Document:

Exhibit

EXHIBIT 10.1

FRANKLIN RESOURCES, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION 
As of October 17, 2016
The following sets forth the fees and other payments that non-employee directors of Franklin Resources, Inc. (“Franklin”) are entitled to receive as members of the Board of Directors of Franklin (the “Franklin Board”). The Franklin Board last approved changes in such compensation structure on October 17, 2016.
The non-employee Franklin director designated by the independent directors of the Franklin Board as the lead independent director of the Franklin Board is entitled to receive an annual lead director retainer fee of $20,000 (one-fourth of which is paid quarterly).
Non-employee Franklin directors are entitled to receive an annual Franklin Board retainer fee of $85,000 (one-fourth of which is paid quarterly), plus $5,000 for each Franklin Board meeting attended by such director in excess of the five regularly scheduled Franklin Board meetings per fiscal year.
Non-employee Franklin directors are also entitled to receive an annual equity award for approval on the date of each annual organizational meeting of the Franklin Board (“Annual Organizational Meeting”). Effective as of the next Annual Organizational Meeting, scheduled to be held on February 15, 2017, the annual equity award shall be valued at $135,000 (rounded up to the nearest whole share), reflecting an increase in value of $10,000 in the annual equity award.
Non-employee Franklin directors who serve on Franklin Board committees are entitled to be paid $1,500 per committee meeting attended. Additionally, the Chairperson of the Franklin Audit Committee is entitled to receive an annual retainer fee of $15,000 (one-fourth of which is paid quarterly), and the Chairpersons of the Franklin Compensation Committee and the Franklin Corporate Governance Committee are each entitled to receive an annual retainer fee of $10,000 (one-fourth of which is paid quarterly).
In addition, Franklin reimburses directors for certain expenses incurred in connection with attending Franklin Board and committee meetings as well as other related events, including travel, hotel accommodations, meals and other incidental expenses for the director and his or her spouse accompanying the director in connection with such events. Franklin may also, from time to time, provide directors and their spouses with token gifts of nominal value.
Franklin also allows directors to defer payment of their directors’ fees, and to treat the deferred amounts as hypothetical investments in Franklin common stock or Franklin Templeton mutual funds. The terms of any such deferred payment arrangements are set forth in separate documentation between Franklin and the particular directors in accordance with Franklin’s 2006 Directors Deferred Compensation Plan, as amended and restated.Blueprint

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

COMMON STOCK PURCHASE AGREEMENT

 

 

This
Common Stock Purchase Agreement (this
“Agreement”) is
made as of November 14, 2016, by and among Fusion
Telecommunications International, Inc., a Delaware
corporation with its principal office at 420 Lexington Avenue,
Suite 1718, New York, New York 10170 (the “Company”), and those purchasers
listed on the attached Exhibit A, as such exhibit may
be amended from time to time (each a “Purchaser,” and collectively, the
“Purchasers”).

Recitals

A.           The
Company has authorized the sale and issuance of up to 2,608,696
shares (the “Shares” or “Securities”) of the common stock
of the Company, $0.01 par value per share (the “Common Stock”), to certain
investors in a private placement (the “Offering”).

B.           Pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), and Rule 506(b) promulgated thereunder,
the Company desires to sell to the Purchasers listed on the
attached Exhibit A,
as such exhibit may be amended from time to time, and such
Purchasers, severally and not jointly, desire to purchase from the
Company that number of shares of Common Stock set forth opposite
each such Purchaser’s name on Exhibit A, on the terms and
subject to the conditions set forth in this Agreement.

Terms and Conditions

Now,
therefore, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the parties,
intending to be legally bound, do hereby agree as
follows:

1.            

Purchase
of the Securities.

1.1           
Agreement to Sell and
Purchase. At the Closing (as hereinafter defined), the
Company will issue and sell to each of the Purchasers, and each
Purchaser will, severally and not jointly, purchase from the
Company, the number of Shares set forth opposite such
Purchaser’s name on Exhibit A for the purchase
price set forth opposite such Purchaser’s name on
Exhibit A (the
“Purchase
Price”). The aggregate purchase price for each Share
to be purchased hereunder will be $1.15.

1.2           
Placement Agent Fee. The
Purchasers acknowledge that the Company intends to pay to
Craig-Hallum Capital Group LLC, in its capacity as the placement
agent for the Offering (the “Placement Agent”), a fee in
respect of the sale of Securities to the Purchasers. The Company
shall indemnify and hold harmless the Purchasers from and against
all fees, commissions, or other payments owing by the Company to
the Placement Agent or any other persons from or acting on behalf
of the Company hereunder.

1.3           
Closing; Closing Date. The
completion of the sale and purchase of the Securities (the
“Closing”) shall be held at 10:00 a.m. (Central Time)
on Wednesday, November 16, 2016 or, if the conditions set forth in
Section 4 have not been satisfied by such date, as soon as
practicable following the satisfaction of the conditions set forth
in Section 4 (the “Closing Date”), remotely by
facsimile or other electronic transmission of documents, or at such
other time and place as the Company and the Purchasers may
agree.

1.4           
Delivery of the Shares. At
the Closing, subject to the terms and conditions hereof, the
Company will deliver to each Purchaser a stock certificate or
certificates, in such denominations and registered in such names as
such Purchaser may designate by notice to the Company, representing
the Securities, or at a Purchaser’s request, a statement or
other written evidence that the Securities issuable to such
Purchaser have been issued and are held in book entry form at the
Company’s transfer agent, in either case dated as of the
Closing Date (each such certificate and each such book entry
position are hereinafter referred to as a “Certificate”), against payment of
the purchase price therefor by cash in the form of wire transfer,
unless other means of payment shall have been agreed upon by the
Purchasers and the Company.

2.            
Representations and Warranties of
the Company. The Company hereby represents and warrants to
the Purchasers:

 

 

 

 

2.1           
Authorization. All corporate
action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and
delivery of this Agreement, has been taken. The Company has the
requisite corporate power to enter into this Agreement and carry
out and perform its obligations under this Agreement. At the
Closing, the Company will have the requisite corporate power to
issue and sell the Securities. This Agreement has been duly
authorized, executed and delivered by the Company and, upon due
execution and delivery by the Purchasers, this Agreement will be a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally or by equitable
principles.

2.2           
No Conflict with Other
Instruments. The execution, delivery and performance of this
Agreement, the issuance and sale of the Securities to be sold by
the Company hereunder and the consummation of the actions
contemplated by this Agreement will not (A) result in any violation
of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice: (i) any
provision of the Company’s charter documents as in effect on
the date hereof or at the Closing; (ii) any provision of any
judgment, arbitration ruling, decree or order to which the Company
or its subsidiaries are a party or by which they are bound; (iii)
any bond, debenture, note or other evidence of indebtedness, or any
lease, contract, mortgage, indenture, deed of trust, loan
agreement, joint venture or other agreement, instrument or
commitment to which the Company or any subsidiary is a party or by
which they or their respective properties are bound; or (iv) any
statute, rule, law or governmental regulation or order applicable
to the Company or any of its subsidiaries, except, in the case of
(ii), (iii) and (iv) above, would not reasonably be expected to
have a Material Adverse Effect (as hereinafter defined); or (B)
result in the creation or imposition of any lien, encumbrance,
claim, security interest or restriction whatsoever upon any of the
properties or assets of the Company or any subsidiary or any
acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust
or any other agreement or instrument to which the Company or any
subsidiary are a party or by which they are bound or to which any
of the property or assets of the Company or any subsidiary is
subject. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body is required for
the execution and delivery of this Agreement by the Company and the
valid issuance or sale of the Securities by the Company pursuant to
this Agreement, other than such as have been made or obtained and
that remain in full force and effect, and except for the filing of
a Form D or any filings required to be made under state securities
laws.

2.3           
Certificate of Incorporation;
Bylaws. The Company has made available to the Purchasers
true, correct and complete copies of the Certificate of
Incorporation and Bylaws of the Company, as in effect on the date
hereof.

2.4           
Organization, Good Standing and
Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company and each of its
subsidiaries has full power and authority to own, operate and
occupy its properties and to conduct its business as presently
conducted and is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify
would not reasonably be expected to have a material adverse effect
on its or its subsidiaries’ business, financial condition,
properties, operations, prospects or assets or its ability to
perform its obligations under this Agreement (a “Material Adverse
Effect”).

 

 

 

2.5           
SEC Filings; Financial Statements. As used herein,
the “Company SEC
Documents” means all reports, schedules, forms,
statements and other documents filed or furnished, as applicable,
by the Company under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), including pursuant to Section 13(a) or 15(d)
thereof, including the exhibits thereto and documents incorporated
by reference therein. The
Company has filed all SEC Documents as required on a timely basis
and as of their respective filing dates, the Company SEC Documents
since December 31, 2015 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Securities and Exchange Commission (the “SEC”) promulgated thereunder, and
none of these Company SEC Documents, when filed, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they
were made not misleading. The consolidated financial statements
contained in the Company SEC Documents since December 31, 2015: (i)
complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods covered, except in the case of unaudited
statements as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are
subject to year-end audit adjustments; and (iii) fairly present the
consolidated financial position of the Company and its subsidiaries
as of the respective dates thereof and the consolidated results of
operations cash flows and the changes in shareholders’ equity
of the Company and its subsidiaries for the periods covered
thereby.

2.6           
Capitalization. The
authorized capital stock of the Company consists of (i) 90,000,000
shares of Common Stock, of which (A) 15,064,953 shares prior to the
acquisition of Target (as defined below) and 18,062,879 shares
after the acquisition of Target were issued and outstanding as of
the date of this Agreement, and (B) 4,090,520 shares were reserved
for issuance upon the exercise or conversion, as the case may be,
of outstanding options, warrants or other convertible securities as
of the date of this Agreement; and (ii) 10,000,000 shares of
preferred stock, of which 17,299 are issued and outstanding as of
the date of this Agreement. All issued and outstanding shares of
capital stock have been duly authorized and validly issued, are
fully paid and non-assessable, have been issued and sold in
compliance with the registration requirements of the federal and
state securities laws or the applicable statutes of limitation have
expired, and were not issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. Except
as set forth herein or the Company SEC Documents, there are no (i)
outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company, or any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Company or any subsidiary is a party and relating to the issuance
or sale of any capital stock or convertible or exchangeable
security of the Company or any subsidiary, other than 1,135,765
options granted to directors and employees of the Company and its
subsidiaries pursuant to its 1998 Stock Option Plan, 2009 Stock
Option Plan or the 2016 Equity Incentive Plan and 2,937,456
warrants that are issued and outstanding; or (ii) obligations of
the Company to purchase redeem or otherwise acquire any of its
outstanding capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Except
as disclosed in the Company SEC Documents and as contemplated by
the share purchase agreement (the “SPA”) relating to the
Company’s acquisition of a target company
(“Target”)
proposed to be consummated contemporaneously with this Offering,
there are no anti-dilution or price adjustment provisions, co-sale
rights, registration rights, rights of first refusal or other
similar rights contained in the terms governing any outstanding
security of the Company that will be triggered by the issuance of
the Securities and no person has any right to cause the Company to
effect the registration under the Securities Act of any securities
of the Company (other than the rights which have been granted in
connection with this Agreement and under the SPA).

 

 

 

2.7           
Subsidiaries. Except for
Target and except as set forth in the Company SEC Documents, the
Company does not presently own or control, directly or indirectly,
and has no stock or other interest as owner or principal in, any
other corporation or partnership, joint venture, association or
other business venture or entity (each a “subsidiary”). Each subsidiary is
duly incorporated or organized, validly existing and, if applicable
to the jurisdiction, in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite
power and authority to carry on its business as now conducted. Each
subsidiary is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect. Except as set forth in the
Company SEC Documents, all of the outstanding capital stock or
other securities of each subsidiary is owned by the Company,
directly or indirectly, free and clean of any liens, claims or
encumbrances.

2.8           
Valid Issuance of
Securities. The Securities are duly authorized and, when
issued, sold and delivered and paid for in accordance with the
terms hereof will be duly and validly authorized and issued, fully
paid and non-assessable, free from all taxes, liens, claims,
encumbrances and charges with respect to the issue thereof;
provided, however, that the Securities will be subject to
restrictions on transfer under state and/or federal securities laws
or as otherwise set forth herein. The issuance, sale and delivery
of the Securities in accordance with the terms hereof will not be
subject to preemptive rights of shareholders of the
Company.

