrable Securities when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) sold to the public pursuant to Rule 144 under the Securities Act or sold in a block sale to a financial institution in the ordinary course of its trading business. For purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. "Registration Expenses" shall have the meaning set forth in Section 3.2. "Rule 433" means Rule 433 under the Securities Act or any successor federal law then in force. "Series A Preferred Stock" means the Series A Preferred Stock of the Company, par value $.01 per share. "Securities Act" means the United States Securities Act of 1933, as amended, or any successor federal law then in force. "Securities and Exchange Commission" means the United States Securities and Exchange Commission and any governmental body or agency succeeding to the functions thereof. "Securities Exchange Act" means the United States Securities Exchange Act of 1934, as amended, or any successor federal law then in force. 22 "Shares" shall mean collectively any shares of the Company's equity securities outstanding from time to time, including, but not limited to the Common Stock and the Series A Preferred Stock. "Shelf Registration" shall have the meaning set forth in Section 1.4. "Short-Form Registrations" shall have the meaning set forth in Section 1.1. "Subscription Notice" shall have the meaning set forth in Section 6.1(a). "Subscription Period" shall have the meaning set forth in Section 6.1(b). "Transfer" shall mean any sale, pledge, assignment, encumbrance or other transfer or disposition of any shares of Registrable Securities to any other Person, whether directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. 11. MISCELLANEOUS. 11.1. No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. 11.2. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies at law or in equity existing in its favor, any party shall be entitled to seek specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement. 11.3. Amendment and Waiver. (a) Except as otherwise provided herein, this Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and Persons holding a majority of Clearlake Investor Registrable Securities, provided, that the admission of new parties pursuant to the terms of Section 11.4 shall not constitute an amendment of this Agreement for purposes of this Section 11.3. Notwithstanding the foregoing (A) if any amendment, modification, extension, termination or waiver (an "Amendment") would treat any Investor or group of Investors in a manner different from, and materially adverse relative to, the Clearlake Investors voting in favor of such Amendment, then such Amendment will require the consent of the Investor or Investors holding a majority of the Registrable Securities of such group adversely treated, (B) any Amendment of Section 8 or 11.4(b) hereof shall require the consent of Persons holding a majority of Clearlake Investor Registrable Securities, and HOVRS Parties holding a majority of the Common Stock held by all HOVRS Parties (except that any such Amendment that purports to impose any obligation on the Company shall also require the consent of the Company), (C) any Amendment of Sections 1, 2 or 3 hereof that would (x) have the effect of treating the HOVRS Parties in a manner different from, and materially adverse relative to, the Clearlake Investors voting in favor 23 of such Amendment or (y) cause this Agreement to conflict with the HOVRS Registration Rights Agreement as in effect on the date hereof, shall require the consent of the Company, Persons holding a majority of Clearlake Investor Registrable Securities, and HOVRS Parties holding a majority of the Common Stock held by all HOVRS Parties and (D) any Amendment of clause (B), (C) or (D) of this Section 11.3(a) shall require the consent of the Company, Persons holding a majority of Clearlake Investor Registrable Securities, and HOVRS Parties holding a majority of the Common Stock held by all HOVRS Parties. (b) Each such Amendment shall be binding upon each party hereto and each Investor subject hereto. In addition, each party hereto and each Investor subject hereto may waive any right hereunder, as to itself, by an instrument in writing signed by such party or Investor. The failure of any party to enforce any provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. To the extent the Amendment of any Section of this Agreement would require a specific consent pursuant to this Section 11.3, any Amendment to definitions to the extent used in such Section shall also require such specified consent. (c) It is acknowledged that this Agreement amends and restates in its entirety that certain [Amended and Restated] Investor Rights Agreement dated as of [________, 200_][August 1, 2007] between the Company and the Clearlake Investors, as the same may have been amended, supplemented or otherwise modified from time to time prior to the date hereof. 11.4. Successors and Assigns; Transferees. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Registrable Securities shall continue to be Registrable Securities after any Transfer (except if such securities were effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, sold to the public pursuant to Rule 144 under the Securities Act or sold in a block sale to a financial institution in the ordinary course of its trading business). Any transferee receiving shares of Registrable Securities in a Transfer effected in compliance with the terms of this Agreement shall become an Investor party to this Agreement and shall be subject to the terms and conditions of, and be entitled to enforce, this Agreement to the same extent, and in the same capacity, as the Person that Transfers such Registrable Securities to such transferee; provided that only a Permitted Transferee of a Clearlake Investor will be deemed to be a Clearlake Investor for purposes of this Agreement. For the avoidance of doubt, any transferee receiving Registrable Securities in a Transfer that is not a Clearlake Investor or a Permitted Transferee of a Clearlake Investor or its Affiliates will become a party to this Agreement without the benefit of the right to initiate Demand Registrations or other rights afforded to the Clearlake Investors hereunder. Other than with respect to a pledge