Document:

Form of Warrant

 Exhibit 4.1 
 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. 
 THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON
            , 2018 (the “EXPIRATION DATE”). 
 No. 2008-[    ] 
 VERTICAL COMMUNICATIONS, INC. 
 WARRANT TO PURCHASE SHARES OF COMMON STOCK 
 FOR VALUE RECEIVED,                      (“Warrantholder”), is entitled to purchase, subject to the provisions of
this Warrant To Purchase Shares of Common Stock (the “Warrant”), from Vertical Communications, Inc., a Delaware corporation (“Company”), at any time not later than 5:00 P.M., Eastern time, on the Expiration Date (as
defined above), at an initial exercise price per share equal to $0.01 (such price and such other price as shall result, from time to time, from the adjustments specified in Section 8 hereof is herein referred to as the “Warrant
Price”),                      (such number and such other number as shall result, from time to time, from the adjustments specified
in Section 8 hereof is herein referred to as the “Warrant Shares”) of Common Stock (as defined below). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time as described herein. As used herein, “Common Stock” means the common stock, $0.01 par value per share, of the Company, and any capital stock of any class of the Company hereafter authorized that shall
not be entitled to a fixed sum in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company. This Warrant is one
of the several warrants (collectively, the “2008 Warrants”) evidencing the right to purchase shares of Common Stock issued pursuant to (i) that certain Securities Purchase Agreement dated as of March 12, 2008 by and among
the Company, the Warrantholder and the other parties thereto (as such agreement is amended and/or restated and in effect from time to time, the “2008 Purchase Agreement”); and (ii) those certain subordinated convertible
promissory notes issued pursuant to the 2008 Purchase Agreement (the “2008 Notes”). 
  

	1.	Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of the Warrant, the Company shall issue and
register the Warrant in the name of the Warrantholder. 

  

	2.	Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended
(“Securities Act”), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender
thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company to establish that such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. 

	3.	Exercise of Warrant. 

  

	 	(a)	Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the “Exercise Agreement”) and payment by cash, certified check or wire transfer of funds (or by cash-less exercise as provided in Section 17) for
the Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof). The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder’s designee, as the record owner of such shares, as of the close of business on the date on which this
Warrant shall have been surrendered (or evidence of loss, theft or destruction thereof and security or indemnity reasonably satisfactory to the Company), the Warrant Price shall have been paid, the completed Exercise Agreement shall have been
delivered and, in the case of any transfer of Warrant Shares effected at the time of such exercise, an appropriately executed stock power and a certificate containing such reasonable and appropriate customary representations as may be reasonably
requested by the Company shall have been delivered to the Company. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name
of such holder or, subject to compliance with applicable law, such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at
the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. 

  

	 	(b)	Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties contained in Sections 5.2, 5.3 and 5.4 of the 2008 Purchase
Agreement are true and correct in all material respects with respect to the Warrantholder as of the time of such exercise. 

  

	4.	Compliance with the Securities Act. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any
security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. 

  

	5.	Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of
the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid
to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The holder shall be responsible for income and gift taxes due under federal, state or other law, if any such tax is
due. 

  

	6.	 Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of
and upon cancellation of the mutilated 

  

 Warrant – Page 2 

	 	 
Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of
Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto,
if requested by the Company. 

  

	7.	Reservation of Common Stock. The Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the
authorized and unissued Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by the Warrant in compliance with its terms. The Company agrees that all Warrant Shares issued upon exercise of the Warrant
shall be, at the time of delivery of the certificates for such Warrant Shares upon payment in full of the Warrant Price therefor in accordance with the terms of this Warrant (or by cash-less exercise as provided below), duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company. 

  

	8.	Adjustments to Warrant Price and Warrant Shares. Subject and pursuant to the provisions of this Section 8, the Warrant Price and number of Warrant Shares subject
to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. 