2.9           
Offering. Assuming the
accuracy of the representations of the Purchasers in Section 3.3 of
this Agreement on the date hereof and on the Closing Date, the
offer, issue and sale of the Securities are and will be exempt from
the registration and prospectus delivery requirements of the
Securities Act and have been or will be registered or qualified (or
are or will be exempt from registration and qualification) under
the registration, permit or qualification requirements of all
applicable state securities laws. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance
of the Securities to the Purchasers. Other than the Company SEC
Documents, the Company has not distributed and will not distribute
prior to the Closing Date any offering materials in connection with
the offering and sale of the Securities. The Company has not taken
any action to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or
sale of the Securities within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be
within the exemptions of Section 4 of the Securities
Act.

2.10         
Litigation. Except as set
forth in the Company SEC Documents, there is no action, suit,
proceeding nor investigation pending or, to the Company’s
knowledge, currently threatened against the Company or any of its
subsidiaries that (a) if adversely determined would reasonably be
expected to have a Material Adverse Effect or (b) would be required
to be disclosed in the Company’s Annual Report on Form 10-K
under the requirements of Item 103 of Regulation S-K. The foregoing
includes, without limitation, any action, suit, proceeding or
investigation, pending or threatened, that questions the validity
of this Agreement or the right of the Company to enter into this
Agreement and perform its obligations hereunder. Neither the
Company nor any subsidiary is subject to any injunction, judgment,
decree or order of any court, regulatory body, arbitral panel,
administrative agency, national securities exchange or other
government body. To the Company’s knowledge, there is no
proceeding or investigation by the Principal Market (as defined
below) pending that could lead to a suspension of listing or
trading of the Common Stock.

2.11         
Governmental Consents. No
consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the
part of the Company or any of its subsidiaries is required in
connection with the consummation of the transactions contemplated
by this Agreement, except for notices required or permitted to be
filed with the Principal Market or certain state and federal
securities commissions, which notices will be filed on a timely
basis.

2.12         
No Brokers. Except for any
fees payable to the Placement Agent, no broker, finder or
investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions
contemplated by this Agreement based on arrangements made by the
Company.

 

 

 

2.13         
Compliance. Neither the
Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or Bylaws (or similar organizational
documents). The Company and its subsidiaries, and their
representatives, have been conducting their business in compliance
with all applicable laws, rules and regulations of the
jurisdictions in which they conduct business, including, without
limitation, all applicable local, state and federal environmental
laws and regulations, except where failure to be so in compliance
would not have a Material Adverse Effect. Each of the Company and
its subsidiaries has all necessary franchises, licenses, permits,
certificates and other authorizations from any foreign, federal,
state or local government or governmental agency, department or
body that are currently necessary for the operation of the business
of the Company and its subsidiaries as currently conducted, except
where the failure to currently possess such franchises, licenses,
certificates and other authorizations would not reasonably be
expected to have a Material Adverse Effect.

2.14         
No Material Changes. Except
as disclosed in the Company SEC Documents and except for the
acquisition of Target pursuant to the SPA and the entry by the
Company into a new credit facility (the “Credit Facility”)
contemporaneously therewith, since December 31, 2015, there has
been no material adverse change in the assets, liabilities,
business, properties, operations, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
Since December 31, 2015, the Company has not declared or paid any
dividend or distribution on its common stock.

2.15       
  Contracts. Except for
matters which are not reasonably likely to have a Material Adverse
Effect and those contracts that are substantially or fully
performed or expired by their terms, the contracts listed as
exhibits to or described in the Company SEC Documents that are
material to the Company or any of its subsidiaries and all
amendments thereto, are in full force and effect on the date
hereof, and neither the Company nor any applicable subsidiary of
the Company nor, to the Company’s knowledge, any other party
to such contracts is in breach of or default under any of such
contracts. Neither the Company nor any of its subsidiaries has any
contracts or agreements that would constitute a material contract
as such term is defined in Item 601(b) of Regulation S-K, except
for such contracts or agreements that are filed as exhibits to or
described in the Company SEC Documents and except for the SPA, the
Credit Agreement and agreements contemplated thereby.

2.16       
Intellectual Property.

(a) The
Company and each of its subsidiaries has ownership or license or
legal right to use, or can acquire on reasonable terms, all patent,
copyright, trade secret, know-how trademark, trade name customer
lists, designs, manufacturing or other processes, computer
software, systems, data compilation, research results or other
proprietary rights used in the business of the Company or such
subsidiary (collectively “Intellectual Property”), except
as such failure to own, license, use or acquire would not result in
a Material Adverse Effect. All of such patents, registered
trademarks and registered copyrights have been duly registered in,
filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights or the
corresponding offices of other jurisdictions and have been
maintained and renewed in accordance with all applicable provisions
of law and administrative regulations in the United States and all
such jurisdictions.

(b) The
Company and each of its subsidiaries has taken all reasonable steps
required in accordance with sound business practice and business
judgment to establish and preserve its ownership of all material
Intellectual Property with respect to their products and
technology.

(c) To
the knowledge of the Company, the present business, activities and
products of the Company and its subsidiaries do not infringe any
intellectual property of any other person, except or where such
infringement would not have a Material Adverse Effect. No
proceeding charging the Company or any of its subsidiaries with
infringement of any adversely held Intellectual Property is
currently pending. To the knowledge of the Company, no other person
is infringing any rights of the Company or its subsidiaries to the
Intellectual Property.

 

 

 

(d) No
proceedings are pending or, to the knowledge of the Company,
threatened, which challenge the rights of the Company or any of its
subsidiaries to the use of the Intellectual Property. To the
knowledge of the Company, the Company and each of its subsidiaries
has the right to use, free and clear of material claims or rights
of other persons, all of its customer lists, designs, computer
software, systems, data compilations, and other information that
are required for its products or its business as presently
conducted. To the knowledge of the Company, neither the Company nor
any of its subsidiaries is making unauthorized use of any
confidential information or trade secrets of any person. The
activities of any of the employees on behalf of the Company or of
any of its subsidiaries do not violate any agreements or
arrangements between such employees and third parties related to
confidential information or trade secrets of third parties or that
restrict any such employee’s engagement in business activity
of any nature.

(e) All
material licenses or other agreements under which (i) the Company
or any subsidiary employs rights in Intellectual Property, or (ii)
the Company or any subsidiary has granted rights to others in
Intellectual Property owned or licensed by the Company or any
subsidiary are in full force and effect, and there is no default
(and there exists no condition which, with the passage of time or
otherwise, would constitute a default by the Company or such
subsidiary) by the Company or any subsidiary of the Company with
respect thereto.

2.17           Exchange
Compliance. The Company’s common stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on The
Nasdaq Capital Market (the “Principal Market”), and the
Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock (including the
Shares) from the Principal Market. The Company is in compliance
with all of the presently applicable requirements for continued
listing of the Common Stock on the Principal Market. The issuance
of the Securities does not require shareholder approval including,
without limitation, pursuant to the rules and regulations of the
Principal Market.

2.18           
Form S-3 Eligibility. The
Company is eligible to register the Shares for resale by the
Purchasers using Form S-3 promulgated under the Securities
Act.

2.19           
Accountants. EisnerAmper
LLP, who expressed their opinion with respect to the consolidated
financial statements contained in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2015, to be
incorporated by reference into the Registration Statement (as
hereinafter defined) and the prospectus which forms a part thereof
(the “Prospectus”), have advised the
Company that they are, and to the knowledge of the Company they
are, independent accountants as required by the Securities Act and
the rules and regulations promulgated thereunder. The Company
covenants to file its Form 10-K containing audited consolidated
financial statements for the year ended December 31, 2016 within
the time period required by applicable securities laws and further
represents and warrants that it has no reason to believe that the
auditors will not be able to express an unqualified opinion with
respect to such financial statements, assuming the Closing occurs
as contemplated herein.

2.20           Taxes.
The Company and each of its subsidiaries has filed all federal,
state, local and foreign income and franchise tax returns (except
where the failure to file would not have a Material Adverse Effect)
and has paid all taxes shown as due thereon. The Company has set aside on its
books adequate provisions for payments of taxes as of its reporting
period, and has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it or any of its
subsidiaries by any taxing jurisdiction.

2.21           Insurance.
The Company and each of its subsidiaries maintains and will
continue to maintain insurance of the types and in the amounts that
the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies,
all of which insurance is in full force and effect.

 

 

 

2.22         
Transfer Taxes. On the
Closing Date, all stock transfer or other taxes (other than income
taxes) that are required to be paid in connection with the sale and
transfer of the Securities hereunder will be, or will have been,
fully paid or provided for by the Company and the Company will have
complied with all laws imposing such taxes.

2.23         
Investment Company. The
Company (including its subsidiaries) is not an “investment
company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for
an investment company, within the meaning of the Investment Company
Act of 1940 and will not be deemed an “investment
company” as a result of the transactions contemplated by this
Agreement.

2.24         
Related Party Transactions.
To the knowledge of the Company, no transaction has occurred
between or among the Company or any of its affiliates (including,
without limitation, any of its subsidiaries), officers or directors
or any affiliate or affiliates of any such affiliate, officer or
director that with the passage of time will be required to be
disclosed pursuant to Section 13, 14 or 15(d) of the Exchange Act
other than those transactions that have already been so
disclosed.

2.25         
Books and Records. The
books, records and accounts of the Company and its subsidiaries
accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the
operations of, the Company and its subsidiaries.

2.26        
Disclosure Controls and Internal Controls.

(a)           The
Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), which (i) are designed to ensure that material
information relating to the Company is made known to the
Company’s principal executive officer and its principal
financial officer by others within the Company particularly during
the periods in which the periodic reports required under the
Exchange Act are being prepared; and (ii) provide for the periodic
evaluation of the effectiveness of such disclosure controls and
procedures as of the end of the period covered by the
Company’s most recent annual or quarterly report filed with
the SEC.

(b)           
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization and (iv) the
recorded accountability for assets and liabilities is compared with
the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term
is defined in Rule 13a-14 under the Exchange Act) that are
effective in ensuring that information required to be disclosed by
the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers
and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure. The Company
is not aware of (i) any significant deficiency or material weakness
in the design or operation of its internal controls; or (ii) any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s or any
of its subsidiary’s internal controls.

(c)           
Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no changes that have
materially affected, or are reasonably likely to materially affect,
the Company’s or any of its subsidiary’s internal
control over financial reporting, including any corrective actions
with regard to significant deficiencies and material
weaknesses.

(d)           
Except as described in the Company SEC Documents, there are no
material off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K), or any other relationships with unconsolidated
entities (in which the Company or its control persons have an
equity interest) that may have a material current or future effect
on the Company’s or any of its/subsidiary’s financial
condition, revenues or expenses, changes in financial condition,
results of operations, liquidity, capital expenditures or capital
resources.

 

 

 

 

2.27           
No General Solicitation.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D promulgated under the Securities Act) in connection
with the offer or sale of the Securities.

2.28           
Rights Agreement. The
Company has not adopted a shareholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

2.29           
Foreign Corrupt Practices.
Neither the Company nor any of its subsidiaries nor any director,
officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977; or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or
employee.

2.30           
Sarbanes-Oxley Act. The
Company is in compliance in all material respects with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.

2.31           
Employee Relations. Neither
the Company nor any of its subsidiaries is a party to any
collective bargaining agreement. The Company reasonably believes
that its and its subsidiaries’ relations with its employees
are good. No executive officer of the Company (as defined in Rule
501(f) of the Securities Act) has notified the Company that such
officer intends to leave the Company or otherwise terminate such
officer’s employment with the Company. To the knowledge of
the Company, no executive officer of the Company is, or is expected
to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company to any
liability with respect to any of the foregoing
matters.

The
Company and each of its subsidiaries is in compliance with all
federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.

2.32           
Environmental Laws. The
Company and each of its subsidiaries (i) is in compliance with any
and all Environmental Laws (as hereinafter defined), (ii) has
received all permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct its business and
(iii) is in compliance with all terms and conditions of any such
permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect. The term “Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands
or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.

 

 

 

2.33           No
Manipulation; Disclosure of Information. The Company has not
taken and will not take any action designed to or that might
reasonably be expected to cause or result in an unlawful
manipulation of the price of the Common Stock to facilitate the
sale or resale of the Securities. The Company confirms that, to its
knowledge, with the exception of the proposed sale of Securities as
contemplated herein (as to which the Company makes no
representation) and information provided with respect to the Target
and the SPA and the Company’s new credit facility, neither it
nor any other person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that
constitutes or might constitute material, non-public information.
The Company understands and confirms that the Purchasers shall be
relying on the foregoing representations in effecting transactions
in securities of the Company. All disclosures provided to the
Purchasers regarding the Company, its business and the transactions
noted in Section 2.33 above furnished by the Company are true and
correct and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which
they were made, not misleading.

