FORM OF WARRANT

 

 

the securities represented by this warrant have not been registered under the
securities act of 1933, as amended (the "securities act"), or applicable state
securities laws. the securities have been acquired for investment and may not be
offered for sale, sold, transferred or assigned unless (1) there is an effective
registration statement under such act covering such securities, (2) the sale is
made in accordance with rule 144 or a bona fide pledge or custodial arrangement
with respect to such securities or (3) an opinion of counsel reasonably
satisfactory to the company is delivered stating that such registration is not
required.

warrant no. CS_______–___

up to ________ shares of
                  common stock, subject to adjustment

 

 

WARRANT

 

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

 

 

 

fusion telecommunications international, inc. (the "company" or the "issuer"), a
Delaware corporation, for value received, hereby certifies that _______, or its
permitted assigns, is the registered holder (the "holder") of warrants to
purchase from the issuer up to ________  (the "warrant number") duly authorized,
validly issued, fully paid and non-assessable shares of common stock, par value
$0.01 per share (the "common stock"), of the issuer at a price per share equal
to the warrant price (as defined herein), subject to the terms, conditions and
adjustments set forth below in this warrant (this "warrant").

 

 

TABLE OF CONTENTS

 1.     WARRANT                   

 2.     RESERVATION OF SHARES

 3.     TRANSFER AND ASSIGNMENT

 4.     TAXES

 5.     ADJUSTMENTS

 6.      BUSINESS COMBINATIONS

 7.     LOST OR STOLEN WARRANT

 8.     AGENT

 9.     NOTICE

10.    MISCELLANEOUS

 

1.     Warrant
 
The Warrant represented hereby has been issued pursuant to the Subscription
Agreement dated _________ (the “Subscription Agreement [exhibit_10-1.htm]”), and
is subject to the terms and conditions thereof. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth in the
Subscription Agreement.
 
     1.1     Warrant Number and Price; Warrant Term.
 
              (a)      Warrant Number and Price. Subject to the provisions of
this Warrant
 
                        (i)     This Warrant entitles the Holder to purchase at
any time during the Warrant Term for the Warrant Price up to the Warrant Number
of
                                shares of Common Stock, subject to adjustment as
set forth herein;

 

                       (ii)     The "Warrant Price" shall be $_______ per share.

 

            (b)      Warrant Term.  The "Warrant Term" Shall mean from and after
the Closing Date (herein defined) until _____________.

 

 

     1.2     Manner of Exercise.

 

> (a)     The Warrant may be exercised by the Holder, in whole or in part, from
> time to time during the Warrant Term, by presentation and surrender hereof to
> the Issuer at its principal office with a notice in substantially the form
> attached to this Warrant as Exhibit 1 duly executed by such Holder (a "Warrant
> Notice") and accompanied by payment of the Warrant Price for the number of
> shares of Common Stock specified in such form. Any such exercise shall be
> irrevocable. As soon as practicable after each such exercise of this Warrant,
> but not later than ten (10) Business Days from the receipt the Warrant Notice,
> the Issuer shall issue and deliver to the Holder a certificate or certificates
> for the shares of Common Stock issuable upon such exercise, registered in the
> name of the Holder or its designee.

2.     Reservation of Shares

For so long as this Warrant has not been exercised in full, the Issuer shall, at
all times prior to the end of the Warrant Term, reserve and keep available free
from any pre-emptive rights that would reduce the number of shares issuable to
the Holder under this Warrant, out of its authorized but unissued capital stock,
the number of shares of Common Stock available for exercise hereunder. In the
event the number of issued shares of Common Stock plus all other shares of
Common Stock outstanding and otherwise reserved for issuance exceeds the total
authorized number of shares of Common Stock, the Issuer shall promptly take all
actions necessary to increase the authorized number of shares of Common Stock,
including causing its board of directors to call a special meeting of
stockholders and recommend such increase.

