Document:

Unassociated Document

    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.
              1 	
              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
      registered permitted assigns, is the registered holder (the "Holder")
      of
      rights to purchase from the Issuer up to [___________(_____)]1 
      (the
      "Warrant
      Number")
      duly
      authorized, validly issued, fully paid and nonassessable 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").

    
      
         

        ____________

        1
          Insert
          50% of the number of shares of Common Stock into which the Holder's Preferred
          Stock is convertible.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

           

        

      

    

    1. Warrant.
      The
      Warrant represented hereby has been issued pursuant to the Subscription and
      Rights Agreement dated December 20, 2006 (the “Subscription
      Agreement”),
      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 a price per share equal to [___________(_______)]2 .

     

    (b)
      Warrant
      Term.
      The
      "Warrant
      Term"
      shall
      mean from and after the Closing Date (herein defined) until __________ ___,
      201_3 .

    

    1.2
      Manner of Exercise. 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 of 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 five
      (5) 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
          Insert
          120% of price of Issuer’s Common Stock determined at the initial closing under
          the Subscription Agreement (the “Closing
          Date”),
          as
          adjusted pursuant to this Warrant.

         

      

      
        3
          Insert
          date that is 90th
          monthly
          anniversary of Closing Date.

      

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    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 Common Shares 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 Common Shares
      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 thereunder 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 share of Common Stock issuable upon exercise of the Warrant is subject
      to adjustment for stock splits, recombinations, stock dividends and the
      like.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    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 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.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    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 therefrom, 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.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    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 thereunder 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
      Under the Subscription Agreement, the Issuer is only required to use its best
      efforts to cause a registration statement covering the issuance of the
      Registrable Securities to be declared effective, and once effective, only to
      use
      its best efforts to maintain the effectiveness of the registration statement.
      The Issuer will not be obligated to deliver any Registrable Securities, and
      there are no contractual penalties for failure to deliver any such securities,
      if a registration statement is not effective at the time of exercise. The
      failure or inability of the Issuer to maintain the effectiveness of such
      registration statement shall not in any way prevent the expiration of this
      Warrant at the end of the Warrant Term.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    Notwithstanding
      anything herein to the contrary, if a Holder upon any Warrant exercise does
      not
      consent to accept unregistered Common Stock in lieu of Registered Common Stock
      (as defined in the Issuer’s Certificate of Rights and Preferences of Series A-2
      Cumulative Convertible Preferred Stock, as amended), 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.

     

    [Remainder
      of Page Left Blank Intentionally]

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

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

    

    Dated:
      ________, 200_

    

    

    FUSION
      TELECOMMUNICATIONS INTERNATIONAL, INC.

    

    

    

    By:
      ______________________

    Name:
      

    Title:
      

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    Exhibit
      1

    

    [FORM
      OF
      WARRANT NOTICE]

    

    (To
      Be
      Executed Upon Exercise Of Warrant)

    

    [DATE]

    

    Fusion
      Telecommunications International, Inc.

    420
      Lexington Avenue, Suite 1718

    New
      York,
      New York 10170

    Attention:  [____________]

    

    Re: Exercise
      of Warrant

    

    Ladies
      and Gentlemen:

    

    The
      undersigned is the registered holder of a warrant (the "Warrant")
      evidencing certain rights to purchase 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 registered in the name of and delivered to
      the
      undersigned at the following address:

    

    [TO
      BE
      ADDED]

    

    [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, insert the
      following
      -- The
      undersigned requests that 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.]

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    

    HOLDER
      

    

    

    By:____________________________________     

    Name:

    Title:

    

    

    

    By:____________________________________     

    Name:

    Title:

     

    
      
         

      

      
        -2-Unassociated Document

    
      CERTIFICATE
        OF RIGHTS AND PREFERENCES

      OF

      SERIES
        A-2 CUMULATIVE CONVERTIBLE PREFERRED STOCK

      OF

      FUSION
        TELECOMMUNICATIONS INTERNATIONAL, INC.

       

      Pursuant
        to Section 151 of the Delaware General Corporation Law and Article Fourth,
        Section 2 of the Certificate of Incorporation (as amended, the "Certificate
        of Incorporation"),
        of
        Fusion Telecommunications International, Inc. (the "Company"),
        a
        corporation organized and existing under the laws of the State of Delaware,
        hereby certifies that the following resolution was duly adopted by the board
        of
        directors of the Company (the "Board")
        effective as of May __, 2007 pursuant to authority conferred upon the Board
        by
        the Certificate of Incorporation, which authorizes the issuance of up to
        ten
        million (10,000,000) shares of preferred stock, par value $0.01 per
        share.