2.34           Forward-Looking
Information. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) made by the Company or any of its officers or
directors contained in the SEC Documents, or made available to the
public generally since September 30, 2016, has been made or
reaffirmed without a reasonable basis or has been disclosed other
than in good faith.

2.35           No
Additional Agreements. Other than with respect to closing
mechanics, the Company has no other agreements or understandings
(including, without limitation, side letters) with any Purchaser or
other person to purchase Shares on terms more favorable to such
person than as set forth herein.

2.36           No
“Bad Actor” Disqualification. The Company has
exercised reasonable care, in accordance with SEC rules and
guidance, and has conducted a factual inquiry, the nature and scope
of which reflect reasonable care under the relevant facts and
circumstances, to determine whether any Covered Person (as defined
below) is subject to any of the “bad actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act (“Disqualification Events”). To the
Company’s knowledge, after conducting such sufficiently
diligent factual inquiries, no Covered Person is subject to a
Disqualification Event, except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company
has complied, to the extent applicable, with any disclosure
obligations under Rule 506(e) under the Securities Act.
“Covered
Persons” are those persons specified in Rule 506(d)(1)
under the Securities Act, including the Company; any predecessor or
affiliate of the Company; any director, executive officer, other
officer participating in the offering, general partner or managing
member of the Company; any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power; any promoter (as defined in Rule 405
under the Securities Act) connected with the Company in any
capacity at the time of the sale of the Securities; and any person
that has been or will be paid (directly or indirectly) remuneration
for solicitation of purchasers in connection with the sale of the
Securities (a “Solicitor”), any general partner
or managing member of any Solicitor, and any director, executive
officer or other officer participating in the offering of any
Solicitor or general partner or managing member of any
Solicitor.

3.            
Representations and Warranties of
the Purchasers. Each Purchaser, severally and not jointly,
hereby represents and warrants to the Company as
follows:

 

 

 

3.1           
Legal Power. The Purchaser
has the requisite authority to enter into this Agreement and to
carry out and perform its obligations under the terms of this
Agreement. All action on the Purchaser’s part required for
the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Closing.

3.2           
Due Execution. This
Agreement has been duly authorized, executed and delivered by the
Purchaser, and, upon due execution and delivery by the Company,
this Agreement will be a valid and binding agreement of the
Purchaser, except as rights to indemnity hereunder may be limited
by federal or state securities laws and except as enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights
generally or by equitable principles.

3.3           
Investment Representations.
In connection with the sale and issuance of the Securities, the
Purchaser, for itself and no other Purchaser, makes the following
representations:

(a)           
Investment for Own Account.
The Purchaser is acquiring the Securities for its own account, not
as nominee or agent, and not with a view to, or for resale in
connection with, any distribution or public offering thereof within
the meaning of the Securities Act; provided,
however, that by making the representations herein, the Purchaser
does not agree to hold any of the Securities for any minimum or
specific term and reserves the right to dispose of the securities
at any time in accordance with or pursuant to a registration
statement or an exemption from the registration requirements of the
Securities Act.

(b)           Transfer
Restrictions; Legends. The Purchaser understands that (i)
the Securities have not been registered under the Securities Act;
(ii) the Securities are being offered and sold pursuant to an
exemption from registration, based in part upon the Company’s
reliance upon the statements and representations made by the
Purchasers in this Agreement, and that the Securities must be held
by the Purchaser indefinitely, and that the Purchaser must,
therefore, bear the economic risk of such investment indefinitely,
unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration; (iii) each
Certificate representing Securities will be endorsed or notated
with the following legend until the date the Shares are eligible
for sale without restriction or limitation under Rule 144 under the
Securities Act:

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO EITHER AN EFFECTIVE
REGISTRATION STATEMENT OR RULE 144 UNDER THE SECURITIES ACT, THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

(iv)
the Company will instruct any transfer agent not to register the
transfer of the Securities (or any portion thereof) until the
applicable date set forth in clause (iii) above unless (A) the
conditions specified in the foregoing legends are satisfied, (B) if
the opinion of counsel referred to above is to the further effect
that such legend is not required in order to establish compliance
with any provisions of the Securities Act or this Agreement, (C) if
the Purchaser provides the Company with reasonable assurance, such
as through a representation letter, that the Securities may be sold
pursuant to Rule 144 under the Securities Act, or (D) other
reasonably satisfactory assurances of such nature are given to the
Company. If so required by the Company’s transfer agent, the
Company shall cause its counsel to issue and deliver a legal
opinion to the transfer agent to effect the removal of the
restrictive legend contemplated by this Agreement.

 

 

 

The
Company acknowledges and agrees that a Purchaser may from time to
time pledge, and/or grant a security interest in some or all of the
Securities pursuant to a bona fide margin agreement in connection
with a bona fide margin account and, if required under the terms of
such agreement or account, the Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a
pledge or transfer shall not be subject to approval or consent of
the Company and no legal opinion of legal counsel to the pledgee,
secured party or pledgor shall be required in connection with the
pledge, but such legal opinion may be required in connection with a
subsequent transfer following default by the Purchaser transferee
of the pledge. No notice shall be required of such pledge. At the
appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Shareholders
thereunder.

Certificates
evidencing the Shares shall not contain any restrictive legend
(including the legend set forth in this Section): (i) following a
resale of the Shares under an effective registration statement
(including the Registration Statement) covering the Shares, or (ii)
following a sale of such Shares pursuant to Rule 144, or (iii)
while such Shares are eligible for sale under Rule 144 and, with
respect to any Purchaser’s Shares, such Purchaser is not and
has not been for three months an affiliate of the Company (as such
term is defined in Rule 144(a)(1)) and such Shares have been held
for one year or more pursuant to the requirements of Rule 144 and
any other requirements under Rule 144 have been satisfied at such
time, or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the SEC).
Following such time as restrictive legends are not required to be
placed on Certificates representing Shares, the Company will, no
later than three business days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a
Certificate representing Shares containing a restrictive legend and
such other documentation and representations as the Company, its
legal counsel or Transfer Agent may reasonably request to confirm
compliance with the preceding sentence as applicable (provided,
however, that neither the Company nor its legal counsel will
require a legal opinion in connection with any sale pursuant to
Rule 144), deliver or cause to be delivered to such Purchaser a
Certificate representing such Shares that is free from all
restrictive legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company
that enlarge the restrictions on transfer set forth in this
Section. Certificates for Shares subject to legend removal
hereunder shall be transmitted by the transfer agent of the Company
to the Purchasers by crediting the account of the Purchaser’s
prime broker with the Depository Trust Company system unless a
Purchaser provides alternate written instructions. The Company will
pay all fees and expenses of its transfer agent and the Depository
Trust Company in connection with the removal of legends pursuant to
this Section 3.3(b).

Each
Purchaser, severally and not jointly with the other Purchasers,
agrees that the removal of the restrictive legend from Certificates
representing Shares as set forth in this Section 3.3(b) is
predicated upon the Company’s reliance that the Purchaser
will sell any Shares pursuant to either the registration
requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption
therefrom.

(c)           
Financial Sophistication; Due
Diligence. The Purchaser has such knowledge and experience
in financial or business matters that it is capable of evaluating
the merits and risks of the investment in connection with the
transactions contemplated in this Agreement. Such Purchaser has, in
connection with its decision to purchase the Securities, relied
only upon the representations and warranties contained herein and
the information contained in the Company SEC Documents. Further,
the Purchaser has had such opportunity to obtain additional
information and to ask questions of, and receive answers from, the
Company, concerning the terms and conditions of the investment and
the business and affairs of the Company, as the Purchaser considers
necessary in order to form an investment decision.

 

 

 

(d)           Accredited
Investor Status. The Purchaser is an “accredited
investor” as such term is defined in Rule 501(a) of the rules
and regulations promulgated under the Securities Act.

(e)           Residency.
If the Purchaser is an entity, the Purchaser is organized under the
laws of the jurisdiction set forth beneath such Purchaser’s
name on the signature page attached hereto, and its principal place
of operations is in the state set forth beneath such
Purchaser’s name on the signature page attached
hereto.

(f)           General
Solicitation. The Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over the television or radio
or presented at any seminar or any other general solicitation or
general advertisement.

3.4           No
Investment, Tax or Legal Advice. Each Purchaser understands
that nothing in the Company SEC Documents, this Agreement, or any
other materials presented to the Purchaser in connection with the
purchase and sale of the Securities constitutes legal, tax or
investment advice. Each Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of
Securities.

3.5           Additional
Acknowledgement. Each Purchaser acknowledges that it has
independently evaluated the merits of the transactions contemplated
by this Agreement, that it has independently determined to enter
into the transactions contemplated hereby, that it is not relying
on any advice from or evaluation by any other person. Each
Purchaser acknowledges that the Placement Agent has acted solely as
placement agent for the Company in connection with the Offering of
the Securities by the Company, that the information and data
provided to the Purchaser in connection with the transaction
contemplated hereby has not been subjected to independent
verification by the Placement Agent, and that the Placement Agent
has made no representation or warranty whatsoever with respect to
the accuracy or completeness of such information, data or other
related disclosure material. Each Purchaser acknowledges that it
has not taken any actions that would deem the Purchasers to be
members of a “group” for purposes of Section 13(d) of
the Exchange Act.

3.6           Limited
Ownership. The purchase of the Securities issuable to each
Purchaser at the Closing will not result in such Purchaser
(individually or together with any other person or entity with whom
such Purchaser has identified, or will have identified, itself as
part of a “group” in a public filing made with the SEC
involving the Company’s securities) acquiring, or obtaining
the right to acquire, in excess of 19.999% of the outstanding
shares of Common Stock or voting power of the Company on a
post-transaction basis that assumes that the Closing shall have
occurred. Such Purchaser does not presently intend to, along or
together with others, make a public filing with the SEC to disclose
that it has (or that it together with such other persons or
entities have) acquired, or obtained the right to acquire, as a
result of the Closing (when added to any other securities of the
Company that it or they then own or have the right to acquire), in
excess of 19.999% of the outstanding shares of Common Stock or the
voting power of the Company on a post-transaction basis that
assumes that the Closing shall have occurred.

3.7           No
Short Position. Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any person or entity acting on behalf of or
pursuant to any understanding with such Purchaser, executed any
purchases or sales, including short sales as defined in Rule 200 of
Regulation SHO under the Exchange Act (“Short Sales”), of the securities
of the Company during the period commencing from the time that such
Purchaser first received a term sheet (written or oral) from the
Company or any other person representing the Company setting forth
the material terms of the transactions contemplated hereunder until
the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets,
the representation set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made
the investment decision to purchase the securities covered by this
Agreement. Other than to other persons party to this Agreement,
such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction
(including the existence and terms of this transaction, the
acquisition of Target and the Company’s new credit facility).
Notwithstanding the foregoing, for avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in
order to effect short sales or similar transactions in the
future.

 

 

 

4.            

Conditions
to Closing.

4.1           
Conditions to Obligations of
Purchasers at Closing.  Each Purchaser’s obligation
to purchase the Securities at the Closing is subject to the
fulfillment, on or prior to the Closing, of all of the following
conditions, any of which may be waived by the
Purchaser:

(a)           
Representations and Warranties
True; Performance of Obligations. The representations and
warranties made by the Company in Section 2 shall be true and
correct in all material respects (or, where the representation and
warranty itself is qualified by materiality, it shall be true and
correct in all respects) on the Closing Date with the same force
and effect as if they had been made on and as of said date (except
to the extent that any such representation and warranty expressly
speaks as of an earlier date, in which case such representation and
warranty shall be so true and correct as of such earlier date), and
the Company shall have performed and complied with all obligations
and conditions herein required to be performed or complied with by
it on or prior to the Closing, including, but not limited to, those
obligations and conditions set forth in Sections 4.1(c), 4.1(f),
4.1(g), 4.1(h), and 4.1(i), and a certificate duly executed by an
officer of the Company, to the effect of the foregoing, shall be
delivered to the Purchasers. The delivery of such certificate shall
evidence the satisfaction of the conditions set forth in this
Section 4.1.

(b)           
Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents and
instruments incident to such transactions shall be reasonably
satisfactory in substance and form to counsel to the Purchaser, and
counsel to the Purchaser shall have received all such counterpart
originals or certified or other copies of such documents as they
may reasonably request. The Company shall have delivered (or caused
to have been delivered) to each Purchaser, the Certificates
required by this Agreement.

