Exhibit 10.1


 


MODIFICATION
AND SETTLEMENT AGREEMENT


 


This
Modification and Settlement Agreement (this “Agreement”) is entered into as of March 16, 2021, by and
among FTE Networks, Inc., a Nevada corporation (the “Corporation”), on the one hand, and Lateral Juscom Feeder
LLC, a Delaware limited liability company (“Lateral”), Lateral US Credit Opportunities Fund, L.P., a Delaware
limited partnership (“LUSCOF”) and Lateral SMA Agent LLC, a Delaware limited liability company (“Lateral
SMA,” and WVP Emerging Manager Private Fund, LLC on behalf of and for the account of WVP Emerging Manager Private Fund
– Lateral Series, a Delaware limited liability company (“WVP,” and together with Lateral, LUSCOF and Lateral
SMA, the “Lateral Parties”) on the other hand. Each of the Corporation and the Lateral Parties is a “Party”
and, collectively, the “Parties.”


 


RECITALS


 


WHEREAS,
as of the date hereof, the Lateral Parties collectively beneficially own 8,128,688 shares of the common stock, par value $0.001
per share (the “Common Shares”), of the Corporation, including (i) 4,193,207 outstanding Common Shares, (ii)
1,586,865 Common Shares underlying Series A-1 Warrants (the “Series A-1 Warrants”), pursuant to that certain
Series A-1 Warrant Agreement, dated as of July 2, 2019 (the “Series A-1 Warrant Agreement”), (iii) 1,586,865
Common Shares underlying Series A-2 Warrants (the “Series A-2 Warrants”), pursuant to that certain Series A-2
Warrant Agreement, dated as of July 2, 2019 (the “Series A-2 Warrant Agreement” and together with the Series
A-1 Warrant Agreement, the “Warrant Agreements”), and 761,750 Common Shares underlying other warrants issued
by the Corporation to the Lateral Parties prior to the Warrant Agreements (the “Other Lateral Warrants”), each
to purchase one Common Share at a price per share set forth therein, in each case on the terms and conditions set forth in the
Warrant Agreements and the Other Lateral Warrants, as the case may be;


 


WHEREAS,
the Warrant Agreements provide that as soon as practicable after December 31, 2019 (the “Original True-Up Date”),
the number of Warrant Shares (as defined therein) that may be purchased upon exercise of the Series A-1 Warrants and Series A-2
Warrants of the Corporation would automatically without any further action by any holder thereof or the Corporation be increased
or decreased, so that after such adjustment, the sum of (i) the number of Common Shares issuable upon the exercise of all outstanding
Series A-1 Warrants and Series A- 2 Warrants of the Corporation, plus (iii) 4,193,207 Common Shares (previously issued to the
Lateral Parties other than Niagara Nominee, L.P. prior to the date hereof) equals 25.0% of the total issued and outstanding Common
Shares (on a fully-diluted basis) on the Original True-Up Date (the “True-Up Provision”).


 


WHEREAS,
on December 30, 2019, the Corporation consummated a purchase of the equity and certain business assets (the “Vision Acquisition”)
pursuant to that certain Purchase Agreement dated as of December 20, 2019 (the “Purchase Agreement”), by and
among the Corporation, (ii) US Home Rentals LLC, a Delaware limited liability company, (x) Vision Property Management, LLC, a
South Carolina limited liability company and certain other sellers named therein, and certain other parties named therein.


 




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WHEREAS,
the Lateral Parties have provided an aggregate of approximately $2,000,000 in critical funding to support the Corporation’s
working capital requirements and operations.


 


WHEREAS,
the Parties wish to cancel the Warrant Agreements and the Other Lateral Warrants in exchange for Common Shares to reflect certain
negotiated effects of the Vision Acquisition.


 


NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:


 


 1. Cancelation of Warrants and Issuance of New Shares.




 


(a) Each
Lateral Party owns, of record and beneficially, warrants evidencing (as of their original issuance date) the right to purchase
the number of Series A-1 Warrants or A- 2 Warrants corresponding to each Lateral Party’s name on Schedule A attached
hereto, together with any additional shares eligible to be purchased thereunder as a result of the anti-dilution provisions of
such warrants. The Lateral Parties (i) have good and valid title to and record and beneficial ownership of the Series A-1 Warrants
and Series A-2 Warrants originally representing the right to purchase an aggregate of 3,173,731 Common Shares (along with any
additional Common Shares eligible to be purchased thereunder as a result of the anti-dilution provisions of such warrants), and
Other Lateral Warrants representing the right to purchase an aggregate of 761,750 Common Shares (along with any additional Common
Shares eligible to be purchased thereunder as a result of the anti-dilution provisions of such warrants) (all such Series A-1
Warrants, Series A-2 Warrants and Other Lateral Warrants being herein referred to as the “Subject Warrants”),
in each case free and clear of any liens or rights of others; (ii) have not transferred any of the Subject Warrants of the Corporation
or any rights thereunder to any other person, other than to the Corporation pursuant to the cancellation contemplated by this
Agreement.