       

      RESOLVED,
        that pursuant to authority expressly granted to and vested in the Board and
        pursuant to the provisions of the Certificate of Incorporation, the Board
        hereby
        creates a series of preferred stock, herein designated and authorized as
        the
        Series A-2 Cumulative Convertible Preferred Stock, par value $0.01 per share,
        which shall consist of four thousand (4,000) of the ten million (10,000,000)
        shares of preferred stock (the "Series
        A-2 Preferred Stock")
        which
        the Company now has authority to issue, and the Board of Directors hereby
        fixes
        the powers, designations and preferences and the relative, participating,
        optional and other special rights of the shares of such series, and the
        qualifications, limitations and restrictions thereof as follows:

       

      1. Number.
        The
        number of shares constituting the Series A-2 Cumulative Convertible Preferred
        Stock shall be four thousand (4,000).

       

      2. Definitions.
        Unless
        the context otherwise requires, when used herein the following terms shall
        have
        the meaning indicated.

       

      "Acquiring
        Person"
        is
        defined in 6(G).

       

      "AMEX"
        means
        the American Stock Exchange, provided,
        however,
        that if
        the American Stock Exchange is not then the principal U.S. trading market
        for
        the Common Stock, then "AMEX"
        shall
        be deemed to mean the principal U.S. national securities exchange (as defined
        in
        the Securities Exchange Act of 1934, as amended (the "Exchange
        Act")
        on
        which the Common Stock is then traded, or if such Common Stock is not then
        listed or admitted to trading on any national securities exchange but is
        designated as a Nasdaq Capital Market Security by the National Association
        of
        Securities Dealers, Inc. ("NASD"),
        then
        such market system, or if such Common Stock is not listed or quoted on any
        of
        the foregoing, then the OTC Bulletin Board.

       

      "Board"
        means
        the Board of Directors of the Company.

       

      "Business
        Day"
        means
        any day on which the Common Stock may be traded on the AMEX, or, if not admitted
        for trading on the AMEX, any day other than a Saturday, Sunday or holiday
        on
        which banks in New York City are required or permitted to be
        closed.

       

      “Call
        Notice”
is
        defined in 6(C).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      "Capital
        Stock"
        means
        (i) with respect to any Person that is a corporation, any and all shares,
        interests, participations or other equivalents (however designated) of capital
        or capital stock of such Person and (ii) with respect to any Person that
        is not
        a corporation, any and all partnership, limited partnership, limited liability
        company or other equity interests of such Person. 

       

      "Certificate"
        means
        this Certificate of Rights and Preferences of the Series A-2 Cumulative
        Convertible Preferred Stock.

       

      "Certificate
        of Incorporation"
        means
        the Certificate of Incorporation of the Company, as amended.

       

      "Change
        of Control"
        is
        defined in 6G.

       

      "Common
        Stock"
        means
        the Company's common stock, par value $0.01 per share, and any Capital Stock
        for
        or into which such Common Stock hereafter is exchanged, converted, reclassified
        or recapitalized by the Company or pursuant to a Change of Control to which
        the
        Company is a party (or, at the election of the Acquiring Person, the capital
        stock of any Acquiring Person from and after the consummation of a Change
        of
        Control).

       

      "Common
        Stock Equivalents"
        means
        (without duplication with any other Common Stock or common stock, as the
        case
        may be, or Common Stock Equivalents) rights, warrants, options, convertible
        securities or exchangeable securities, exercisable for or convertible or
        exchangeable into, directly or indirectly, Common Stock, or common stock,
        as the
        case may be, whether at the time of issuance or upon the passage of time
        or the
        occurrence of some future event.

       

      "Company"
        means
        Fusion Telecommunications International, Inc., a Delaware corporation (or,
        if,
        as, and when applicable, any Acquiring Person from and after the consummation
        of
        a Change of Control).

       

      "Company
        Conversion"
        is
        defined in Section
        6(B)(i).

       

      "Company
        Conversion Notice"
        is
        defined in Section
        6(B)(i).

       

      "Conversion
        Notice"
        is
        defined in Section
        6(A)(i).

       

      "Conversion
        Price"
        means
        $.83, subject to adjustment for stock splits, recombinations, stock dividends
        and the like as provided herein.

       

      "Conversion
        Stock Amount"
        is
        defined in Section
        6(A)(ii).