  

	 	(a)	In the event the Company shall at any time after the Original Issue Date (as defined below) issue Additional Shares of Common Stock (defined below) (including Additional Shares of
Common Stock deemed to be issued), without consideration or for a consideration per share less than the applicable Warrant Price in effect immediately prior to such issuance, then the Warrant Price shall be reduced, concurrently with such issuance,
to the consideration per share received by the Company for such issuance or deemed issuance of the Additional Shares of Common Stock; provided that, if such issuance or deemed issuance was without consideration, then the Company shall
be deemed to have received an aggregate of $0.001 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued. Notwithstanding anything to the contrary set forth in this Warrant, if the Company shall issue any
Options and/or Convertible Securities, or otherwise agrees to issue any Options and/or Convertible Securities, then the Company shall be deemed to have issued Additional Shares of Common Stock and the applicable provisions of this
Section 8 shall apply to such issuance or deemed issuance. 

  

	 	(b)	Determination of Consideration. For purposes of this Section 8, the consideration received by the Company for the issue of any Additional Shares of Common Stock
shall be computed as follows: 

  

	 	(i)	Cash and Property: Such consideration shall: 

  

	 	(1)	insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest;

  

	 	(2)	insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors;
and 

  

	 	(3)	 in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for 

  

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consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors. 

  

	 	(ii)	Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued, relating to Options
and Convertible Securities, shall be determined by dividing: 

  

	 	(1)	the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

  

	 	(2)	the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options and Convertible Securities and the conversion or
exchange of such Convertible Securities. 

  

	 	(c)	Multiple Closing Dates. In the event the Company shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related
transactions and that would result in an adjustment to the Warrant Price pursuant to the terms of Section 8(a) above, and such issuance dates occur within a period of no more than 30 days from the first such issuance to the final such
issuance, then, upon the final such issuance, the Warrant Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result
of any such subsequent issuances within such period). 

  

	 	(d)	Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding
Common Stock, the Warrant Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable upon exercise of the Warrant shall be increased in proportion to such increase in
the aggregate number of shares of Common Stock outstanding. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Warrant Price in effect immediately before the
combination shall be proportionately increased so that the number of shares of Common Stock issuable upon exercise of the Warrant shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any
adjustment under this Section 8(d) shall become effective at the close of business on the date the subdivision or combination becomes effective. 

  

 Warrant – Page 4 

	 	(e)	Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Warrant Price in effect immediately
before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Warrant Price then in effect by a fraction:

  

	 	(i)	the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such
record date, and 

  

	 	(ii)	the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; 

 provided,
however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Warrant Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Warrant Price shall be adjusted pursuant to this Section 8(e) as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment
shall be made if the Warrantholder simultaneously receives a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as the Warrantholder would have received if the Warrant had been
exercised on the date of such event. 
  

	 	(f)	Adjustments for Other Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of shares of Common Stock in respect of outstanding shares of Common
Stock) or in other property, then and in each such event the Warrantholder shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal
to the amount of such securities or other property as the Warrantholder would have received if the Warrant had been exercised on the date of such event. 

  

	 	(g)	 Adjustment for Merger or Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving
the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Sections 8(d), 5(e) or 5(f), then, following any such reorganization,
recapitalization, reclassification, consolidation or merger, this Warrant shall thereafter be exercisable in lieu of the Common Stock into which it was exercisable prior to such event into the kind and amount of securities, cash or other property
which a holder of shares of Common Stock of the Company immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 8, to the end that the provisions set forth in 

  

 Warrant – Page 5 

	 	 
this Section 8 (including provisions with respect to changes in and other adjustments of the Warrant Price) shall thereafter be applicable, as
nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise thereof. 

  

	 	(h)	Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Warrant Price pursuant to this Section 8, the Company at its expense
shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Warrantholder a certificate setting forth such adjustment
or readjustment (including the kind and amount of securities, cash or other property into which the Warrant is exercisable) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at any time of the Warrantholder (but in any event not later than 10 days thereafter), furnish or cause to be furnished to the Warrantholder a certificate setting forth (i) the Warrant Price then
in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the exercise of this Warrant. 