 


(b) On
the date hereof, the Corporation shall issue to the Lateral Parties the number of Common Shares corresponding to each Lateral
Party’s name on Schedule A attached hereto designated as “Settlement Date Shares”.


 


(c) Immediately
upon the satisfaction of the preceding sentence, all of the Subject Warrants shall be automatically and without any further action
of the parties hereto, cancelled and be of no further force or effect, including, without limitation any effect of the True- Up
Provision in the Warrant Agreements. No Common Shares or any other securities or other property have been acquired, and as a result
of their cancellation pursuant to this paragraph no Common Shares or any other securities or other property may been acquired,
pursuant to the Subject Warrants.


 


2.  Issuance
of Series J-1 and J-2 Redeemable Non-Convertible Preferred Shares.




 


(a) In
consideration of the modification of the Warrant Agreements as set forth above and for other good and valuable consideration,
within three business days after the date of this Agreement, the Corporation shall take all necessary action (including all necessary
filings with the Secretary of State of Nevada) to issue to the Lateral Parties an aggregate amount of $10,000,000 in stated value
of Series J-1 Non-Voting Non-Convertible Redeemable Preferred Stock (the “Series J-1 Preferred Shares”) and
an aggregate amount of $10,000,000 in stated value of Series J-2 Non-Voting Non-Convertible Redeemable Preferred Stock (the “Series
J-2 Preferred Shares”, and together with the Series J-1 Preferred Shares, the “Preferred Shares”)
to the Lateral Parties, to be allocated among the Lateral Parties as set forth in Schedule B. The Preferred Shares shall
have the terms and conditions set forth in the Form of Certificate of Designation set forth as Exhibit A hereto.


 




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(b) The
Corporation and the Lateral Parties shall cooperate in good faith to ensure that the Preferred Shares are issued as promptly as
possible and to cause the Preferred Shares to be considered to be outstanding as of December 31, 2020, to the extent permitted
by and consistent with applicable legal and accounting requirements.


 


3. MCA
Litigation Recovery. The Lateral Parties shall pay to the Corporation, not later than 60 days following receipt of any
amounts recovered from any of those certain commercial tort litigation claims, fraud claims, and insurance claims against
various lenders under various merchant cash advances for indebtedness (other than, for the avoidance of doubt, any
convertible promissory notes or similar notes evidencing indebtedness for borrowed money) that was incurred but not permitted
under the agreements governing the Corporation’s indebtedness, including but not limited to claims against those
entities set forth on Exhibit B hereto (collectively, the “MCA Claims”), an amount equal to 50% of
any amounts received from any such MCA Claim in excess of an annualized preferred return of 100% on any amounts invested or
expended by the Lateral Parties in pursuing such MCA Claims. This preferred return shall not exceed three times such amounts
invested or expended. By way of illustration, if the recovery on a claim was $120,000 and was received 36 months after the
Lateral Parties expended $30,000 to recover that amount, the payment to the Corporation would be $15,000. The Lateral Parties
shall provide annually to the Corporation an accounting of any and all amounts invested or expended pursuing the MCA Claims.
The Lateral Parties acknowledge that as of the date of this Agreement, they have not yet invested or expended any amounts in
pursuing such MCA Claims, nor received any sums on account of such Claims.


 


 4.  Future True-Up Shares.




 


(a) Immediately
upon the earlier of the Conversion Date (as defined in the Certificate of Designation with respect to the Series I Preferred Shares)
or the conversion of any Series I Preferred Shares into fully paid and non-assessable Common Shares or the redemption, repurchase,
repayment, tender or other monetization of any Series I Preferred Shares (the “Future True-Up Date”), the Corporation
shall take all necessary action (including all necessary filings with the Secretary
of State of Nevada) to issue to the Lateral Parties the number of Common Shares corresponding to each Lateral Party’s name
on Schedule A attached hereto designated as “Future True-Up Shares”.