       

      "Daily
        Market Price"
        means,
        on any date, the amount per share of the Common Stock equal to (i) the daily
        volume-weighted average price on the AMEX or, if no sale takes place on such
        date, the closing bid prices on the AMEX thereof on such date, in each case
        as
        reported by Bloomberg, L.P. (or by such other Person as the Company may select),
        or (ii) if such Common Stock is not then listed or admitted to trading on
        the
        AMEX, the higher of (x) the book value per share thereof as determined by
        any
        firm of independent public accountants of recognized standing selected by
        the
        Board as of the last calendar day of the most recent month ending before
        the
        date as of which the determination is to be made or (y) the fair value per
        share
        thereof determined in good faith by an independent, nationally recognized
        appraisal firm selected by the Board, subject to adjustment for stock splits,
        recombinations, stock dividends and the like.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      "Dividend
        Payment Date"
        is
        defined in Section
        3(A).

       

      "Dividend
        Period"
        is
        defined in Section
        3(A).

       

      "Dividend
        Rate"
        means a
        rate equal to the Stated Value multiplied by eight percent (8%) per
        annum.

       

      "Exchange
        Act"
        means
        the Securities Exchange Act of 1934, as amended. 

       

      "Holder"
        shall
        mean a holder of the Series A-2 Preferred Stock.

       

      "Issue
        Date"
        means
        with respect to any shares of the Series A-2 Preferred Stock the initial
        date of
        issuance of such shares of the Series A-2 Preferred Stock.

       

      “Issue
        Date Price”
means
        the price of Issuer’s Common Stock determined on the date of the initial
        issuance of the shares of the Series A-2 Preferred Stock.

       

      "Junior
        Securities"
        means
        Capital Stock that, with respect to dividends and distributions upon
        Liquidation, ranks junior to the Series A Preferred Shares, including but
        not
        limited to Common Stock and any other class or series of Capital Stock issued
        by
        the Company or any Subsidiary of the Company on or after the Issue Date,
        but
        excluding any Parity Securities and Senior Securities issued (i) to Holders
        of
        the Series A-2 Preferred Stock, (ii) with the approval of the Holders of
        a
        Majority of the Series A-2 Preferred Stock or (iii) upon the conversion,
        redemption or exercise of securities described in clause (i) or (ii) in
        accordance with the terms thereof.

       

      "Liquidation"
        means
        the voluntary or involuntary liquidation, dissolution or winding up of the
        Company; provided,
        however,
        that a
        consolidation, merger or share exchange shall not be deemed a Liquidation,
        nor
        shall a sale, assignment, conveyance, transfer, lease or other disposition
        by
        the Company of all or substantially all of its assets, which does not involve
        a
        substantial distribution by the Company of cash or other property to the
        holders
        of Common Stock, be deemed to be a Liquidation.

       

      "Liquidation
        Preference"
        is
        defined in Section
        4.

       

      "Majority
        of the Series A-2 Preferred Stock"
        means
        more than fifty percent (50%) of the then outstanding shares of the Series
        A-2
        Preferred Stock.

       

      "Other
        Securities"
        means
        any stock (other than Common Stock) and other securities of the Company or
        any
        other Person which the Holders of the Series A-2 Preferred Stock at any time
        shall be entitled to receive, or shall have received, upon conversion or
        redemption of the Series A-2 Preferred Stock in lieu of or in addition to
        Common
        Stock, or which at any time shall be issuable or shall have been issued in
        exchange for or in replacement of Common Stock or Other Securities.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      "Parity
        Securities"
        means
        any class or series of Capital Stock that, with respect to dividends or
        distributions upon Liquidation, is pari passu
        with all
        Series A-2 Preferred Shares. For the avoidance of doubt, each series of Series
        A
        Preferred Shares is a Parity Security with respect to each other series of
        Series A Preferred Shares.

       

      "Person"
        means
        an individual, corporation, partnership, limited liability company, joint
        venture, association, trust, unincorporated organization or other
        entity.

       

      "Prevailing
        Price"
        means,
        with respect to any reference date, the average of the Daily Market Prices
        of
        the Common Stock for the thirty (30) Business Days ending on and including
        the
        third (3rd)
        Business Day before such reference date.

       

      "Qualified
        Public Company"
        means a
        corporation meeting all of the following criteria: (i) the common stock of
        the
        corporation is registered under Section 12 of the Securities Exchange Act
        of
        1934, as amended, (ii) the Prevailing Price shall be an amount greater than
        one
        dollar ($1) per share of Common Stock, and (iii) the average daily reported
        volume of trading in such common stock on all national securities exchanges,
        markets, services, and/or reported through the AMEX as reported by Bloomberg
        L.P. (or by such other Person as the Company may select) during the ninety
        (90)
        calendar days preceding the reference date exceeds twenty thousand (20,000)
        shares of Common Stock.

       

      "Registered
        Common Stock"
        means
        Common Stock the resale of which has been registered under the Securities
        Act
        and is freely tradable upon delivery.

       

      "Securities
        Act"
        means
        the Securities Act of 1933, as amended, or any successor statute, and the
        rules
        and regulations promulgated thereunder.