  

	 	(i)	Notice of Record Date. In the event: 

  

	 	(i)	the Company shall take a record of the holders of its Common Stock for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any
right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or 

  

	 	(ii)	of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, or any liquidation of the Company; or 

  

	 	(iii)	of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, 

 then, and in each such case, the Company will send or cause to be sent to the Warrantholder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount
and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Common Stock. Such notice shall be sent at least 20 days prior to the record date or
effective date for the event specified in such notice. Any notice required by the provisions hereof to be given to the Warrantholder shall be deemed sent to the Warrantholder if deposited in the United States mail, postage prepaid, and addressed to
the Warrantholder at his, her or its address appearing on the books of the Company. 
  

	 	(j)	The following terms shall have the following meanings: 

  

 Warrant – Page 6 

	 	(i)	“Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to the terms of this Section 8, deemed to be issued) by
the Company after the Original Issue Date, other than the following shares of Common Stock, and shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities: 

  

	 	(1)	shares of Common Stock, Options or Convertible Securities issued or deemed issued as a dividend, stock split, split-up or other distribution on shares of Common Stock that is
covered by this Section 8; 

  

	 	(2)	up to an aggregate of 80,000,000 shares of Common Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combinations or other similar
recapitalization affecting such shares), including Options therefor, authorized under the Company’s various stock option plans in effect as of the Original Issue Date, of which no shares of Common Stock have been issued as restricted stock as
of the Original Issue Date or are issuable upon the exercise of Options outstanding as of the Original Issue Date and 80,000,000 shares of Common Stock are issuable to employees, consultants or directors pursuant to stock option, stock grant, stock
purchase or similar plans or arrangements approved by the Board of Directors or a committee thereof; 

  

	 	(3)	shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of
Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security; 

  

	 	(4)	the issuance of the Warrants contemplated in that certain Credit Agreement dated as of October 18, 2006, by and among the Company, Vertical Communications Acquisition Corp., a
Delaware corporation, Columbia Partners, L.L.C. Investment Management, and National Elevator Industry Pension Fund and the shares of Common Stock issued or issuable upon the exercise thereof; and 

  

	 	(5)	the securities issued or issuable pursuant to the 2008 Purchase Agreement, the 2008 Notes, the shares of the Company’s preferred stock issued or issuable upon conversion of the
2008 Notes, the shares of Common Stock issued or issuable upon conversion of such shares of preferred stock, the issuance of the warrants contemplated by Section 5(a) of the 2008 Notes and the shares of Common Stock issued or issuable upon
exercise of such warrants. 

  

	 	(ii)	“Convertible Securities” shall mean any evidences of indebtedness, shares of capital stock or other securities directly or indirectly convertible into or
exchangeable for Common Stock, but excluding Options. 

  

	 	(iii)	“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire shares of Common Stock or Convertible Securities.

  

	 	(iv)	“Original Issue Date” shall mean March 12, 2008. 

  

 Warrant – Page 7 

	9.	Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of the Warrant. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this Section 9, be delivered upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising holder of this Warrant an amount in cash equal to
the current Market Price of such fractional share of Common Stock. 

  

	10.	Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right,
remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. 

  

	11.	Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price or the number of Warrant Shares, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. 

  

	12.	Identity of Transfer Agent. The Transfer Agent for the Common Stock is ComputerShare Investor Services. Upon the appointment of any subsequent transfer agent for the Common
Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer
agent. 