(c)            
Qualifications, Legal
Investment. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Securities shall have been duly
obtained and shall be effective on and as of the Closing. No stop
order or other order enjoining the sale of the Securities shall
have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the SEC,
or any commissioner of corporations or similar officer of any state
having jurisdiction over this transaction. At the time of the
Closing, the sale and issuance of the Securities shall be legally
permitted by all laws and regulations to which the Company is
subject. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered,
promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions
contemplated by this Agreement.

(d)            
Execution of Agreements. The
Company shall have executed this Agreement and have delivered this
Agreement to the Purchasers.

(e)            
Secretary’s
Certificate. The Company shall have delivered to the
Purchasers a certificate of the Secretary of the Company certifying
as to (i) the truth and accuracy of the resolutions of the board of
directors relating to the transaction contemplated hereby (a copy
of which shall be included with such certificate) and (ii) the
current versions of the Company’s Certificate of
Incorporation and bylaws.

(f)            
Trading and Listing. Trading
and listing of the Company’s common stock on the Principal
Market shall not have been suspended by the SEC or the Principal
Market.

(g)            
Market Listing. The Company
will comply with all of the requirements of the Financial Industry
Regulatory Authority, Inc. and the Principal Market with respect to
the issuance of the Securities and will list the Shares on the
Principal Market no later than the earlier of (a) the effective
date of the Registration Statement (as hereinafter defined) or (b)
the Required Effective Date (as hereinafter defined).

(h)            
Blue Sky. The Company shall
have obtained all necessary “blue sky” law permits and
qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the
Securities.

(i)            
Material Adverse Change.
Since the date of this Agreement, there shall not have occurred any
event which results in a Material Adverse Effect.

(j)            
Opinion. The Company shall
have delivered to Purchasers the opinion of Kelley Drye &
Warren LLP, counsel to the Company, dated as of the Closing Date in
substantially the form attached hereto as Exhibit B.

(k)            
Acquisition of Target. The
acquisition of Target shall have been consummated in accordance
with the SPA.

 

 

 

4.2            
Conditions to Obligations of the
Company. The Company’s obligation to issue and sell
the Securities at the Closing is subject to the fulfillment, on or
prior to the Closing, of the following conditions, any of which may
be waived by the Company:

(a)           
Representations and Warranties
True. The representations and warranties made by the
Purchasers in Section 3 shall be true and correct in all material
respects (or, where the representation and warranty itself is
qualified by materiality, it shall be true and correct in all
respects) on the Closing Date with the same force and effect as if
they had been made on and as of said date (except to the extent
that any such representation and warranty expressly speaks as of an
earlier date, in which case such representation and warranty shall
be so true and correct as of such earlier date).

(b)           
Performance of Obligations.
The Purchasers shall have performed and complied with all
agreements and conditions herein required to be performed or
complied with by them on or before the Closing. The Purchasers
shall have delivered the Purchase Price, by wire transfer, to the
account designated by the Company for such purpose.

(c)            
Qualifications, Legal
Investment. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Securities shall have been duly
obtained and shall be effective on and as of the Closing. No stop
order or other order enjoining the sale of the Securities shall
have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the SEC,
or any commissioner of corporations or similar officer of any state
having jurisdiction over this transaction. At the time of the
Closing, the sale and issuance of the Securities shall be legally
permitted by all laws and regulations to which the Company is
subject. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered,
promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions
contemplated by this Agreement.

(d)            
Execution of Agreements. The
Purchasers shall have executed this Agreement and delivered this
Agreement to the Company.

(e)            
Acquisition of Target. The
acquisition of Target shall have been consummated in accordance
with the SPA.

 

 

 

4.3           
Termination of Obligations to Effect Closing; Effects.

(a)            
Termination. The obligations
of the Company, on the one hand, and the Purchasers, on the other
hand, to effect the Closing shall terminate as
follows:

(i)           Upon
the mutual written consent of the Company and the
Purchasers;

(ii)           By
the Company if any of the conditions set forth in Section 4.2 shall
have become incapable of fulfillment, and shall not have been
waived by the Company;

(iii)           By
a Purchaser (with respect to itself only) if any of the conditions
set forth in Section 4.1 shall have become incapable of
fulfillment, and shall not have been waived by the Purchaser;
or

(iv)            
By either the Company or any Purchaser (with respect to itself
only) if the Closing has not occurred on or prior to December 1,
2016;

provided, however,
that, in the case of clause (iii) above and clause (iv) with
respect to the Company, the party seeking to terminate its
obligation to effect the Closing shall not then be in breach of any
of its representations, warranties, covenants, or agreements
contained in this Agreement if such breach has resulted in the
circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

(b)            
Effect of Termination. In
the event of termination by the Company or any Purchaser of its
obligations to effect the Closing pursuant to this Section 4.3,
written notice thereof shall be given promptly to the other
Purchasers by the Company and the other Purchasers shall have the
right to terminate their obligations to effect the Closing upon
written notice to the Company and the other Purchasers. Nothing in
this Section 4.3 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions
of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under
this Agreement.

5.            

Additional
Covenants.

5.1           Reporting
Status. With a view to making available to the Purchasers
the benefits of certain rules and regulations of the SEC which may
permit the sale of the Shares to the public without registration,
the Company agrees to use its reasonable best efforts to file with
the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act. The Company will
otherwise take such further action as a Purchaser may reasonably
request, all to the extent required from time to time, to enable
such Purchaser to sell the Shares without registration under the
Securities Act or any successor rule or regulation adopted by the
SEC. If, at any time during the period commencing from the
six-month anniversary of the date hereof and ending at such time
that all Registrable Securities (as defined below) may be sold
without the requirement for the Company to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144 (the “144 Sale Date”), the Company
fails to satisfy the current public information requirement of Rule
144(c) under the Securities Act, then the Company shall, on the
business day immediately following such failure and each
30th day
thereafter until the 144 Sale Date, make a payment to the
Purchasers as partial liquidated damages for such failure equal to
1% of the Purchase Price paid for the Shares then owned by the
Purchasers up to a maximum of 12.0% of the Purchase Price for such
Registrable Securities. Payments pursuant to this Section 5.1 will
be prorated on a daily basis during each 30-day period and will be
paid to the Purchasers by wire transfer or check within five
business days after the earlier of (i) the end of each 30-day
period following such failure to satisfy the current public
information requirement or (ii) the 144 Sale Date. If the
Company fails to pay any liquidated damages pursuant to this
section in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 12% per annum (or
such lesser maximum amount that is permitted to be paid by
applicable law) to the Purchasers, accruing daily from the date
such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full.

 

 

 

5.2           Listing.
So long as a Purchaser owns any of the Securities, the Company will
use its reasonable best efforts to maintain the qualification or
listing of its Common Stock, including the Shares, on the Principal
Market or an alternative listing on the NASDAQ Stock Market, New
York Stock Exchange or NYSE MKT and will comply in all material
respects with the Company’s reporting, filing and other
obligations under the rules of such exchanges, as
applicable.

5.3           Adjustments
in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of
Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly
shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each
reference in this Agreement to a number of shares or price per
share shall be amended appropriately to account for such
event.

5.4           Non-Public
Information. The Company covenants and agrees that neither
it nor any other person acting on its behalf will provide any
Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company. Furthermore,
if the Company has disclosed any material non-public information to
the Purchaser, the Purchaser has no duty to keep such information
confidential following the public announcement of the
Offering.

5.5           Equal
Treatment of Purchasers. No consideration (including any
modification of this Agreement and any other documents or
agreements executed in connection with the transaction contemplated
hereunder) shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of this
Agreement unless the same consideration is also offered to all of
the parties to this Agreement. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by
the Company and negotiated separately by each Purchaser, and is
intended for the Company to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in
concert or as a group with respect to the purchase, disposition or
voting of securities of the Company or otherwise.

5.6           Restriction
on Future Issuances. Unless otherwise waived by holders of a
majority of the Shares sold in this Offering:

(a) The
Company will not, from the date of this Agreement through the date
that is 45 days after the effective date of the Registration
Statement (the “Lock-Up
Period”), (a) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock or (b) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (a) or (b) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise,
except for (x) grants of options, shares of Common Stock and other
awards to purchase or receive shares of Common Stock under the
Company’s equity incentive plans that are in effect as of or
prior to the date hereof or (y) issuances of shares of Common Stock
upon the exercise or conversion of securities outstanding as of the
date of this Agreement in accordance with the terms of such
securities in effect on the date hereof or upon the exercise of
options or other awards granted under the Company’s equity
incentive plans.

 

 

 

(b) The
Company agrees not to accelerate the vesting of any option or
warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period.

(c) In
addition, from the Closing Date of the Offering until 45 days after
the effective date of the Registration Statement, the Company will
not issue or agree to issue more than (i) such number of shares as
is equal in value to $1,000,000 of (a) Common Stock or (b) any
securities of the Company or any subsidiary that would entitle the
holder thereof to acquire at any time shares of Common Stock,
including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time directly
or indirectly convertible into or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock, entitling any
person or entity to acquire shares of Common Stock, in the case of
each of (i)(a) and (i)(b) above at an effective price per share of
at least $1.15, and (ii) such number of shares as is equal in value
to $5,000,000 of (a) Common Stock or (b) any securities of the
Company or any subsidiary that would entitle the holder thereof to
acquire at any time shares of Common Stock, including without
limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time directly or indirectly
convertible into or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock, entitling any person or
entity to acquire shares of Common Stock, in the case of each of
(ii)(a) and (ii)(b) above at an effective price per share of at
least $2.00.

Notwithstanding
this Section 5.6, the Company shall not be restricted from issuing
shares of Common Stock, or registering with the SEC the sale or
resale of shares of Common Stock, in connection with the SPA and
any agreement contemplated thereby, provided, however, that the
registration statement for such shares shall not be filed earlier
than sixty (60) days following the effective date of the
registration statement covering the shares of Common Stock sold
hereunder.

6.            

Registration
Rights.

6.1           Registration
Procedures and Expenses; Liquidated Damages for Certain
Events.

(a) The
Company shall prepare and file with the SEC, as promptly as
reasonably practicable following Closing, but in no event later
than 45 days following the date hereof (the “Initial Filing Date”), a
registration statement on Form S-3 (or any successor to Form S-3),
covering the resale of the Registrable Securities (the
“S-3 Registration
Statement”) and use all commercially reasonable
efforts to, as soon as reasonably practicable thereafter but in no
event later than 90 days following the date hereof (or 120 days in
the event of a full review of the S-3 Registration Statement by the
SEC), effect such registration and any related qualification or
compliance with respect to all Registrable Securities held by the
Purchasers. For purposes of this Agreement, the term
“Registrable
Securities” shall mean (i) the Shares and (ii) any
Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, any Shares. In the
event that Form S-3 (or any successor form) is or becomes
unavailable to register the resale of the Registrable Securities at
any time prior to the Initial Filing Date, the Company shall
prepare and file with the SEC, as promptly as reasonably
practicable following the Closing but in no event later than the
Initial Filing Date, a registration statement on Form S-1 (or any
successor to Form S-1), covering the resale of the Registrable
Securities (the “S-1
Registration Statement” and collectively the S-3
Registration Statement, the “Registration Statement”) and use
all commercially reasonable efforts to, as soon as reasonably
practicable thereafter but in no event later than 120 days
following the date hereof (150 days in the event of a full review
of the S-1 Registration Statement by the SEC), to effect such
registration and any related qualification or compliance with
respect to all Registrable Securities held by the Purchasers. If
the Company is not eligible to use Form S-3 at the Initial Filing
Date, and the Company subsequently becomes eligible to use Form S-3
during the Effectiveness Period (as defined below), the Company
shall file, as promptly as reasonably practicable, a new S-3
Registration Statement, or if available, an amendment to the Form
S-1, covering the resale of the Registrable Securities and replace
the S-1 Registration Statement with the new S-3 Registration
Statement or amended Form S-1, as the case may be, upon the
effectiveness of the new S-3 Registration Statement.