       

      "Senior
        Securities"
        means
        any class or series of Capital Stock that, with respect to dividends or
        distributions upon Liquidation, ranks senior to the Series A-2 Preferred
        Stock.

       

      "Series
        A-2 Preferred Stock"
        means
        the Series A-2 Cumulative Convertible Preferred Stock of the Company or any
        successor.

       

      "Stated
        Value"
        is an
        amount equal to one thousand dollars ($1,000) per share of the Series A-2
        Preferred Stock plus any accrued and unpaid dividends, whether or not declared
        and whether or not earnings are available in respect of such dividends. In
        the
        event the Company shall declare a distribution on the Common Stock payable
        in
        securities or property other than cash, the value of such securities or property
        will be the fair market value. Any securities shall be valued as follows:
        (i) if
        traded on a national securities exchange or through a Nasdaq market, the
        value
        shall be deemed to be the average of the closing prices of the securities
        on
        such exchange or system over the thirty (30) Business Day period ending three
        (3) calendar days prior to such declaration; (ii) if actively traded
        over-the-counter, the value shall be deemed to be the average of the closing
        bid
        or sale prices (whichever is applicable) over the thirty (30) Business Day
        period ending three (3) calendar days prior to such declaration; and (iii)
        if
        there is no active public market, the value shall be the fair market value
        thereof, as determined in good faith by the Board.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      "Subsidiary"
        of a
        Person means (i) a corporation, a majority of whose stock with voting power,
        under ordinary circumstances, to elect directors is at the time of
        determination, directly or indirectly, owned by such Person or by one or
        more
        Subsidiaries of such Person, or (ii) any other entity (other than a corporation)
        in which such Person or one or more Subsidiaries of such Person, directly
        or
        indirectly, at the date of determination thereof has a least a majority
        ownership interest.

       

      The
        foregoing definitions will be equally applicable to both the singular and
        plural
        forms of the defined terms.

       

      3. Dividends
        and Distributions.

       

      (A) Holders
        shall be entitled to receive out of the assets of the Company legally available
        for that purpose, dividends at the Dividend Rate to be paid in accordance
        with
        the terms of this Section
        3.
        Such
        dividends shall be fully cumulative from the Issue Date, shall accumulate
        regardless of whether the Company earns a profit and shall be payable in
        arrears, when and as declared by the Board (or a duly appointed committee
        of
        directors), on January 1 of
        each
        year,
        (each
        such date being herein referred to as a "Dividend
        Payment Date"),
        commencing on January 1, 2008. The period from the Issue Date to January 1,
        2008, and each annual period between consecutive Dividend Payment Dates shall
        hereinafter be referred to as a "Dividend
        Period."
        The
        dividend for any Dividend Period for any share of Series A-2 Preferred Stock
        that is not outstanding on every calendar day of the Dividend Period shall
        be
        prorated based on the number of calendar days such share was outstanding
        during
        the period. Each such dividend shall be paid to the Holders of record of
        the
        Series A-2 Preferred Stock as their names appear on the share register of
        the
        Company on the Dividend Payment Date. Dividends on account of arrears for
        any
        past Dividend Periods may be declared and paid at any time, without reference
        to
        any Dividend Payment Date (including, without limitation, for purposes of
        computing the Stated Value of any shares of Series A-2 Preferred Stock in
        connection with the conversion or redemption thereof or any Liquidation of
        the
        Company), to Holders of record on a date designated by the Board, not exceeding
        thirty (30) calendar days preceding the payment date thereof, as may be fixed
        by
        the Board. For purposes of determining the amount of dividends accrued as
        of the
        first Dividend Payment Date and as of any date that is not a Dividend Payment
        Date, such amount shall be calculated on the basis of the Dividend Rate for
        the
        actual number of calendar days elapsed from and excluding the Issue Date
        (in
        case of the first Dividend Payment Date and any date prior to the first Dividend
        Payment Date) or the last preceding Dividend Payment Date (in case of any
        other
        date) to the date as of which such determination is to be made, based on
        a three
        hundred sixty-five (365) day year.