  

	13.	Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by an internationally recognized overnight air courier, then such notice shall be deemed given one day after delivery to such carrier. All notices shall be addressed as follows: (i) if to the Warrantholder, at its address as set forth in
the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days’ advance written notice to the other: 

  

					
	If to the Company:	 		 	
		
		 	 Vertical Communications, Inc.
 Ten Canal Park

 Cambridge, Massachusetts 02141

		 	Attn:	 	President
		 	Fax:	 	(617) 354-3564
			
	With a copy to:	 		 	
		
		 	 Andrews Kurth LLP 1717
 Main Street, Suite
3700
 Dallas, Texas 75201

		 	Attn:	 	Victor B. Zanetti
		 	Fax:	 	(214) 659-4401

  

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	14.	Registration Rights. The initial holder of this Warrant may be entitled to the benefit of certain registration rights in respect of the Warrant Shares as provided in the 2008
Purchase Agreement, and any subsequent holder hereof may be entitled to such rights. 

  

	15.	Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns
hereunder. 

  

	16.	Governing Law. This Warrant shall be governed by, and construed in accordance with, the laws of the State of New York. 

  

	17.	Net Issue Election. Notwithstanding any other provision contained herein to the contrary, if the Warrant Shares may not be freely sold to the public for any reason
(including, but not limited to, the failure of the Company to have effected the registration of the Warrant Shares or to have a current prospectus available for delivery or otherwise, but excluding the inability of the Warrantholder to sell the
Warrant Shares due to market conditions), the Warrantholder may elect to receive, without the payment by the Warrantholder of the aggregate Warrant Price in respect of the shares of Common Stock to be acquired, shares of Common Stock equal to the
value of this Warrant or any portion hereof by the surrender of this Warrant (or such portion of this Warrant being so exercised) together with the Net Issue Election Notice annexed hereto as Appendix B duly executed, at the office of
the Company. Thereupon, the Company shall issue to the Warrantholder such number of fully paid, validly issued and nonassessable shares of Common Stock as is computed using the following formula: 

  

	
	X = Y (A - B) 
	              A

 where 
  

	 	X  =	the number of Warrant Shares which the Warrantholder has then requested be issued to the Warrantholder; 

  

	 	Y  =	the total number of Warrant Shares which the Warrantholder has surrendered at such time for cash-less exercise (including both shares to be issued to the Warrantholder and shares to
be canceled as payment therefor); 

  

	 	A  =	the Market Price of a share of Common Stock; and 

  

	 	B  =	the Warrant Price in effect under this Warrant at the time the net issue election is made. 

  

	18.	No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its
ownership of this Warrant. 

  

	19.	Amendment; Waiver. Any term of this Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) upon the written
consent of the Company and holder or holders of 35% of the aggregate shares of Common Stock issued or issuable upon exercise of all of the 2008 Warrants. 

  

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	20.	Section Headings. The section heading in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict
the provisions hereof. 

  

	21.	No Dilution or Impairment. The Company will not, by amendment of its certificate of incorporation or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Warrantholder set forth herein. Without limiting the generality of the foregoing, the Company will not increase the par value of any shares of stock receivable upon the exercise
of this Warrant above the amount payable therefor upon such exercise, and at all times will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable stock upon the
exercise of this Warrant. 

 [Remainder of Page Intentionally Left Blank] 
  

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 Signature Page to Warrant 
 IN WITNESS WHEREOF, Vertical Communications, Inc. has caused this Warrant to be duly executed, as of the      day of
            , 2008. 
  

			
	 VERTICAL COMMUNICATIONS, INC.

		
	 By:
	 	  

	 Name:
	 	
	 Title:
	 	

 APPENDIX A 
 WARRANT EXERCISE FORM 
  

	To:	Vertical Communications, Inc. 

 The undersigned hereby
irrevocably elects to exercise the right of purchase represented by the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant,
             shares of Common Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as follows: 

 

			
	  
	 	
		
	  
	 	
	Address	 	
		
	  
	 	
	  
	 	
	Federal Tax ID or Social Security No.	 	