 

 

 

(b) The
Company shall, during the Effectiveness Period (as hereinafter
defined), use its commercially reasonable efforts to:

(i) prepare
and file with the SEC such amendments and supplements to the
Registration Statement and the Prospectus used in connection
therewith as may be necessary or advisable to keep the Registration
Statement current and effective for the Registrable Securities held
by a Purchaser for a period ending on the earlier of (i) the second
anniversary of the Closing Date, (ii) the date on which all
Registrable Securities may be sold pursuant to Rule 144 under the
Securities Act or any successor rule (“Rule 144”) during any three-month
period without the requirement for the Company to be in compliance
with the current public information required under Rule 144(c)(1)
or (iii) such time as all Registrable Securities have been sold
pursuant to a registration statement or Rule 144 (collectively, the
“Effectiveness
Period”). The Company shall notify each Purchaser
promptly upon the Registration Statement and each post-effective
amendment thereto, being declared effective by the SEC and advise
each Purchaser that the form of Prospectus contained in the
Registration Statement or post-effective amendment thereto, as the
case may be, at the time of effectiveness meets the requirements of
Section 10(a) of the Securities Act or that it intends to file a
Prospectus pursuant to Rule 424(b) under the Securities Act that
meets the requirements of Section 10(a) of the Securities
Act;

(ii) furnish
to the Purchaser promptly with respect to the Registrable
Securities registered under the Registration Statement such number
of copies of the Registration Statement and the Prospectus
(including supplemental prospectuses and amendments) filed with the
SEC in conformance with the requirements of the Securities Act and
such other documents as the Purchaser may reasonably request, in
order to facilitate the public sale or other disposition of all or
any of the Registrable Securities by the Purchaser;

(iii) make
any necessary blue sky filings;

(iv) pay
the expenses incurred by the Company and the Purchasers in
complying with this Section 6, including, all registration and
filing fees, FINRA fees, exchange listing fees, printing expenses,
fees and disbursements of counsel for the Company, blue sky fees
and expenses and the expense of any special audits incident to or
required by any such registration (but excluding attorneys’
fees of any Purchaser and any and all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities by the Purchasers);

(v) advise
the Purchasers, promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of
the initiation of any proceeding for that purpose; and it will
promptly use its reasonable best efforts to prevent the issuance of
any stop order or to obtain its withdrawal at the earliest possible
moment if such stop order should be issued; and

(vi) with
a view to making available to the Purchaser the benefits of Rule
144 and any other rule or regulation of the SEC that may at any
time permit the Purchaser to sell Registrable Securities to the
public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as such term is
understood and defined in Rule 144, until the earlier of (A) such
date as all of the Registrable Securities qualify to be resold
immediately pursuant to Rule 144 or any other rule of similar
effect during any three-month period without the requirement for
the Company to be in compliance with the current public information
required under Rule 144(c)(1) or (B) such date as all of the
Registrable Securities shall have been resold pursuant to Rule 144
(and may be further resold without restriction); (ii) file with the
SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and under the Exchange Act;
and (iii) furnish to the Purchaser upon request, as long as the
Purchaser owns any Registrable Securities, (A) a written statement
by the Company as to whether it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) if not
available on the SEC EDGAR system, a copy of the Company’s
most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, and (C) such other information as may be reasonably requested
in order to avail the Purchaser of any rule or regulation of the
SEC that permits the selling of any such Registrable Securities
without registration.

 

 

 

The
Company understands that each Purchaser disclaims being an
underwriter, but acknowledges that a determination by the SEC that
a Purchaser is deemed an underwriter shall not relieve the Company
of any obligations it has hereunder.

(c) If
(i) the Registration Statement is not filed on or prior to the
Initial Filing Date, or (ii) the Company fails to file with the SEC
a request for acceleration of the Registration Statement in
accordance with Rule 461 under the Securities Act, within five
Trading Days, as defined below, after the date the Company is first
notified (orally or in writing) by the SEC that the Registration
Statement will not be “reviewed” or will not be subject
to further review or comment, or (iii) prior to the effective date
of the Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to
comments made by the SEC in respect of such Registration Statement
within 21 days after the receipt of comments by or notice from the
SEC that such amendment or resolution of such comments is required
in order for such Registration Statement to be declared effective,
or (iv) the Registration Statement is not declared effective by the
SEC on or before the date that is 90 days after the date hereof, or
120 days after the date hereof in the event of a full review of the
Registration Statement by the SEC (the “Required Effective Date”), or (v)
there occurs a Suspension (or part thereof) (as defined below) that
does not constitute a Qualifying Suspension (as defined below) or
(vi) at any time during the period commencing from the six month
anniversary of the date hereof and ending at such time, the Company
shall fail to satisfy the current public information requirement
under Rule 144(c) (any of the foregoing being referred to as an
“Event”, and
for purposes of clauses (i), (iv) and (vi), the date on which such
Event occurs, and for purpose of clause (ii) the date on which such
five Trading Day period is exceeded, and for purpose of clause
(iii) the date which such 21 day period is exceeded, and for
purpose of clause (v) the date on which the applicable 30 or 45 day
period is exceeded being the “Event Date”), then except during
any period of time during which the Registrable Securities may be
resold pursuant to Rule 144 without volume limitations, in addition
to any other rights the Purchasers may have hereunder or under
applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall
not have been cured by such date) until the applicable Event is
cured, the Company shall pay to each Purchaser an amount in cash,
as liquidated damages and not as a penalty, equal to the product of
1.0% multiplied by the Purchase Price paid by such Purchaser with
respect to the Registrable Securities affected by such Event and
held by such Purchaser on such Event Date or monthly anniversary
thereof, up to a maximum of 12.0% of the Purchase Price for such
Registrable Securities; provided, however, that no amount arising
under subsection (vi) above shall be payable in duplication of any
amount payable under Section 5.1. If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven
days after the date payable, the Company will pay interest thereon
at a rate of 12% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Purchaser, accruing
daily from the date such liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full. The
liquidated damages pursuant to the terms hereof shall apply on a
daily pro rata basis for any portion of a month prior to the cure
of an Event. A “Trading
Day” is any day of the year that the Principal Market
is open for trading of the Common Stock.

6.2

Transfer
of Shares After Registration; Suspension.

(a) Except
in the event that Section 6.2(b) applies, the Company shall during
the Effectiveness Period: (i) if deemed necessary or advisable by
the Company, prepare and file from time to time with the SEC a
post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and so that, as thereafter
delivered to purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; (ii) provide the Purchasers copies, or access to
copies, of any documents filed pursuant to Section 6.2(a)(i); and
(iii) upon request, inform each Purchaser who so requests that the
Company has complied with its obligations in Section 6.2(b)(i) (or
that, if the Company has filed a post-effective amendment to the
Registration Statement which has not yet been declared effective,
the Company will notify the Purchaser to that effect, will use its
reasonable best efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly
notify the Purchaser pursuant to Section 6.2(b)(i) when the
amendment has become effective).

 

 

 

(b) Subject
to Section 6.1(c), in the event: (i) of any request by the SEC or
any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or related Prospectus or
for additional information; (ii) of the issuance by the SEC or any
other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose; or (iv) of any
event or circumstance which necessitates the making of any changes
in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the
Company shall promptly deliver a certificate in writing to the
Purchasers (the “Suspension
Notice”) to the effect of the foregoing and, upon
receipt of such Suspension Notice, the Purchasers will refrain from
selling any Registrable Securities pursuant to the Registration
Statement (a “Suspension”) until the Purchasers
are advised in writing by the Company that the current Prospectus
may be used, and have received copies, or access to copies, from
the Company of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such
Prospectus. In the event of any Suspension, the Company will use
its reasonable best efforts to cause the use of the Prospectus so
suspended to be resumed as soon as reasonably practicable after
delivery of a Suspension Notice to the Purchasers. In addition to
and without limiting any other remedies (including, without
limitation, at law or at equity) available to the Company and the
Purchaser, the Company and the Purchasers shall be entitled to
specific performance in the event that the other party fails to
comply with the provisions of this Section 6.2(b).

(c) Notwithstanding
the foregoing paragraphs of this Section 6.2, the Company shall use
its reasonable best efforts to ensure that (i) a Suspension shall
not exceed 30 days individually, (ii) Suspensions covering no more
than 45 days, in the aggregate, shall occur during any twelve month
period and (iii) each Suspension shall be separated by a period of
at least 30 days from a prior Suspension (each Suspension that
satisfies the foregoing criteria being referred to herein as a
“Qualifying
Suspension”).

(d) During
the Effectiveness Period, the Company shall cause Certificates
evidencing the Registrable Securities not to contain any
restrictive legend (including the legend set forth in Section
3.3(b)): (i) following a resale of the Shares under an effective
registration statement (including the Registration Statement)
covering such Registrable Securities, or (ii) following a sale of
such Registrable Securities pursuant to Rule 144, or (iii) while
such Registrable Securities are eligible for sale under Rule 144
and, with respect to any Purchaser’s Shares, such Purchaser
is not and has not been for three months an affiliate of the
Company (as such term is defined in Rule 144(a)(1)) and such Shares
have been held for one year or more pursuant to the requirements of
Rule 144 and any other requirements under Rule 144 have been
satisfied at such time, or (iv) if such legend is not required
under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of
the SEC). Following such time as restrictive legends are not
required to be placed on Certificates representing Shares, the
Company will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Company’s
transfer agent of a Certificate representing Registrable Securities
containing a restrictive legend, deliver or cause to be delivered
to such Purchaser a Certificate representing such Registrable
Securities that is free from all restrictive legends. Promptly
after the Registration Statement is declared effective by the SEC,
the Company will cause its counsel to issue a legal opinion to the
Company’s transfer agent to effect the removal of the
restrictive legend contemplated by this Agreement upon request by a
Purchaser in connection with a sale of such Purchaser’s
Registrable Securities by such Purchaser pursuant to the
Registration Statement, which opinion will not include the resale
of shares issued as part of the purchase price for the acquisition
of Target pursuant to the SPA. The Company may not make any
notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth
in this Agreement. Certificates for Registrable Securities subject
to legend removal hereunder shall be transmitted by the transfer
agent of the Company to the Purchasers by crediting the account of
the Purchaser’s prime broker with the Depository Trust
Company system unless a Purchaser provides alternate written
instructions.

 

 

 

6.3 

Indemnification. For the purpose of this
Section 6.3:

(a) the
term “Selling
Shareholder” shall mean a Purchaser, its general
partners, managing members, managers, executive officers and
directors and each person, if any, who controls that Purchaser
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act;

(b) the
term “Registration
Statement” shall include any final Prospectus,
exhibit, supplement or amendment included in or relating to, and
any document incorporated by reference in, the Registration
Statement (or deemed to be a part thereof) referred to in Section
6.1; and

(c) the
term “untrue
statement” shall mean any untrue statement or alleged
untrue statement of a material fact, or any omission or alleged
omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.

(d)            The
Company agrees to indemnify and hold harmless each Selling
Shareholder from and against any losses, claims, damages or
liabilities to which such Selling Shareholder may become subject
(under the Securities Act or otherwise) insofar as such losses,
claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue
statement of a material fact contained in the Registration
Statement, (ii) any inaccuracy in the representations and
warranties of the Company contained in this Agreement or the
failure of the Company to perform its obligations hereunder or
(iii) any failure by the Company to fulfill any undertaking
included in the Registration Statement, and the Company will
reimburse such Selling Shareholder for any reasonable legal expense
or other actual accountable out-of-pocket expenses reasonably
incurred in investigating, defending or preparing to defend any
such action, proceeding or claim; provided, however, that the
Company shall not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based
upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Shareholder
specifically for use in preparation of the Registration Statement
or the failure of such Selling Shareholder to comply with its
covenants and agreements contained herein or any statement or
omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Selling Shareholder prior to
the pertinent sale or sales by the Selling
Shareholder.

(e)            Each
Purchaser severally (as to itself), and not jointly, agrees to
indemnify and hold harmless the Company (and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer of
the Company who signs the Registration Statement and each director
of the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or
otherwise), insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement of a material fact contained in
the Registration Statement if, and only if, such untrue statement
was made in reliance upon and in conformity with written
information furnished by or on behalf of that Purchaser
specifically for use in preparation of the Registration Statement,
and that Purchaser will reimburse the Company (or such officer,
director or controlling person, as the case may be), for any
reasonable legal expense or other actual accountable out-of-pocket
expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim. The
obligation to indemnify shall be limited to the net amount of the
proceeds received by the Purchaser from the sale of the Registrable
Securities pursuant to the Registration Statement.