3.     Transfer and Assignment.

By accepting delivery of this Warrant, the Holder covenants and agrees with the
Issuer not to exercise the Warrant or transfer the Warrant or the shares of
Common Stock represented hereby except in compliance with the terms of this
Warrant. By accepting delivery of this Warrant, the Holder further covenants and
agrees with the Issuer that the Warrant may not be sold or assigned, in whole or
in part, unless such sale or assignment complies with applicable federal and
state securities laws and the terms of this Warrant. As condition precedent to
any transfer, the Holder shall provide the Issuer with an opinion of counsel in
such form as the Issuer may reasonably require. If a portion of the Warrant
evidenced hereby is transferred in compliance with the terms of this Warrant,
all rights of the Holder hereunder may be exercised by the transferee provided
that any Holder of the Warrant may deliver a Warrant Notice only with respect to
such Holder's portion of the Warrant.

4.     Taxes

The Issuer will pay all documentary stamp taxes (if any) attributable to the
issuance of Common Stock upon the exercise of the Warrant by the Holder;
provided, however, that the Issuer shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the registration of
the Warrant or any certificates for Common Shares in a name other than that of
the Holder of the Warrant surrendered upon the exercise of the Warrant, and the
Issuer shall not be required to issue or deliver a Warrant evidencing rights
there under or certificates for Common Shares unless or until the person or
persons requesting the issuance thereof shall have paid to the Issuer the amount
of such tax or shall have established to the reasonable satisfaction of the
Issuer that such tax has been paid.

5.     Adjustments

The number of shares of Common Stock issuable upon exercise of the Warrant is
subject to adjustment for stock splits, combinations, stock dividends,
recapitalizations and similar corporate events, as may be determined in good
faith by the Company’s Board of Directors.

6.     Business Combinations

In case the Issuer on or after the date hereof is party to any (a) acquisition
of the Issuer by means of merger or other form of corporate reorganization in
which outstanding shares of the Issuer are exchanged for securities or other
consideration issued, or caused to be issued, by the Acquiring Person, herein
defined, or its Parent, herein defined, Subsidiary, herein defined, or
affiliate, (b) a sale of all or substantially all of the assets of the Issuer
(on a consolidated basis) in a single transaction or series of related
transactions, (c) any other transaction or series of related transactions by the
Issuer or relating to the Common Stock (including without limitation, any stock
purchase or tender or exchange offer) in which the power to cast the majority of
the eligible votes at a meeting of the Issuer's stockholders at which directors
are elected is transferred to a single entity or group acting in concert, or (d)
a capital reorganization or reclassification of the Common Stock or other
securities (other than a reorganization or reclassification in which the Common
Stock or other securities are not converted into or exchanged for cash or other
property, and, immediately after consummation of such transaction, the
stockholders of the Issuer immediately prior to such transaction own the Common
Stock, other securities or other voting stock of the Issuer in substantially the
same proportions relative to each other as such stockholders owned immediately
prior to such transaction), then, and in the case of each such transaction (each
of which is referred to herein as "Change in Control", proper provision shall be
made so that, at the option of the Acquiring Person and upon fifteen (15) days’
notice to the Issuer and the Holder prior to the consummation of the Change of
Control, either (i) the Acquiring Person expressly agrees to assume all of the
Issuer’s obligations under the Warrant or (ii) the Holder has fifteen (15) days
in which to exercise its rights under the Warrant. If Holder does not exercise
its rights during such fifteen (15) day period, all rights under the Warrant
shall terminate and the Warrant shall be of no further force and effect. The
Issuer, to the extent feasible, shall provide the Holder with thirty (30) days’
notice of the consummation of any Change of Control. Subject to the foregoing,
on or before the closing date under the agreement entered into with an Acquiring
Person resulting in a Change in Control, the Issuer, if applicable, shall
deliver to the Holder written notice that the Acquiring Person has assumed such
obligations. "Acquiring Person" means, in connection with any Change in Control,
(i) the continuing or surviving corporation of a consolidation or merger with
the Issuer (if other than the Issuer), (ii) the transferee of all or
substantially all of the properties or assets of the Issuer, (iii) the
corporation consolidating with or merging into the Issuer in a consolidation or
merger in connection with which the Common Stock is changed into or exchanged
for stock or other securities of any other Person or cash or any other property,
(iv) the entity or group (other than Holder or any of its affiliates) acting in
concert acquiring or possessing the power to cast the majority of the eligible
votes at a meeting of the Issuer 's stockholders at which directors are elected,
or, (v) in the case of a capital reorganization or reclassification, the Issuer,
or (vi) at the Holder's election, any Person that (A) controls the Acquiring
Person directly or indirectly through one or more intermediaries, (B) is
required to include the Acquiring Person in the consolidated financial
statements contained in such Parent's Annual Report on Form 10-K (if such Person
is required to file such a report) or would be required to so include the
Acquiring Person in such Person's consolidated financial statements if they were
prepared in accordance with U.S. GAAP and (C) is not itself included in the
consolidated financial statements of any other Person (other than its
consolidated subsidiaries). "Parent" shall mean any corporation (other than the
Acquiring Person) in an unbroken chain of corporations ending with the Acquiring
Person, provided each corporation in the unbroken chain (other than the
Acquiring Person) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. "Subsidiary" shall mean any
corporation at least 50% of whose outstanding voting stock shall at the time be
owned directly or indirectly by the Acquiring Person or by one or more
Subsidiaries.