permitted pursuant to Section 5.2.3 hereof, prior to the Transfer of any Registrable Securities to any transferee, and as a condition thereto, each Investor effecting such Transfer shall (a) cause such transferee to deliver to the Company and each of the Investors its written agreement, in form and substance reasonably satisfactory to the Company, to be bound by the terms and conditions of this Agreement to the extent described in the preceding sentence and (b) if such Transfer is to a 24 Permitted Transferee, remain directly liable for the performance by such Permitted Transferee of all obligations of such transferee under this Agreement. (b) Prior to the Transfer by any HOVRS Party of any of the Company's Capital Stock to any transferee, and as a condition thereto, such HOVRS Party shall cause such transferee to deliver to the Company and each of the Investors its written agreement, in form and substance reasonably satisfactory to the Company, to be subject to the terms and conditions of this Agreement to the same extent, and in the same capacity, as the HOVRS Party that Transfers such Capital Stock to such transferee; provided that this Section 11.4(b) shall not apply to Transfers of Capital Stock that (x) are effectively registered under the Securities Act and disposed of in accordance with a registration statement covering such Capital Stock, or (y) constitute sales to the public pursuant to Rule 144 under the Securities Act or block sales to financial institutions in the ordinary course of their trading business. 11.5. 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 provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 11.6. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same Agreement. 11.7. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 11.8. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given, delivered and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 11.8 prior to 5:00 p.m. (Eastern time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 5:00 p.m. (Eastern time) on any Business Day and earlier than 11:59 p.m. (Eastern time) on the day preceding the next Business Day, or (iii) one (1) Business Day after when sent, if sent by nationally recognized overnight courier service (charges prepaid). The address for such notices and communications shall be as follows: If to the Company: GoAmerica, Inc. 433 Hackensack Avenue Hackensack, NJ 07601 Facsimile: (201) 527-1081 Attention: General Counsel and Chief Financial Officer 25 with a copy to: Lowenstein Sandler PC 65 Livingston Avenue Roseland, NJ 07068 Facsimile: (973) 587-2351 Attention: Peter H. Ehrenberg If to any Clearlake Investor: to the addressee specified on Schedule A hereto. If to any HOVRS Party: to the addressee specified on Schedule B hereto. 11.9. Delivery by Facsimile. This Agreement and any signed agreement or instrument entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation of a contract and each such party forever waives any such defense. 11.10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to a contract executed and performed in such state, without giving effect to the conflicts of laws principles thereof. 11.11. Jurisdiction; Submission to Jurisdiction; Waivers. Each party hereto irrevocably agrees that any proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect thereof brought by the other party hereto or its successors or assigns, may be brought and determined in the Supreme Court of the State of New York in New York County or in the United States District Court for the Southern District of New York, and each party hereto hereby irrevocably submits with regard to any such proceeding for itself and in respect to its properties, generally and unconditionally, for all purposes of this Agreement. 11.12. Waiver of Jury Trial. To the extent not prohibited by applicable law that cannot be waived, each party hereto waives, and covenants that such party will not assert (whether as plaintiff, defendant or otherwise), any right to trail by jury in any forum in respect of any issue, claim or proceeding arising out of this Agreement or the subject matter hereof or in any way connected with the dealings of any party hereto in connection with any of the above, in each case whether now existing or hereafter arising and whether in contract, tort or otherwise. Any party to this Agreement may file a copy of this Section 11.12 with any court as written evidence of the consent of the parties hereto to the waiver of their rights to trial by jury. 11.13. Termination. The provisions of Section 11 of this Agreement shall terminate as to any Investor at such time as such Investor ceases to own any Series A Preferred Stock or shares issued upon conversion thereof or in exchange therefor. * * Signature pages follow * * IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement on the day and year first above written. COMPANY: GOAMERICA, INC. By: ___________________________ Name: ___________________________ Title: ___________________________ INVESTORS CCP A, L.P. By: CLEARLAKE CAPITAL PARTNERS, LLC Its: General Partner By: CCG Operations, LLC Its: Managing Member By: ______________________________ Name: Title: Manager HOVRS PARTIES ______________________________ Name: Ronald Obray ______________________________ Name: Denise Obray ______________________________ Name: Edmond Routhier CAYMUS INVESTMENT GROUP II, LLC By: __________________________ Name: Title: CAYMUS OBRAY, LLC By: __________________________ Name: Title: ______________________________ Name: [ ] [To be updated immediately prior to execution to include all HOVRS stockholders (including option holders who exercise prior to closing)] Schedule A: Clearlake Investors CCP A, L.P. Address for Notice: Clearlake Capital Group, LP 650 Madison Ave. 23rd Floor New York, NY 10022 Attention: Behdad Eghbali Facsimile: (212) 610-9121 With a copy to: Milbank, Tweed, Hadley & McCloy LLP 601 S. Figueroa, 30th Floor Los Angeles, CA 90017 Attention: Melainie K. Mansfield, Esq. Facsimile: (213) 892-4711 Schedule B: HOVRS Parties [To be updated immediately prior to execution to include all HOVRS stockholders (including option holders who exercise prior to closing)] [ ] Address for Notice: [ ] [ ] [ ] Attention: [ ] Facsimile: [ ] -----END PRIVACY-ENHANCED MESSAGE-----