 

 

 

(f)            Promptly
after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 6.3,
such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, but
the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party
under this Section 6.3 (except to the extent that such omission
materially and adversely affects the indemnifying party’s
ability to defend such action) or from any liability otherwise than
under this Section 6.3. Subject to the provisions hereinafter
stated, in case any such action shall be brought against an
indemnified person, the indemnifying person shall be entitled to
participate therein, and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, shall
be entitled to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to
assume the defense thereof (unless it has failed to assume the
defense thereof and appoint counsel reasonably satisfactory to the
indemnified party), such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense
thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the
reasonable opinion of counsel to the indemnified person, for the
same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel (who
shall not be the same as the opining counsel) at the expense of
such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than
one separate counsel (together with appropriate local counsel) for
all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any
action unless the indemnifying person shall have approved the terms
of such settlement; provided that such consent shall not be
unreasonably withheld. No indemnifying person shall, without the
prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of
which any indemnified person is or could reasonably have been a
party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an
unconditional release of such indemnified person from all liability
on claims that are the subject matter of such
proceeding.

(g)            If
the indemnification provided for in this Section 6.3 is unavailable
to or insufficient to hold harmless an indemnified party under
subsection (d) or (e) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and the
liable Purchaser on the other in connection with the statements or
omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, in the
case of an untrue statement, whether the untrue statement relates
to information supplied by the Company on the one hand or the
liable Purchaser on the other and the parties’ relative
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement. The Company and the Purchasers
agree that it would not be just and equitable if contribution
pursuant to this subsection (g) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in
this subsection (g). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection
(g) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (g), no
Purchasers shall be required to contribute any amount in excess of
the amount by which the net amount received by that Purchaser from
the sale of the Registrable Securities to which such loss relates
exceeds the amount of any damages which that Purchaser has
otherwise been required to pay to the Company by reason of such
untrue statement. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Purchasers’
obligations in this subsection to contribute are several in
proportion to their sales of Registrable Securities to which such
loss relates and not joint.

 

 

 

(h)            The
parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 6.3, and are
fully informed regarding said provisions. They further acknowledge
that the provisions of this Section 6.3 fairly allocate the risks
in light of the ability of the parties to investigate the Company
and its business in order to assure that adequate disclosure is
made in the Registration Statement as required by the Securities
Act and the Exchange Act.

(i)            The
obligations of the Company and of the Purchasers under this Section
6.3 shall survive completion of any offering of Registrable
Securities in such Registration Statement for a period of two years
from the effective date of the Registration Statement. No
indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of each indemnified party, consent
to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.

6.4           Termination
of Conditions and Obligations. The conditions precedent
imposed by Section 3 or this Section 6 upon the transferability of
the Registrable Securities shall cease and terminate as to any
particular number of the Registrable Securities when such
Registrable Securities shall have been effectively registered under
the Securities Act and sold or otherwise disposed of in accordance
with the intended method of disposition set forth in the
Registration Statement covering such Registrable Securities or at
such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act. The Company
shall request an opinion of counsel promptly upon receipt of a
request therefor from a Purchaser.

6.5           Information
Available. So long as the Registration Statement is
effective covering the resale of Registrable Securities owned by a
Purchaser, the Company will furnish (or, to the extent such
information is available electronically through the Company’s
filings with the SEC, the Company will make available via the
SEC’s EDGAR system or any successor thereto) to each
Purchaser:

(a) as
soon as practicable after it is available, one copy of its Annual
Report on Form 10-K (the foregoing, in each case, excluding
exhibits);

(b) upon
the request of the Purchaser, all exhibits excluded by the
parenthetical to subparagraph (a)(ii) of this Section 6.5 as filed
with the SEC and all other information that is made available to
shareholders; and

 

 

 

(c) upon
the reasonable request of the Purchaser, an adequate number of
copies of the Prospectuses to supply to any other party requiring
such Prospectuses; and the Company, upon the reasonable request of
a Purchaser, will meet with each Purchaser or a representative
thereof at the Company’s headquarters during the
Company’s normal business hours to discuss all information
relevant for disclosure in the Registration Statement covering the
Registrable Securities and will otherwise reasonably cooperate with
the Purchasers conducting an investigation for the purpose of
reducing or eliminating the Purchasers’ exposure to liability
under the Securities Act, including the reasonable production of
information at the Company’s headquarters; provided, that the
Company shall not be required to disclose any confidential
information to or meet at its headquarters with a Purchaser until
and unless that Purchaser shall have entered into a confidentiality
agreement in form and substance reasonably satisfactory to the
Company with the Company with respect thereto.

6.6           Public
Statements; Limitation on Information. The Company shall (A)
by no later than 9:00 a.m. (New York City time) on the fourth
Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the Offering and (B) file
a Current Report on Form 8-K within the time required by and in
accordance with the requirements of the Exchange Act. From and
after the issuance of such press release, the Company represents to
the Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
Offering. Neither the Company nor any Purchaser shall issue any
other press release with respect to the transactions contemplated
hereby nor otherwise make any such public statement without the
prior consent of the Company and the Placement Agent, which
consents in each case shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company will not make any public
disclosure listing a Purchaser as one of the purchasers of the
Securities without that Purchaser’s prior written consent,
except as may be required by applicable law or rules of any
exchange on which the Company’s securities are
listed.

6.7           Protection
of Exemptions. Without limiting the provisions of Section
5.6, the Company will not, for a period of six months following the
Closing Date offer for sale or sell any securities unless, in the
opinion of the Company’s counsel, such offer or sale does not
jeopardize the availability of exemptions from the registration and
qualification requirements under applicable securities laws with
respect to the Offering. Except for the issuance of stock options
under the Company’s stock option plans, the issuance of
common stock upon exercise of outstanding options and warrants, the
issuance of common stock purchase warrants, the issuance of Common
Stock pursuant to the SPA, and the offering contemplated hereby,
the Company has not engaged in any offering of equity securities
during the six months prior to the date of this Agreement. The
foregoing provisions of this Section 6.7 shall not prevent the
Company from filing a “shelf” registration statement
pursuant to Rule 415 under the Securities Act, but the foregoing
provisions shall apply to any sale of securities
thereunder.

6.8           Form D
and State Securities Filings. The Company will file with the
SEC a Notice of Sale of Securities on Form D with respect to
the Securities, as required under Regulation D under the
Securities Act, no later than 15 days after the Closing Date. The
Company will promptly and timely file all documents and pay all
filing fees required by any states’ securities laws in
connection with the sale of Securities.

6.9           Assignment
of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 6 may be
assigned by a Purchaser to a party that acquires, other than
pursuant to the Registration Statement or Rule 144, any of the
Registrable Securities originally issued or issuable to such
Purchaser as contemplated by this Agreement, or to any affiliate of
a Purchaser that acquires any Registrable Securities. Any such
permitted assignee shall have all the rights of such Purchaser
under this Section 6 with respect to the Registrable Securities
transferred during the Effectiveness Period.

6.10           Selling
Shareholder Questionnaire. Each Purchaser agrees to furnish
to the Company a completed questionnaire in the form attached to
this Agreement as Exhibit C (a “Selling Holder Questionnaire”).
The Company shall not be required to include the Registrable
Securities of a Purchaser in a Registration Statement and shall not
be required to pay any liquidated or other damages hereunder to any
such Purchaser who fails to furnish to the Company a fully
completed Selling Holder Questionnaire at least three business days
prior to the filing of the Registration Statement.

 

 

 

7.            

Miscellaneous.

7.1           
Governing Law. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the choice of law
provisions thereof, and the federal laws of the United
States.

7.2           
Successors and Assigns.
Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the
parties hereto. Notwithstanding the foregoing, the Company may not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers that constitute
at least a majority of the Shares then held by the
Purchasers.

7.3           
Entire Agreement. This
Agreement and the exhibits hereto, and the other documents
delivered pursuant hereto, constitute the full and entire
understanding and agreement among the parties with regard to the
subjects hereof and no party shall be liable or bound to any other
party in any manner by any representations, warranties, covenants,
or agreements except as specifically set forth herein or therein.
Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.

7.4           
Severability. In the event
any provision of this Agreement shall be invalid, illegal, or
unenforceable, it shall to the extent practicable, be modified so
as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

7.5           
Amendment and Waiver. Except
as otherwise provided herein, any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period
of time or indefinitely), with the written consent of the Company
and each Purchaser. Any amendment or waiver effected in accordance
with this Section 7.5 shall be binding upon any holder of any
Securities purchased under this Agreement, each future holder of
all such securities, and the Company.

7.6           
Fees and Expenses. Except as
otherwise set forth herein, the Company and the Purchasers shall
bear their own expenses and legal fees incurred on their behalf
with respect to this Agreement and the transactions contemplated
hereby. Each party hereby agrees to indemnify and to hold harmless
of and from any liability the other parties for any commission or
compensation in the nature of a finder’s fee to any broker or
other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which such
indemnifying party or any of its employees or representatives are
responsible.

 

 

 

 

7.7           
Notices. All notices,
requests, consents and other communications hereunder shall be in
writing, shall be delivered (A) if within the United States, by
first-class registered or certified airmail, or nationally
recognized overnight express courier, postage prepaid or by
electronic mail, or (B) if from outside the United States, by
International Federal Express (or comparable service) or by
facsimile or electronic mail, and shall be deemed given (i) if
delivered by first-class registered or certified mail domestic,
upon the business day received, (ii) if delivered by nationally
recognized overnight carrier, one business day after timely
delivery to such carrier, (iii) if delivered by International
Federal Express (or comparable service), two business days after so
mailed, or (iv) if delivered by electronic mail at or prior to 5:30
p.m. (New York City time) on a Trading Day, on the Trading Day so
delivered or, if delivered by facsimile or electronic mail after
5:30 p.m. (New York City time) on a Trading Day or on a day that is
not a Trading Day, the next Trading Day after the date of delivery,
and shall be addressed as follows, or to such other address or
addresses as may have been furnished in writing by a party to
another party pursuant to this paragraph:

●

if to the Company,
to the address of the Company’s principal office set forth on
the first page of this Agreement, Attention: Secretary and
Treasurer, e-mail: pturits@fusionconnect.com with a copy to (which
shall not constitute notice to the Company) Kelley Drye &
Warren LLP, 101 Park Avenue, New York, New York 10178, Attention: Carol Weiss Sherman, e-mail:
csherman@kelleydrye.com and

●

if to the
Purchaser, at its address on the signature page to this
Agreement.

7.8           
Survival of Representations,
Warranties and Agreements. Notwithstanding any investigation
made by any party to this Agreement or by the Placement Agent, all
covenants, agreements, representations and warranties made by the
Company and the Purchasers herein shall survive the execution of
this Agreement, the delivery to the Purchasers of the Securities
being purchased and the payment therefor, and a party’s
reliance on such representations and warranties shall not be
affected by any investigation made by such party or any information
developed thereby.

7.9           
Counterparts. This Agreement
may be executed by pdf signature and in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one instrument.

7.10         
Headings. The headings
herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

 

 

7.11           
Independent Nature of
Purchasers’ Obligations and Rights. The obligations of
each Purchaser under this Agreement are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of
any other Purchaser under this Agreement. Nothing contained herein,
and no action taken by any Purchaser pursuant hereto, shall be
deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create
a presumption that the Purchasers are in any way acting in concert
or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser confirms that it has
independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and
advisors. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights
arising out of this Agreement, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any
proceeding for such purpose. It is expressly understood and agreed
that each provision contained in this Agreement is between the
Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.

 

[The Remainder of this Page is
Blank; Signature Pages Follow]

 

 

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

FUSION
TELECOMMUNICATIONS INTERNATIONAL, INC.

 

 

By:
/s/ Gordon Hutchins,
Jr.

Name:                      

Gordon Hutchins,
Jr.Title:President and Chief Operating Officer

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Mill Road Capital II, L.P.