7.     Lost or Stolen Warrant.

In case this Warrant shall be mutilated, lost, stolen or destroyed, the Issuer
may in its discretion issue in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor, but only upon
receipt of evidence reasonably satisfactory to the Issuer of such loss, theft or
destruction of such Warrant. Applicants for a substitute Warrant shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Issuer may prescribe.

8.     Agent. 

The Issuer (and any successor) shall at all times maintain a register of the
holders of the Warrant.

 

9.     Notice

All notices and other communications from the Issuer to the Holder, or vice
versa, shall be deemed delivered and effective when given personally or mailed
by first-class registered or certified mail, postage prepaid, or overnight
courier, at such address as may have been furnished to the Issuer or the Holder,
as the case may be, in writing by the Issuer or such Holder from time to time.

 

10.     Miscellaneous.

10.1     This Warrant shall be governed by, and construed in accordance with,
the internal laws of the State of New York (including Sections 5-1401 and 5-1402
of the New York General Obligation Law), and the Issuer hereby submits to the
non-exclusive jurisdiction of any state or federal court in the Southern
District of New York and any court hearing any appeal there from, over any suit,
action or proceeding against it arising out of or based upon this Warrant (a
"Related Proceeding"). The Issuer hereby waives any objection to any Related
Proceeding in such courts whether on the grounds of venue, residence or domicile
or on the ground that the Related Proceeding has been brought in an inconvenient
forum.

10.2     Any and all remedies set forth in this Warrant: (i) shall be in
addition to any and all other remedies the Holder or the Issuer may have at law
or in equity, (ii) shall be cumulative, and (iii) may be pursued successively or
concurrently as each of Holder and the Issuer may elect. The exercise of any
remedy by the Holder or the Issuer shall not be deemed an election of remedies
or preclude the Holder or the Issuer, respectively, from exercising any other
remedies in the future.

10.3     For purposes of this Warrant, except as otherwise expressly provided or
unless the context otherwise requires: (i) the terms defined in this Warrant
have the meanings assigned to them in this Warrant and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender and neuter gender of such term; (ii) accounting terms
not otherwise defined herein have the meanings assigned to them in accordance
with U.S. GAAP; (iii) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Warrant, unless the context shall otherwise require; (iv) a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other subdivisions;
(v) the words "herein", "hereof", "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; (vi) the
term "include" or "including" shall mean without limitation; (vii) any
agreement, instrument or statute defined or referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statues and references to all attachments thereto and instruments incorporated
therein; and (viii) references to a Person are also to its permitted successors
and assigns and, in the case of an individual, to his or her heirs and estate,
as applicable.