 


5.  No
Further Adjustments. The Lateral Parties agree and acknowledge that they have no agreement, arrangement or understanding with
the Corporation to provide or enter into any modification of this Agreement or the transactions contemplated hereby, or to issue
or provide any additional shares of any class or series (or any rights to acquire any such shares) or any consideration of any
other type or nature to any of the Lateral Parties, as a result of or relating to any agreement or arrangement that may be entered
into with the persons or entities that sold the Vision Property business to the Corporation
(the “Vision Arrangement”), whether or not the Vision Arrangement involves the payment or issuance of cash,
promissory notes, securities or any combination of the foregoing by the Corporation, and whether or not the Vision Arrangement
may wind up being agreed to by the Corporation on materially different terms than may be contemplated on the date of this Agreement.


 




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6.  Notices.
Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon confirmation
of receipt, when sent by email (provided such confirmation is not automatically generated), or (c) one business day after deposit
with a nationally recognized overnight delivery service, in each case properly addressed to the Party to receive the same. The
addresses and emails for such communications:


 


If
to the Corporation:


 


FTE
Networks, Inc.


237
West 35th Street, Suite 806


New
York, NY 10001


Attention:
General Counsel


Email:
mfernandez@ftenet.com


 


with
a copy (which will not constitute notice) to:


 


Troutman
Pepper Hamilton Sanders LLP


3000
Two Logan Square


Eighteenth
and Arch Streets


Philadelphia,
PA 19103


Attention:
Robert Friedel


Email:
robert.friedel@troutman.com


 


If
to Lateral:


 


Lateral
Investment Management, LLC


400
South El Camino Real, Suite 1100,


San
Mateo, CA 94402


650-396-2200


Attention:
Richard de Silva, Managing Partner


Email:
Rd@lateralim.com


 


with
a copy (which will not constitute notice) to


 


King
& Spalding LLP


1185
Avenue of the Americas


New
York, NY 10036


Attention:
Kevin E. Manz


Email:
kmanz@kslaw.com


 




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If
to WVP:


 


Worth
Venture Partners, LLC


295
Sunset Avenue


Englewood,
NJ 07631


212-558-9017


Email:
hfdata@worthventure.com


 


7. Applicable
Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the State of New York without
reference to the conflict of laws principles thereof. Each of the Parties irrevocably agrees that any legal action or proceeding
with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment
in respect of this Agreement and the rights and obligations arising hereunder brought by another Party or its successors or assigns,
will be brought and determined exclusively in the courts of the State of New York (or, if a New York state court declines to accept
jurisdiction over a particular matter, any federal court within the Southern District of New York). Each of the Parties hereby
irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally,
to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement in
any court other than the aforesaid courts. Each of the Parties hereby irrevocably waives, and agrees not to assert in any action
or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named
courts for any reason, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable legal requirements,
any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit,
action or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.


 


8. Counterparts.
This Agreement may be executed in two or more textually identical counterparts, each of which will be considered one and the same
agreement and will become effective when counterparts have been signed by each of the Parties and delivered to the other Parties
(including by means of electronic delivery or facsimile).


 




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9. Entire
Agreement; Amendment and Waiver; Successors and Assigns; Third Party Beneficiaries; Term. This Agreement, the Warrant Agreements,
the Series J-1 Preferred Shares, the Series J-2 Preferred Shares, the Series I Preferred Shares and a separate letter agreement
dated the date hereof together constitute the entire agreement of the Parties with respect to the subject matter discussed herein
and together supersede all prior agreements, arrangements, or understandings, whether written or oral, between the parties with
respect to the transactions contemplated hereby. No modifications of this Agreement can be made except in writing signed by an
authorized representative of each Party. No failure on the part of any Party to exercise, and no delay in exercising, any right,
power or remedy hereunder will operate as a waiver thereof, nor will any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by law. The terms and conditions of this Agreement
will be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors, heirs, executors,
legal representatives, and permitted assigns. No Party will assign or delegate this Agreement or any rights or obligations hereunder
without, with respect to Lateral, the prior written consent of the Corporation, and with respect to the Corporation, the prior
written consent of the Lateral Parties. This Agreement is solely for the benefit of the Parties and is not enforceable by any
other persons or entities.


 


10. Interpretation.
When a reference is made in this Agreement to “Sections,” or “Exhibits,” such reference shall be to a
Section of or Exhibit to this Agreement unless otherwise indicated. The terms defined in the singular have a comparable meaning
when used in the plural, and vice versa. The headings contained in this Agreement are for reference purposes only and are not
part of this Agreement. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed followed by the words “without limitation.” No rule of construction against the
draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the
product of negotiation between sophisticated parties advised by counsel. All references to “$” or “dollars”
mean the lawful currency of the United States of America. Except as expressly stated in this Agreement, all references to any
statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to
time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any
statute, rule or regulation include any successor to the section. Whenever the words “hereof”, “hereby”,
“herein” and “hereunder” and words of like import are used in this Agreement, they shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.