       

      (B) Subject
        to the following proviso, dividends payable on the Series A-2 Preferred Stock
        shall be paid, at the option of the Holder, in cash or by the issuance of
        Common
        Stock provided,
        however,
        that
        the Company may elect to make any payment of dividends by the issuance of
        Registered Common Stock on any Dividend Payment Date with 10 days’ prior written
        notice to the Holder, if the Company is a Qualified Public Company on the
        Dividend Payment Date. The number of shares of Registered Common Stock to
        be
        issued shall be determined by dividing the cash amount of the dividend otherwise
        payable by the Prevailing Price calculated as of such Dividend Payment Date,
        provided,
        however,
        except
        at the Company’s option, in no event shall such price be less than the price set
        on the Issue Date; provided,
        further,
        if the
        Company shall combine, subdivide or reclassify its Common Stock, or shall
        declare any dividend payable in shares of its Common Stock, or shall take
        any
        other action of a similar nature affecting such shares, the number of shares
        of
        Registered Common Stock to be issued shall be adjusted to the extent appropriate
        to reflect such event, including appropriate adjustments to account for any
        such
        event that occurs during the period used for calculating such Prevailing
        Price.
        The number of shares of Registered Common Stock to be issued as a dividend
        shall
        be rounded to the nearest whole share after aggregating all shares of Series
        A-2
        Preferred Stock owned by a Holder.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      (C) If,
        on
        any Dividend Payment Date, the Company fails to pay dividends, then until
        the
        dividends that were scheduled to be paid on such date are paid, such dividends
        shall cumulate, but shall not accrue additional dividends. Unpaid dividends
        for
        any period less than a full Dividend Period shall cumulate on a day to day
        basis
        and shall be computed on the basis of a three hundred sixty-five (365) day
        year.

       

      (D) So
        long
        as any shares of Series A-2 Preferred Stock shall be outstanding, (i) the
        Company, except for the payment of dividends or other cash distributions
        under a
        joint venture agreement or other strategic alliance with respect to which
        the
        Company and/or a Subsidiary is a party, shall not and shall not allow its
        Subsidiaries to declare or pay any dividend whatsoever, whether in cash,
        property or otherwise, set aside any cash or property for the payment of
        dividends, or make any other distribution on any Parity Securities, except
        for
        dividends paid to the Company or any of its wholly-owned Subsidiaries and
        dividends paid on the Series A Preferred Shares or (ii) the Company shall
        not
        and shall not allow its Subsidiaries to repurchase, redeem or otherwise acquire
        for value or set aside any cash or property for the repurchase or redemption
        of
        any Junior Securities or Parity Securities, unless in each such case all
        dividends to which the Holders of the Series A-2 Preferred Stock shall have
        been
        entitled to receive for all previous Dividend Periods shall have been
        paid.

       

      (E) Subject
        to the immediately following sentence, the Company shall be entitled to deduct
        and withhold from any dividend on the Series A-2 Preferred Stock such amounts
        as
        the Company is required to deduct and withhold with respect to such dividend
        under the Internal Revenue Code of 1986, as amended, or any other provision
        of
        state, local or foreign tax law. In the event the Company or the Holder elects,
        pursuant to Section 3(B), to pay or be paid, as the case may be, a dividend
        on
        the Series A-2 Preferred Stock by issuing Registered Common Stock or Common
        Stock, as the case may be, to a Holder, (i) the Company shall deliver the
        number
        of shares of Registered Common Stock or Common Stock, as the case may be,
        that
        would be delivered to a Holder pursuant to Section 3(B) in the absence of
        any
        requirement under applicable law to deduct and withhold any amount with respect
        to such dividend and (ii) on the Business Day following the Dividend Payment
        Date, Holder shall transfer to the Company by wire transfer of immediately
        available funds an amount equal to what the Company is required under applicable
        law to deduct and withhold with respect to such dividend. For purposes of
        determining the withholding amount, the dividend value shall be determined
        under
        Section 3(B) hereof.

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      4. Liquidation
        Preference.
        In the
        event of any Liquidation, after payment or provision for payment by the Company
        of the debts and other liabilities of the Company and the liquidation preference
        of any Senior Securities that rank senior to the Series A-2 Preferred Stock
        with
        respect to distributions upon Liquidation, each Holder shall be entitled
        to
        receive an amount in cash for each share of the then outstanding Series A-2
        Preferred Stock held by such Holder equal to the greater of (a) the Stated
        Value
        per share to and including the date full payment is tendered to the Holders
        with
        respect to such Liquidation, and (b) the amount the Holders would have received
        if the Holders had converted all outstanding shares of Series A-2 Preferred
        Stock into Common Stock in accordance with the provisions of Section
        6(A)
        hereof,
        in each case as of the Business Day immediately preceding the date of such
        Liquidation (the "Liquidation
        Preference"),
        before any distribution shall be made to the holders of any Junior Securities
        (and any Senior Securities or Parity Securities that, with respect to
        distributions upon Liquidation, rank junior to the Series A-2 Preferred Stock)
        upon the Liquidation of the Company. In case the assets of the Company available
        for payment to the Holders are insufficient to pay the full Liquidation
        Preference on all outstanding shares of the Series A-2 Preferred Stock and
        all
        outstanding shares of Parity Securities and Senior Securities that, with
        respect
        to distributions upon Liquidation, are pari passu
        with the
        Series A-2 Preferred Stock in the amounts to which the holders of such shares
        are entitled, then the entire assets of the Company available for payment
        to the
        Holders and to the holders of such Parity Securities and Senior Securities
        shall
        be distributed ratably among the Holders of the Series A-2 Preferred Stock
        and
        the holders of such Parity Securities and Senior Securities, based upon the
        aggregate amount due on such shares upon Liquidation. Written notice of any
        Liquidation of the Company, stating a payment date and the place where the
        distributable amounts shall be payable, shall be given by facsimile and
        overnight delivery not less than ten (10) calendar days prior to the payment
        date stated therein, to the Holders of record of the Series A-2 Preferred
        Stock,
        if any, at their respective addresses as the same shall appear on the books
        of
        the Company.