 (Name of
Investor)

 

 

By:
/s/ Justin C.
Jacob

Name:
Justin C. Jacob

Title:
Managing Director

 

 

Investment Amount
(# shares): 826,087

Investment Amount
($ @ $1.15 share): $950,000

Tax
Identification No.:

Jurisdiction of
Organization: Delaware

Jurisdiction of
Principal Place of Operations: CT

 

Address
for Notice: 382 Greenwich Avenue, Greenwich, CT

 06830

 

Attention: Linda
Hanager

Telephone:

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Technology Opportunity Partners, LP

(Name of
Investor)

 

 

By:
/s/ Steve L.
Fingerhead

Name:
Steve L. Fingerhead

Title:
Managing Partner

 

 

Investment Amount
(# shares): 434,783

Investment Amount
($ @ $1.15 share): $500,000

Tax
Identification No.:

Jurisdiction of
Organization: Delaware

Jurisdiction of
Principal Place of Operations: California

Address
for Notice: One Ferry Building, Suite 255, San

Francisco, CA
94111

Attention: Daniel
Still

Telephone:
415-677-5962

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Kevin Harris

(Name of
Investor)

 

 

By:
/s/ Kevin
Harris

Name:
Kevin Harris

Title:

 

Investment Amount
(# shares): 28,986

Investment Amount
($ @ $1.15 share):$33,333.33

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: c/o Craig Hallum, 222 S. 9th Street,
Suite

350,
Minneapolis, MN 55402

Attention: MaryAnn
Borgerding

Telephone:
612-334-6346

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

William F. Hartfiel
III                                                      

(Name of
Investor)

 

 

By:
/s/ William F. Hartfiel
III

Name:
William F. Hartfiel III

Title:

 

Investment Amount
(# shares): 28,986

Investment Amount
($ @ $1.15 share):$33,333.33

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

Address
for Notice: c/o Craig Hallum, 222 S. 9th Street,
Suite

350,
Minneapolis, MN 55402

Attention: MaryAnn
Borgerding

Telephone:
612-334-6346

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Henry Alfaro

(Name of
Investor)

 

 

By: /s/ Henry Alfaro

Name:
Henry Alfaro

Title:

 

 

Investment Amount
(# shares): 28,986

Investment Amount
($ @ $1.15 share): $33,333.33

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: PO Box 2045, Orinda CA 94563

Attention: Henry
Alfaro

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Paul C. O’Brien

(Name of
Investor)

 

 

By:
/s/ Paul C.
O’Brien

Name:
Paul C. O’Brien

Title:

 

 

Investment Amount
(# shares): 86,957

Investment Amount
($ @ $1.15 share):$100,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: 1021 Avalon Way, Diymouth, MA 02360

Attention: Paul C.
O’Brien

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Jolyon F. Stern

(Name of
Investor)

 

 

By:
/s/ Jolyon F.
Stern

Name:
Jolyon F. Stern

Title:

 

Investment Amount
(# shares): 173,913

Investment Amount
($ @ $1.15 share): $200,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice:

 

 

Attention:

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Peter A. Ferentinos

(Name of
Investor)

 

 

By:
/s/ Peter A
Ferentinos

Name:
Peter A Ferentinos

Title:

 

 

Investment Amount
(# shares): 86,957

Investment Amount
($ @ $1.15 share): $100,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice:

 

 

Attention:

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Alan
Brumberger

(Name of
Investor)

 

 

By:
/s/ Alan
Brumberger

Name:
Alan Brumberger

Title:

 

Investment Amount
(# shares): 86,957

Investment Amount
($ @ $1.15 share): $100,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: 189 E. Mountain Drive, Montecita, CA

 93108

 

Attention:

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Marvin Rosen

(Name of
Investor)

 

 

By:
/s/ Marvin
Rosen

Name:
Marvin Rosen

Title:

 

 

Investment Amount
(# shares): 195,652

Investment Amount
($ @ $1.15 share): $225,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: Fusion Telecommunications, 420

Lexington Avenue,
Suite 1718, New

 York, New
York 10170

 

Attention: Marvin
Rosen

Telephone:

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock
Purchase Agreement is hereby executed as of the date first above
written.

 

 

 

Matthew Rosen

(Name of
Investor)

 

 

By:
/s/ Matthew
Rosen

Name:
Matthew Rosen

Title:

 

 

Investment Amount
(# shares): 21,739

Investment Amount
($ @ $1.15 share): $25,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: Fusion Telecommunications, 420

Lexington Avenue,
Suite 1718, New

 York, New
York 10170

 

Attention: Matthew
Rosen

 

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

DV-FT Holdings, LLC

(Name of
Investor)

 

 

By:
Marc B.
Davis

Name:
Marc B. Davis

Title:
Manager

 

 

Investment Amount
(# shares): 86,957

Investment Amount
($ @ $1.15 share): $100,000

Tax
Identification No.:

Jurisdiction of
Organization: Nevada

Jurisdiction of
Principal Place of Operations: Florida

 

Address
for Notice: PO Box 845, Jupiter, FL 33468

 

Attention: Mark B.
Davis

Telephone:
305-987-1501

 

E-mail:
mark@dvcdglobal.com

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Michael DelGiudice

(Name of
Investor)

 

 

By:
/s/ Michael
DelGiudice

Name:
Michael DelGiudice

Title:

 

Investment Amount
(# shares): 21,739

Investment Amount
($ @ $1.15 share): $25,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: 176 Milan Hill Road, Milan NY 12571

 

 

Attention:

Telephone:

 

E-mail:
mdelgiudice@mcmglobal.com

 

Delivery
Instructions (if different from above):

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Ronald Shapo

(Name of
Investor)

 

 

By:
/s/ Ronald A
Shapo

Name:
Ronald A Shapo

Title:

 

Investment Amount
(# shares): 21,739

Investment Amount
($ @ $1.15 share): $25,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice:

 

 

Attention:

Telephone:

 

E-mail:
Ronald.shapo@hklaw.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Bernard J. Korman

(Name of
Investor)

 

 

By:
/s/ Bernard J.
Korman

Name:
Bernard J. Korman

Title:

 

 

Investment Amount
(# shares): 21,739

Investment Amount
($ @ $1.15 share):$25,000

Tax
Identification No.:

Jurisdiction of
Organization

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: 2101 Market Street, Suite 1001,

Philadelphia, PA
19103

 

 

Attention:

Telephone:

 

E-mail:
bkorman683@aol.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Dennis J. Block

(Name of
Investor)

 

 

By:
/s/ Dennis J.
Block

Name:
Dennis J. Block

Title:

 

 

 

Investment Amount
(# shares): 130,435

Investment Amount
($ @ $1.15 share): $150,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: Greenberg Traurig LLP, 200 Park

 Avenue, NY,
NY 10016

 

 

Attention: Dennis
J. Block

Telephone:
212-801-2222

 

E-mail:
blockd@gtlaw.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Philip Turits

(Name of
Investor)

 

 

By:
/s/ Philip
Turits

Name:
Philip Turits

Title:

 

 

Investment Amount
(# shares): 4,348

Investment Amount
($ @ $1.15 share): $5,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

 

Address
for Notice: Fusion Telecommunications, 420

Lexington Avenue,
Suite 1718, NY, NY 10170

 

 

Attention: Philip
Turits

Telephone:
212-201-2407

 

E-mail:
pturits@fusionconnect.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Barry Volpert

(Name of
Investor)

 

 

By:
/s/ Barry
Volpert

Name:
Barry Volpert

Title:

 

 

Investment Amount
(# shares): 60,000

Investment Amount
($ @ $1.15 share): $69,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

 

Address
for Notice: c/o Crestview Partners, 667 Madison Avenue, NY, NY
10065

 

Attention: Barry
Volpert

Telephone:
212-906-0701

 

E-mail:
bvolpert@crestview.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Thomas Murphy

(Name of
Investor)

 

 

By:
/s/ Thomas
Murphy

Name:
Thomas Murphy

Title:

 

 

Investment Amount
(# shares): 45,000

Investment Amount
($ @ $1.15 share): $51,750

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

Address
for Notice: c/o Crestview Partners, 667 Madison

Avenue,
10th
Floor, NY, NY 10065

 

 

Attention: Thomas
Murphy

Telephone:
212-906-0777

 

E-mail: tmurphy@crestview.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

Francine M Blum Revocable
Trust

(Name of
Investor)

 

 

By:
/s/ Francine M. Blum, as
Trustee

Name:
Francine M.
Blum

Title:

 

 

 

Investment Amount
(# shares): 13,044

Investment Amount
($ @ $1.15 share): $15,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

 

Address
for Notice: 3235 Treasure Trove, Miami, FL 33133

 

 

Attention: Francine
M Blum

Telephone:

 

E-mail:
larryblum@gmail.com

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

William D. Rubin

(Name of
Investor)

 

 

By:
/s/ William D.
Rubin

Name:
William D. Rubin

Title:

 

Investment Amount
(# shares): 4,348

Investment Amount
($ @ $1.15 share): $5,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

 

Address
for Notice:

 

 

Attention:

Telephone:

 

E-mail:

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

In
witness whereof, the foregoing Common Stock Purchase Agreement is
hereby executed as of the date first above written.

 

 

 

David S. Flecker

(Name of
Investor)

 

 

By:
/s/ David S.
Flecker

Name:
David S. Flecker

Title:

 

 

 

Investment Amount
(# shares): 21,739

Investment Amount
($ @ $1.15 share): $25,000

Tax
Identification No.:

Jurisdiction of
Organization:

Jurisdiction of
Principal Place of Operations:

 

 

Address
for Notice: 6 Brookwood Drive, Wesr Caldwell, NJ

07006

 

 

 

Attention:

Telephone:

 

E-mail:
dflecker@comcast.net

 

Delivery
Instructions (if different from above):

 

 

 

Attention:

Telephone:

 

 

 

 

EXHIBIT A

 

SCHEDULE OF PURCHASERS

 

 

	

Purchaser

	

Common

Shares

	

Aggregate Purchase Price

	

Jurisdiction of Organization

	

Jurisdiction of Principal Place of Operations

	

Mill
Road Capital II, L.P.

	

826,087

	

$950,000.00

	

DE

	

CT

	

Technology
Opportunity Partners, LP

	

434,783

	

$500,000.00

	

DE

	

CA

	

Kevin
Harris

	

28,986

	

$33,333.33

	

N/A

	

MN

	

William
F. Hartfiel III

	

28,986

	

$33,333.33

	

N/A

	

MN

	

Henry
Alfaro

	

28,986

	

$33,333.33

	

N/A

	

CA

	

Paul C.
O’Brien

	

86,957

	

$100,000.00

	

N/A

	

MA

	

Jolyon
F. Stern

	

173,913

	

$200,000.00

	

N/A

	

NY

	

Peter
A. Ferentinos

	

86,957

	

$100,000.00

	

N/A

	

NY

	

Alan
Brumberger

	

86,957

	

$100,000.00

	

N/A

	

CA

	

Marvin
Rosen

	

195,652

	

$225,000.00

	

N/A

	

NY

	

Matthew
Rosen

	

21,739

	

$25,000.00

	

N/A

	

NY

	

DV-FT
Holdings, LLC

	

86,957

	

$100,000.00

	

NV

	

FL

	

Michael
DelGiudice

	

21,739

	

$25,000.00

	

N/A

	

NY

	

Ronald
Shapo

	

21,739

	

$25,000.00

	

N/A

	

FL

	

Bernard
J. Korman

	

21,739

	

$25,000.00

	

N/A

	

PA

	

Dennis
J. Block

	

130,435

	

$150,000.00

	

N/A

	

NY

	

Philip
Turits

	

4,348

	

$5,000.00

	

N/A

	

NY

	

Barry
Volpert

	

60,000

	

$69,000

	

N/A

	

NY

	

Thomas
Murphy

	

45,000

	

$51,750

	

N/A

	

CT

	

Francine
M Blum Revocable Trust

	

13,044

	

$15,000

	

N/A

	

FL

	

William
Rubin

	

4,348

	

$5,000

	

N/A

	

FL

	

David
Flecker

	

21,739

	

$25,000

	

N/A

	

NJ

 

 

 

 

EXHIBIT B

 

FORM OF OPINION OF COMPANY COUNSEL

 

[Capitalized terms shall have the meanings ascribed thereto in the
Common Stock Purchase Agreement]

1. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.

2. The
Company has all necessary corporate power and authority to (i)
execute and deliver, and to perform its obligations under the
Agreement and (ii) conduct its business as it is, to our knowledge,
currently conducted and described in the Company SEC Documents, and
own, lease and license it properties and assets.

3. The
Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction listed on Schedule 1
hereto.

4. The
execution, delivery and performance by the Company of the Agreement
and the consummation of the transactions contemplated thereby
including the issuance of the Securities have been duly authorized
by all necessary corporate action of the Company.

5. The
Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its
terms.

6. Except
for filings, authorizations or approvals contemplated by the
Agreement, no authorizations or approvals of, and no filings with,
any governmental or administrative agency, regulatory authority,
stock market or trading facility are necessary or required by the
Company for the execution and delivery of the Agreement or the
consummation of the transactions contemplated thereby.

7. Neither
the execution and delivery of the Agreement by the Company, nor the
consummation or performance by the Company of any of the
transactions contemplated by the Agreement (including the issuance
of the Securities) (i) result in a violation of any provisions of
the Company’s certificate of incorporation or bylaws; (ii) to
our knowledge, constitute a violation of any U.S. federal or state
law, rule or regulation applicable to the Company; or (iii) to our
knowledge, violate any judgment, decree, order or award of any
court, governmental body or arbitrator specifically naming the
Company.