 


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remainder of this page intentionally left blank]


 




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IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the Parties as of the
date first indicated above.


 





	 	THE
    CORPORATION:
	 	 
	 	FTE
    NETWORKS, INC.
	 	 
	 	By: 	/s/
    Michael P. Beys
	 	Name: 	Michael B. Beys
	 	Title: 	Interim Chief Executive Officer
	 	 
	 	THE
    LATERAL PARTIES:
	 	 
	 	LATERAL
    US CREDIT OPPORTUNITIES FUND LP
	 	 
	 	By: 	/s/
    Richard de Silva
	 	Name: 	Richard de
Silva
	 	Title: 	Manager
	 	 
	 	LATERAL
    JUSCOM FEEDER, LLC
	 	 
	 	By: 	/s/
    Richard de Silva
	 	Name: 	Richard de Silva
	 	Title: 	Manager
	 	 
	 	LATERAL
    SMA AGENT, LLC
	 	 
	 	By:	/s/
    Richard de Silva
	 	Name: 	Richard de Silva
	 	Title: 	Manager
	 	 
	 	WVP
    EMERGING MANAGER PRIVATE FUND, LLC ON BEHALF OF AND FOR THE ACCOUNT OF WVP EMERGING MANAGER PRIVATE FUND – LATERAL SERIES
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 


 




    	 



    	 



    

 


SCHEDULE
A


 


	Lateral Party	 	Series A-1 Warrants	 	 	Series A-2 Warrants	 	 	Other Lateral Warrants	 	 	Settlement Date Shares to be Issued on the Date Hereof
 (See
                                                                                                                                                                                                                                                                                     Section 1) Fu
	 	 	Future True Up Shares to be Issued on the
 Future True Up Date
 (See Section 4)
	 
	Lateral US Credit Opportunities Fund, L.P.	 	 	1,235,110	 	 	 	1,235,110	 	 	 	748,250	 	 	 	5,477,971	 	 	 	2,492,805	 
	Lateral Juscom Feeder, LLC	 	 	251,254	 	 	 	251,253	 	 	 	0	 	 	 	962,148	 	 	 	507,101	 
	Lateral SMA Agent, LLC	 	 	30,151	 	 	 	30,151	 	 	 	4,050	 	 	 	119,510	 	 	 	60,853	 
	WVP Emerging Manager Private Onshore Fund, LLC	 	 	70,351	 	 	 	70.351	 	 	 	9,450	 	 	 	278,852	 	 	 	141,988	 
	Total:	 	 	1,516,585	 	 	 	1,516,584	 	 	 	761,750	 	 	 	6,838,481	 	 	 	3,202,748	 



 




    	 



    	 



    

 


SCHEDULE
B


 


	Lateral Party	 	Series J-1 Preferred Shares	 	 	Series J-2 Preferred Shares	 
	Lateral US Credit Opportunities Fund, L.P.	 	$	3,891,667	 	 	$	3,891,667	 
	Lateral Juscom Feeder, LLC	 	$	3,291,666	 	 	$	3,291,666	 
	WVP Emerging Manager Private Onshore Fund, LLC	 	$	221,667	 	 	$	221,667	 
	Lateral Home Agent, LLC	 	$	2,595,000	 	 	$	2,595,000	 
	Total:	 	$	10,000,000	 	 	$	10,000,000	 



 




    	 



    	 



    

 


EXHIBIT
B


 