       

      5. Voting
        Rights.
        The
        Holders shall have the following voting rights with respect to the Series
        A-2
        Preferred Stock:

       

      (A) Each
        share of Series A-2 Preferred Stock shall entitle the holder thereof to the
        voting rights specified in Section
        5(B)
        and no
        other voting rights except as required by law.

       

      (B) The
        consent of the Holders of at least a Majority of the Series A-2 Preferred
        Stock,
        voting separately as a single class with one vote per share, in person or
        by
        proxy, either in writing without a meeting or at an annual or a special meeting
        of such Holders called for the purpose, shall be necessary to:

       

      (i) amend,
        alter or repeal, by way of merger or otherwise, any of the provisions of
        the
        Certificate of Incorporation, including this Certificate, or Bylaws of the
        Company so as to:

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      A. change
        any of the rights, preferences or privileges of Holders. Without limiting
        the
        generality of the preceding sentence, such change includes any action that
        would:

       

      1. reduce
        the Dividend Rate on the Series A-2 Preferred Stock, or make such dividends
        non-cumulative, or defer the date from which dividends will accrue, or cancel
        accrued and unpaid dividends, or change the relative seniority rights of
        the
        holders of Series A-2 Preferred Stock as to the payment of dividends in relation
        to the holders of any other capital stock of the Company;

       

      2. reduce
        the amount payable to the holders of the Series A-2 Preferred Stock upon
        the
        voluntary or involuntary liquidation, dissolution, or winding up of the Company,
        or change the relative seniority of the liquidation preferences of the holders
        of the Series A-2 Preferred Stock to the rights upon liquidation of the holders
        of any other capital stock of the Company; 

       

      3. make
        the Series A-2 Preferred Stock redeemable at the option of the Company other
        than in accordance with the terms of this Certificate.

       

      B. authorize,
        create or issue any shares of Parity Securities or Senior Securities (or
        amend
        the provisions of any existing class of Capital Stock to make such class
        of
        Capital Stock a class of Parity Securities or Senior Securities).

       

      (ii) permit
        any Subsidiary of the Company to issue or sell, or obligate itself to issue
        or
        sell, except to the Company or any wholly owned Subsidiary, any security
        of such
        Subsidiaries or all or substantially all of the assets of any Subsidiary
        other
        than sales of assets on an arm's-length, fair market value basis;
        or

       

      (iii) increase
        or decrease (other than by redemption or conversion) the total number of
        authorized shares of Series A-2 Preferred Stock or amend any provisions of
        any
        Capital Stock so as to make such Capital Stock redeemable by the
        Company.

       

      6. Conversion
        and Call Rights.

       

      (A) Procedure
        for Conversion.

       

      (i) General.
        Shares
        of Series A-2 Preferred Stock are convertible at the option of the Holder
        thereof at any time, from time to time, in whole or in part, as
        follows:

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      A. The
        conversion of shares of Series A-2 Preferred Stock may be effected by delivering
        a duly executed written Series A-2 Preferred Stock Conversion Notice, in
        form
        and substance as provided by the Company (the "Conversion
        Notice"),
        to
        the Company, at its principal office specifying the number of shares of Series
        A-2 Preferred Stock to be converted and surrendering the certificate
        representing the shares of Series A-2 Preferred Stock to be
        converted.

       

      B. As
        soon
        as practicable after each such conversion of Series A-2 Preferred Stock,
        but not
        later than five (5) Business Days from the receipt of the Conversion Notice,
        the
        Company shall deliver to such Holder at the address specified in the Conversion
        Notice the Conversion Stock Amount of duly authorized, validly issued, fully
        paid and nonassessable shares of Registered Common Stock (or Other Securities
        or, with such Holder's express written consent, unregistered Common
        Stock).