8. The
authorized capital stock of the Company on the date hereof consists
of 90,000,000 shares of common stock and 10,000,000 shares of
preferred stock. The form of certificates for the Shares conforms
to the requirements of the Delaware General Corporation
Law.

9. To
our knowledge, except as provided or disclosed in the Agreement on
in the Company SEC Documents, no person or entity is entitled to
any preemptive, right of first refusal, contractual or similar
rights with respect to the issuance of the Shares.

10. The
Shares have been duly authorized or reserved for issuance by all
necessary corporate action on the part of the Company; and the
Shares, when issued, sold and delivered against payment therefor in
accordance with the provisions of the Agreement will be duly and
validly issued, fully paid and non-assessable. The holders of the
Shares will not be subject to personal liability by reason of being
such holders.

11. Based
in part on the representations contained in Section 3 of the
Agreement, the offer and sale of the Shares as contemplated under
the Agreement are exempt from registration under the Securities Act
of 1933, as amended (the “Act”) [and from registration
and qualification under the securities law of the States of
[●]].

12. We
are not aware of any actions, suits, arbitrations, claims,
proceedings or investigations pending or threatened against the
Company or any of its subsidiaries or any of their respective
operations, businesses, properties or assets by or before any
court, arbitrator or government or regulatory commission, board,
body, authority or agency that challenges the validity of any
actions take or to be taken by the Company pursuant to the
Agreement or the transaction contemplated thereby.

13. To
our knowledge, except as set forth in the Purchase Agreement, no
holders of the Company’s securities have rights to the
registration of shares of Common Stock or other securities of the
Company because of the filing of the Registration Statement or the
Offering, except as set forth in the Company SEC
Documents.

14. The
Company is not, and immediately after giving effect to the sale of
the Securities in accordance with the Purchase Agreement, and the
application of the proceeds for working capital, will not be
required to be, registered as an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.

 

 

 

 

EXHIBIT C

 

SELLING SHAREHOLDER QUESTIONNAIRE

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

 

Questionnaire for Selling Shareholder

 

This
questionnaire is necessary to obtain information to be used by
Fusion Telecommunications International, Inc. (the
“Company”) to
complete a Registration Statement (the “Registration Statement”) covering
the resale of certain shares of Company Common Stock currently
outstanding and/or of certain shares of Company Common Stock to be
issued upon exercise of currently outstanding warrants to purchase
Company Common Stock. Please complete and return this questionnaire
to Kelley, Drye & Warren LLP, the Company’s legal
counsel, to the attention of Carol
Weiss Sherman either by mail to 101 Park Avenue, New York,
New York 10178 or by fax to (212) 808-7897 or by email to
csherman@kelleydrye.com. Please return the questionnaire
by [●], or sooner, if
possible. Call Carol Weiss Sherman at 212-808-5038 with
questions.

 

FAILURE
TO RETURN THE QUESTIONNAIRE MAY RESULT IN THE EXCLUSION OF YOUR
NAME AND SHARES FROM THE REGISTRATION STATEMENT.

 

Please
answer all questions. If
the answer to any question is “None” or “Not
Applicable,” please so state.

 

If
there is any question about which you have any doubt, please set
forth the relevant facts in your answer.

 

1. 

Please correct your
name and/or
address if not
correct below

 

Name:                      

 

 

Address:                      

 

 

 

 

 

 

 

 

 

 

 

2. 

Please state the
total number of
currently outstanding shares of Company Common Stock that you
beneficially own* and the form of ownership and the date that you
acquired such stock. Include shares registered in your name
individually or jointly with others and shares held in the name of
a bank, broker, nominee, depository or in “street name”
for your account. (DO NOT list options, warrants or other
derivative securities. See Question #3).

 

3. 

Please list any
outstanding options and warrants to purchase Company Common Stock
or other derivative securities to acquire Company Common Stock that
you beneficially own*, including (i) the number of shares of
Company Common Stock to be issued upon the exercise of such option
or warrant, (ii) the date such option or warrant is exercisable,
(iii) the expiration date and (iv) the exercise price per share of
EACH such option and warrant.

 

	

Number of Shares Covered by Option or Warrant

	

Date Exercisable

	

Exercise Price

	

Expiration Date

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

4. 

Please list the
number of shares of Common Stock listed under Question #2 above
that you wish to include in the Registration
Statement.

 

 

 

 

 

5. 

Please list the
number of shares of Common Stock underlying warrants (to the extent
such shares constitute Registrable Securities) listed under
Question #3 above that, upon exercise of such warrants, you wish to
include in the Registration Statement.

 

6. 

If you are a
limited liability company or limited partnership, please name the
managing member or general partner and each person controlling such
managing member or general partner.

 

7. 

If you are an
entity, please identify the natural person(s) who exercises sole or
shared voting power* and/or sole or shared investment power* with
regard to the shares listed under Question #2 and Question
#3.

 

8. 

Please advise
whether you are a registered broker-dealer or an affiliate*
thereof. If you are an affiliate of a registered broker-dealer,
please explain the nature of the affiliation and disclose whether
you acquired the shares in the ordinary course of business and
whether at the time of the acquisition you had any plans or
proposals, directly or with any other person, to distribute the
shares listed under Question #2 and Question #3.

 

 

9. 

List below the
nature of any position, office or other material relationship that
you have, or have had within the past three years, with the Company
or any of its predecessors or affiliates*.

_________________

*See Appendix A for
definitions  

 

10. 

If you expressly
wish to disclaim any beneficial ownership* of any shares listed
under Question #2 for any reason in the Registration Statement,
indicate below the shares and circumstances for disclaiming such
beneficial ownership*.

 

11. 

With respect to the
shares that you wish to include in the Registration Statement,
please list any party that has or may have secured a lien, security
interest or any other claim relating to such shares, and please
give a full description of such claims.

 

12. 

Please review
Appendix B “Plan of Distribution.” Please identify and
describe any method of distribution, other than described in
Appendix B, that you plan on using to sell your shares of the
Company’s Common Stock. By signing below you agree to
distribute your shares of the Company’s Common Stock as
described in Appendix B and this Item 11 and to notify the
Company of any plan to distribute the Company’s Common Stock
that is not described in Appendix B or herein under Item
11.

 

The
undersigned, a Selling Shareholder of the Company, hereby furnishes
the foregoing information for use by the Company in connection with
the preparation of the Registration Statement. The undersigned will
notify [●], at the address specified above, in writing
immediately of any changes in the foregoing answers that should be
made as a result of any developments occurring prior to the time
that all the shares of Common Stock of the Company are sold
pursuant to the Registration Statement referred to above.
Otherwise, the Company is to understand that the above information
continues to be, to the best of the undersigned’s knowledge,
information and belief, complete and correct.

 

 

Dated:
___________ __, 20___

 

 

 

 

 

 

By:                                                                

Name: 

Its:                                                                

 

_________________

*See Appendix A for
definitions 

 

APPENDIX A

To Exhibit C

CERTAIN TERMS USED IN QUESTIONNAIRE

 

AFFILIATE

An
“affiliate” of
a company is a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under
common control with, such company.

 

BENEFICIAL OWNERSHIP

A
person “beneficially
owns” a security if such person, directly or
indirectly, has or shares voting power or investment power of such
security, whether through a contract, arrangement, understanding,
relationship or otherwise. A person is also the beneficial owner of
a security if he has the right to acquire beneficial ownership at
any time within 60 days through the exercise of any option, warrant
or right, or the power to revoke a trust, discretionary account or
similar arrangement.

 

INVESTMENT POWER

“Investment power” includes the
power to dispose, or to direct the disposition of, a
security.

 

VOTING POWER

“Voting power” includes the power
to vote, or to direct the voting of, a security.

 

 

 

APPENDIX B

To Exhibit C

PLAN
OF DISTRIBUTION

15. We
are registering for resale by the selling shareholders and certain
transferees a total of _________ shares of common stock, of which
_______ shares are issued and outstanding. We will not receive any
of the proceeds from the sale by the selling shareholders of the
shares of common stock. We will bear all fees and expenses incident
to our obligation to register the shares of common stock. If the
shares of common stock are sold through broker-dealers or agents,
the selling shareholder will be responsible for any compensation to
such broker-dealers or agents.

16. The
selling shareholders may pledge or grant a security interest in
some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common
stock from time to time pursuant to this prospectus.

17. The
selling shareholders also may transfer and donate the shares of
common stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this
prospectus.

18. The
selling shareholders will sell their shares of common stock subject
to the following:

●

all of a portion of
the shares of common stock beneficially owned by the selling
shareholders or their perspective pledgees, donees, transferees or
successors in interest, may be sold on the OTC Bulletin Board
Market, any national securities exchange or quotation service on
which the shares of our common stock may be listed or quoted at the
time of sale, in the over-the counter market, in privately
negotiated transactions, through the writing of options, whether
such options are listed on an options exchange or otherwise, short
sales or in a combination of such transactions;

●

each sale may be
made at market price prevailing at the time of such sale, at
negotiated prices, at fixed prices or at carrying prices determined
at the time of sale;

●

some or all of the
shares of common stock may be sold through one or more
broker-dealers or agents and may involve crosses, block
transactions or hedging transactions. The selling shareholders may
enter into hedging transactions with broker-dealers or agents,
which may in turn engage in short sales of the common stock in the
course of hedging in positions they assume. The selling
shareholders may also sell shares of common stock short and deliver
shares of common stock to close out short positions or loan or
pledge shares of common stock to broker-dealers or agents that in
turn may sell such shares;

●

in connection with
such sales through one or more broker-dealers or agents, such
broker-dealers or agents may receive compensation in the form of
discounts, concessions or commissions from the selling shareholders
and may receive commissions from the purchasers of the shares of
common stock for whom they act as broker-dealer or agent or to whom
they sell as principal (which discounts, concessions or commissions
as to particular broker-dealers or agents may be in excess of those
customary in the types of transaction involved). Any broker-dealer
or agent participating in any such sale may be deemed to be an
“underwriter” within the meaning of the Securities Act
and will be required to deliver a copy of this prospectus to any
person who purchases any share of common stock from or through such
broker-dealer or agent. We have been advised that, as of the date
hereof, none of the selling shareholders have made any arrangements
with any broker-dealer or agent for the sale of their shares of
common stock; and

●

in connection with any other sales or transfers of common stock not
prohibited by law.

19. The
selling shareholder and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be
“underwriters” within the meaning of the Securities
Act, and any profits realized by the selling shareholders and any
commissions paid, or any discounts or concessions allowed to any
such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act. In addition, any shares of
common stock covered by this prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this prospectus. A selling shareholder may also
transfer, devise or gift the shares of common stock by other means
not covered in this prospectus in which case the transferee,
devisee or giftee will be the selling shareholder under this
prospectus.

20. If
required at the time a particular offering of the shares of common
stock is made, a prospectus supplement or, if appropriate, a
post-effective amendment to the shelf registration statements of
which this prospectus is a part, will be distributed which will set
forth the aggregate amount of shares of common stock being offered
and the terms of the offering, including the name or names of any
broker-deals or agents, any discounts, commissions or concessions
allowed or reallowed or paid to broker-dealers.

21. Under
the securities laws of some states, the shares of common stock may
be sold in such states only through registered or licensed brokers
or dealers. In addition, in some states the shares of common stock
may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration
or qualification is available and is complied with. There can be no
assurance that any selling shareholder will sell any or all of the
shares of common stock registered pursuant to the shelf
registration statement, of which this prospectus forms a
part.

22. The
selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may
limit the timing of purchases and sales of any of the shares of
common stock by the selling shareholders and any other
participating person. Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the
shares of common stock. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect
to the shares of common stock.

We will
bear all expenses of the registration of the shares of common stock
including, without limitation, Securities and Exchange Commission
filing fees and expenses of compliance with the state securities of
“blue sky” laws. The selling shareholders will pay all
underwriting discounts and selling commissions and expenses,
brokerage fees and transfer taxes, as well as the fees and
disbursements of counsel to and experts for the selling
shareholders, if any. We will indemnify the selling shareholders
against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights
agreement or the selling shareholder will be entitled to
contribution. We will be indemnified by the selling shareholders
against civil liabilities, including liabilities under the
Securities Act that may arise from any written information
furnished to us by the selling shareholders for use in this
prospectus, in accordance with the related securities purchase
agreement or will be entitled to contribution. Once sold under this
shelf registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the
hands of persons other than our affiliates.

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