	 	 	Borrower	 	Guarantor(s)	 	Counterparty	 	Date	 	Indebtedness	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Secured Merchant Agreement	 	FTE Networks, Inc.	 	FTE Holdings, LLC Jus- Com, Inc 
Focus Venture Partners, Inc Benchmark Buildings, Inc. Focus Wireless LLC	 	Influx Capital, LLC	 	December 14, 
2018	 	$	2,000,000.00	 
	Secured Merchant Agreement	 	FTE Networks, Inc.	 	FTE Holdings, LLC Jus- Com, Inc 
Focus Venture Partners, Inc Benchmark Buildings, Inc. Focus Wireless LLC	 	Franklin Funding 
Group LLC	 	December 14, 
2018	 	$	2,000,000.00	 
	Merchant Agreement	 	Benchmark Builders 
Inc. FTE Networks Inc Focus Wireless LLC 
Jus-Com Inc.	 	David S. Lethem Michael 
C. Palleschi	 	Cap Call, LLC	 	December 14, 
2018	 	$	250,000.00	 
	Secured Merchant Agreement	 	Benchmark Builders 
Inc. FTE Networks Inc Focus Wireless LLC 
Jus-Com Inc.	 	David S. Lethem Michael 
C. Palleschi	 	Preferred Capital	 	December 12, 
2018	 	$	500,000.00	 
	Secured Merchant Agreement	 	FTE Networks, Inc.	 	Michael C. Pelleschi David S. Lethem	 	Alfa Advance	 	December 12, 
2018	 	$	450,000.00	 
	Agreement for the Purchase and Sale of Future Receipts	 	FTE Holdings, LLC	 	David Scott Lethem FTE Networks, Inc. Jus-Com, Inc. 
Focus Venture Partners, Inc. 
Benchmark Builders, Inc. Optos Capital Partners, LLC 
Focus Wireless, LLC FTE Wireless, LLC 
Crosslayer, Inc.	 	Unique Funding Solutions LLC	 	December 17, 
2018	 	$	750,000.00	 
	Secured Merchant Agreement	 	Benchmark Builders 
Inc. FTE Networks, Inc. Focus Wireless, LLC 
Jus-Com, Inc.	 	Davis S. Lethem Michael C. Palleschi	 	Addy Source LLC	 	December 12, 
2018	 	$	500,000.00	 



 




    	 



    	 



    

 


	Merchant Agreement	 	Benchmark Builders 
Inc. FTE Networks, Inc. Focus Wireless, LLC 
Jus-Com, Inc.	 	Davis S. Lethem Michael C. Palleschi	 	Cap Call, LLC	 	November 30, 
2018	 	$	800,000.00	 
	Secured Merchant Funding	 	FTE Networks, Inc.	 	Davis S. Lethem Michael C. Palleschi FTE Holdings, LLC Jus-Com, Inc 
Focus Venture Partners, Inc. Benchmark Builders, Inc.	 	Queen Funding LLC	 	November 28, 
2018	 	$	1,250,000.00	 
	Future Merchant Services, LLC	 	FTE Networks, Inc.	 	David S. Lethem Michael C. Palleschi FTE Holdings, LLC Jus-Com, Inc 
Focus Venture Partners, Inc 
Benchmark Builders, Inc Focus Wireless 
LLC	 	Capital Merchant Services, LLC	 	November 28, 
2018	 	$	750,000.00	 
	Future Receivables Sale and Purchase Agreement	 	FTE Networks, Inc.	 	David S. Lethem Michael C. Palleschi FTE Holdings, LLC Jus-Com, Inc 
Focus Venture Partners, Inc 
Benchmark Builders, Inc Focus Wireless 
LLC	 	Green Capital Funding, LLC	 	November 27, 
2018	 	$	600,000.00	 
	Merchant Agreement	 	FTE Networks, Inc.	 	Davis S. Lethem	 	HFH CAP	 	October 30, 2018	 	$	1,000,000.00	 
		 	 	 	Michael C. Palleschi	 	 	 	 	 	 	 	 
	 	 	 	 	FTE Holdings, LLC	 	 	 	 	 	 	 	 
	 	 	 	 	Jus-Com, Inc.	 	 	 	 	 	 	 	 
	 	 	 	 	Focus Venture Partners,	 	 	 	 	 	 	 	 
	 	 	 	 	Inc.	 	 	 	 	 	 	 	 
	 	 	 	 	Benchmark Builders,	 	 	 	 	 	 	 	 
	 	 	 	 	Inc.	 	 	 	 	 	 	 	 
	 	 	 	 	Focus Fiber Solutions,	 	 	 	 	 	 	 	 
	 	 	 	 	LLC	 	 	 	 	 	 	 	 
	 	 	 	 	Crosslayer Inc.	 	 	 	 	 	 	 	 
	Secured Merchant	 	FTE Networks, Inc.	 	Davis S. Lethem	 	Hop Capital	 	November 8,	 	$	2,750,000.00	 
	 	 	 	 	Michael C. Palleschi	 	 	 	 	 	 	 	 
	 	 	 	 	Benchmark Builders, Inc.	 	 	 	 	 	 	 	 
	 	 	 	 	FTE Holdings LLC	 	 	 	 	 	 	 	 
	 	 	 	 	Jus-Com, Inc.	 	 	 	 	 	 	 	 
	 	 	 	 	Focus Venture Partners,	 	 	 	 	 	 	 	 
	 	 	 	 	Inc.