       

      C. Notwithstanding
        anything in the Certificate to the contrary, if such Holder does not consent
        to
        accept unregistered Common Stock, then such Holder’s Notice of Conversion shall
        be deemed, without any further action, to have been withdrawn. Moreover,
        in no
        event, shall any conversion under the Certificate be settled in
        cash.

       

      (ii) Conversion
        for stock.
        Subject
        to the previous sub-paragraph, such shares of stock shall be converted into
        that
        number of shares of Registered Common Stock (or at the sole election of the
        Holder, unregistered Common Stock) equal to (A) the aggregate Stated Value
        of
        such shares divided by (B) the Conversion Price (the
        "Conversion
        Stock Amount").
        It
        shall be a condition of either the Company or the converting Holder's obligation
        to close the conversion of the Series A-2 Preferred Stock that such conversion
        be in accordance with applicable federal and state securities laws and any
        applicable waiting period (and any extension thereof) under the
        Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
        expired or been terminated without litigation having been commenced that
        is
        continuing, or threat of litigation having been made that remains unresolved,
        by
        the United States Department of Justice or the United States Federal Trade
        Commission.

       

      (iii) Holder
        of record.
        Each
        conversion of Series A-2 Preferred Stock shall be deemed to have been effected
        immediately before the close of business on the Business Day on which the
        Conversion Notice is delivered, and at such time the Person or Persons in
        whose
        name or names any certificate or certificates for shares of Common Stock
        (or
        Other Securities) shall be issuable upon such conversion as provided herein
        shall be deemed to have become the holder or holders of record
        thereof.

       

      (iv) Partial
        conversion.
        If any
        conversion is for only part of the shares represented by the certificate
        surrendered, the Company shall send a new Series A-2 Preferred Stock certificate
        of like tenor via certified or registered mail RRR or reputable overnight
        courier to such address specified by the Holder, calling in the aggregate
        on the
        face or faces thereof for the number of shares of Series A-2 Preferred Stock
        which have not been converted.

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      (B) Procedure
        for Conversion by the Company.
        

       

      (i) Conversion
        by the Company.
        Shares
        of Series A-2 Preferred Stock may be converted by the Company (a "Company
        Conversion")
        in
        whole or in part for Common Stock as follows

       

      A. From
        and after the first anniversary of the Closing Date, the Company may require
        the
        Holders to convert, on a pro rata
        basis as
        among the holders of Series A-2 Preferred Shares, shares of Series A-2 Preferred
        Shares held by such holders on any of March 31, June 30,
        September 30 and December 31 of each year by delivering a conversion
        notice to the Holders, at least ten (10) days prior to such conversion and
        substantially in the form as provided by the Company (a "Company
        Conversion Notice"),
        provided
        that (x)
        the average of the Daily Market Prices of the Common Stock for the ninety
        (90)
        calendar days ended immediately prior to such Conversion Notice is an amount
        greater than two hundred twenty percent (220%) of the Conversion Price or
        (y)
        after the fifth anniversary of the Closing Date, the Prevailing Price shall
        be
        an amount greater than the Issue Date Price. The number of Series A Preferred
        Shares so converted under clause (x) may not exceed the number that would
        be
        converted for a quantity of shares of Common Stock greater than eight (8)
        times
        the average daily reported volume of trading in the Common Stock on all national
        securities exchanges, Nasdaq market, service, and/or reported through the
        AMEX
        as reported by Bloomberg L.P. (or by such other Person as the Company may
        select) during the ninety (90) calendar days ending one day prior to the
        Conversion Notice Date concerning a conversion under clause (x). The conversion
        price under clause (x) shall be determined in accordance with Section 6(A)(ii).
        The conversion price under clause (y) shall be the Prevailing Price, provided,
        that the Prevailing Price is greater than the Conversion Price. In the event
        that the Conversion Price is greater than the Prevailing Price, then the
        conversion price shall be the Conversion Price.

       

      (C) Five
        Year Call Right.
        From
        and after the fifth anniversary of the date on which the Registration
        Requirement has been satisfied, the Company may from time-to-time issue a
        call
        notice to the holders of the Series A-2 Preferred Shares (the “Call
        Notice”).
        Such
        Call Notice, at the Company’s discretion, may be for all or a portion of the
        Series A-2 Preferred Shares. On or before the tenth (10th) Business Day
        following the date of the Call Notice, the holders of the Series A-2 Preferred
        Shares shall deliver to the Company, all, or, in the case of a Call Notice
        concerning a portion of the Series A-2 Preferred Shares, on a pro rata
        basis as
        provided in the Call Notice, based on the number of shares of Series A-2
        Preferred Shares held by each holder, Series A-2 Preferred Shares with an
        aggregate Stated Value equal to the amount designated in the Call Notice.
        The
        Company shall promptly thereafter pay, by wire transfer of immediately available
        funds, an amount to each such holder equal to the aggregate Stated Value
        of all
        such Series A-2 Preferred Shares delivered by such holder.