10.4     If any term or other provision of this Warrant is invalid, illegal or
incapable of being enforced by any rule of law or public policy all other
conditions and provisions of this Warrant shall nevertheless remain in full
force and effect. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void or
unenforceable, the undersigned agrees that the court making such determination
shall have the power to reduce the scope, duration, area or applicability of the
term or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Issuer shall negotiate in good faith to modify this Warrant so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.

10.5     All dollar ($) amounts set forth herein refer to United States dollars.
All payments hereunder and there under will be made in lawful currency of the
United States of America.

10.6     The Issuer may not assign its obligations under this Warrant other than
by operation of law or in connection with a merger or sale of all or
substantially all of the Issuer's assets or stock or a Change in Control of the
Issuer. Subject to the terms hereof, Holder may assign, pledge, hypothecate or
transfer any of the rights and associated obligations contemplated by this
Warrant, in whole or in part, at its sole discretion (including, but not limited
to, assignments, pledges, hypothecations and transfers in connection with
hedging transactions with respect to this Warrant).

10.7     The shares of Common Stock issuable upon exercise of this Warrant have
not been registered under the Securities Act and the Issuer has not undertaken
to so register the shares. The certificates evidencing such shares will bear a
legend restricting their transferability absent registration under the
Securities Act or the availability of an applicable exemption from such
registration.

10.8     The failure or inability of the Issuer to maintain the effectiveness of
any Registrable Securities shall not in any way prevent the expiration of this
Warrant at the end of the Warrant Term.

Notwithstanding anything herein to the contrary, if a Holder upon any Warrant
exercise does not consent to accept unregistered Common Stock, then such
Holder’s Warrant Notice shall be deemed, without any further action, to have
been withdrawn. Moreover, in no event is the Issuer obligated to settle any
Warrant exercise, in whole or in part, for cash.

This Warrant shall not be valid unless signed by the Issuer.

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IN WITNESS WHEREOF, the Issuer has caused this Common Stock Purchase Warrant to
be signed by its duly authorized officer.

dated: _________________________

fusion telecommunications international, inc.

by: ________________________________________

 

_________________________, as ________________________________

 

 

 

exhibit 1

form of warrant notice

To Be Executed Upon Exercise of Warrant

dated: _________________

attention: _________________

re:     exercise of warrant

Ladies and Gentlemen:

The undersigned is the holder of a Common Stock Purchase Warrant (the "Warrant")
evidencing certain rights to purchase Common Stock shares of Fusion
Telecommunications International, Inc. (the "Issuer") and hereby elects to
exercise the Warrant to purchase ________ shares of Common Stock (as defined in
the Warrant) and hereby delivers via wire transfer of immediately available
United States funds $_______________ in exchange for such shares of Common
Stock, all in accordance with the terms of such Warrant.

In accordance with the terms of the attached Warrant, the undersigned requests
that certificates for such shares be issued in the name of and delivered to the
undersigned at the following address:
 

Title Holder shall be:      
_____________________________________________________________

_________________________________________________________________________________

Deliver to the undersigned at:
     _______________________________________________________

_________________________________________________________________________________

Contact telephone
number:     _______________________________________________________

o     

Check here if the number of shares of Common Stock specified above is less than
the total number of shares of Common Stock remaining under the Warrant.

o     

Check here if the undersigned requests a new Warrant, substantially identical to
the attached Warrant, be issued to the undersigned evidencing rights to exercise
additional Warrants equal to the number of shares of Common Stock called for on
the face of the current Warrant, as adjusted, minus the gross number of shares
of Common Stock delivered to the undersigned in accordance with this Notice.

holder

holder

by: ___________________________________

by: ___________________________________

printed name: ___________________________

printed name: ___________________________

title: _________________________________

title: _________________________________