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

       

      (D) The
        Company shall at all times reserve for issuance such number of its shares
        of
        Common Stock as shall be required hereunder.

       

      (E) The
        Company will use its best efforts to procure, at its sole expense, the listing
        of the Common Stock issuable upon conversion or redemption of the Series
        A-2
        Preferred Stock and shares issuable as dividends hereunder, subject to issuance
        or notice of issuance, on all stock exchanges, markets, and quotation service
        on
        which the Common Stock is then listed or quoted, no later than the date on
        which
        such Series A-2 Preferred Stock is issued to the Holder and thereafter shall
        use
        its best efforts to prevent delisting or removal from quotation of such shares.
        The Company will pay any and all documentary stamp or similar issue or transfer
        taxes that may be payable in respect of the issuance or delivery of shares
        of
        Common Stock on conversion or redemption of shares of the Series A-2 Preferred
        Stock. The Company shall not, however, be required to pay any tax which may
        be
        payable in respect of any transfer involving the issue and delivery of shares
        of
        Common Stock in a name other than that in which the shares of Series A-2
        Preferred Stock so converted or redeemed were registered, and no such issue
        and
        delivery shall be made unless and until the person requesting such issue
        has
        paid to the Company the amount of any such tax, or has established, to the
        reasonable satisfaction of the Company, that such tax has been
        paid.

       

      (F) No
        fractional shares or scrip representing fractional shares shall be issued
        upon
        the conversion or redemption of the Series A-2 Preferred Stock. If any such
        conversion or redemption would otherwise require the issuance of a fractional
        share of Common Stock, an amount equal to such fraction multiplied by the
        current Daily Market Price per share of Common Stock on the date of conversion
        or redemption shall be paid to the Holder in cash by the Company. If more
        than
        one share of Series A-2 Preferred Stock shall be surrendered for conversion
        or
        redemption at one time by or for the same Holder, the number of full shares
        of
        Common Stock issuable upon conversion or redemption thereof shall be computed
        on
        the basis of the aggregate number of shares of Series A-2 Preferred Stock
        so
        surrendered.

       

      
        
           

        

        
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      (G) Change
        of Control.
        In case
        the Company on or after the Issue Date is party to any (a) acquisition of
        the
        Company by means of merger or other form of corporate reorganization in which
        outstanding shares of the Company 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 Company
        (on a consolidated basis) in a single transaction or series of related
        transactions, (c) any other transaction or series of related transactions
        by the
        Company 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 Company'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 Company immediately prior to such transaction own the
        Common
        Stock, other securities or other voting stock of the Company 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 days’ notice to the Company and the Holder prior to the
        consummation of the Change of Control, either (i) the Acquiring Person expressly
        agrees to assume all of the Company’s obligations under the Series A-2 Preferred
        Stock or (ii) the Holder has fifteen (15) days in which to exercise its
        conversion rights under the Series A-2 Preferred Stock. If Holder does not
        exercise its rights during such fifteen (15) day period, all rights under
        the
        Series A-2 Preferred Stock shall terminate and the Series A-2 Preferred Stock
        shall be deemed cancelled. The Company, 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 Company, 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 Company (if other than
        the
        Company), (ii) the transferee of all or substantially all of the properties
        or
        assets of the Company, (iii) the corporation consolidating with or merging
        into
        the Company 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 Company
        's
        stockholders at which directors are elected, or, (v) in the case of a capital
        reorganization or reclassification, the Company, 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.

       

      
        
           

        

        
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      7. Status
        of Converted and Redeemed Shares; Limitations on Series A-2 Preferred
        Stock.
        The
        Company shall return to the status of unauthorized and undesignated shares
        of
        Series A-2 Preferred Stock each share of Series A-2 Preferred Stock which
        shall
        be converted, redeemed or for any other reason acquired by the Company, and
        such
        shares thereafter may have such characteristics and designations as the Board
        may determine. Without the consent of Majority of the Series A-2 Preferred
        Stock,
        the
        Company will not issue any further shares of Series A-2 Preferred
        Stock.

       

      

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      IN
        WITNESS WHEREOF, this Certificate of Rights and Preferences has been signed
        on
        behalf of the Company by the undersigned, all as of the date first set forth
        above.

       

      

      FUSION
        TELECOMMUNICATIONS INTERNATIONAL, INC.

      

      

      ___________________________________

      Name: Matt
        D.
        Rosen

      Title: President
        and CEO

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