  

			
	and delivered by	  	 ̈ certified mail to the above address, or
		  	 ̈ electronically (provide DWAC Instructions:
                            ), or
		  	 ̈ other (specify:
                                        
                                        ).

 and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant,
that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated
below. 
 By exercising the rights represented by this Warrant, the undersigned hereby certifies that, as of the date of exercise of this
Warrant, the representations and warranties contained in Sections 5.2, 5.3 and 5.4 of the 2008 Purchase Agreement are true and correct in all material respects with respect to the undersigned. 
  

							
	 Dated:                 ,             
	 		  	Signature:	 	  

  

			
	Note: The signature must correspond with the name of the registered holder as written on the first page of the Warrant in every particular, without alteration or enlargement or any
change whatever, unless the Warrant has been assigned.	 	  

	 	Name (please print)
	 	  

	 	  

	 	Address
	 	  

	 	 Federal Identification or
 Social Security
No.

	 	  
 Assignee:

	 	  

 APPENDIX B 
 Net Issue Election Notice 
  

	To:	Vertical Communications, Inc. 

  

	Date:	                     

 The undersigned hereby elects under Section 17 of this Warrant to surrender the right to purchase
             shares of Common Stock pursuant to this Warrant and hereby requests the issuance of             
shares of Common Stock. The certificate(s) for the shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below. 
  

	
	  

	Signature
	
	  

	Name for Registration
	
	  

	Mailing AddressSecurities Purchase Agreement

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 THIS SECURITIES PURCHASE AGREEMENT (this
“Agreement”) is made as of March 17, 2008 by and between Vertical Communications, Inc., a Delaware corporation (the “Company”), and the investors set forth on Exhibit A attached hereto (individually, an
“Investor” and collectively, the “Investors”). 
 WITNESSETH: 
 WHEREAS, the Company desires to sell to the Investors on the date hereof, and the Investors desire to purchase from the Company on the date
hereof, severally and not jointly, Subordinated Convertible Promissory Notes substantially in the form attached hereto as Exhibit B (each a “Note” and collectively the “Notes”), in the aggregate principal
amount of $5,250,000, all pursuant to the terms and conditions of this Agreement; 
 WHEREAS, the Company may sell additional Notes in
the aggregate principal amount of up to $2,250,000 (the “Cap”) on identical terms and conditions as set forth herein pursuant to Section 1.6 below and certain rights of first refusal (the “ROFR Rights”)
contained in (i) the Stock Purchase Agreement dated as of September 28, 2004 among the Company and the investors specified therein (the “2004 Agreement”), (ii) the Stock Purchase Agreement dated as of
September 28, 2005 among the Company and the investors specified therein (the “2005 Agreement”), (iii) the Securities Purchase Agreement dated as of February 9, 2006 among the Company and the investors specified
therein (the “February 2006 Agreement”) and (iv) the Amended and Restated Securities Purchase Agreement dated as of December 1, 2006 among the Company and the investors specified therein (the “December 2006
Agreement,” and together with the 2004 Agreement, the 2005 Agreement and the February 2006 Agreement, the “Prior Agreements”); and 
 WHEREAS, the parties hereto desire to enter into this Agreement for the purpose of setting forth certain representations, warranties and covenants made by each to the other as an inducement to the execution and
delivery of this Agreement and the conditions precedent to the consummation of the transactions set forth in this Agreement. 
 NOW,
THEREFORE, in consideration of the premises and of the mutual provisions, agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows: 
 ARTICLE I 
 PURCHASE AND SALE OF THE NOTES 
 1.1 Authorization and Sale of the Notes. Subject to the terms and conditions set
forth in this Agreement and the Notes, the Company has authorized (i) the sale of Notes in the aggregate principal amount of $7,500,000; and (ii) in connection with the conversion of the Notes pursuant to Section 5(a) thereof, the
issuance of one or more warrants substantially in the form of Exhibit A attached to the Notes (each a “Warrant” and collectively the “Warrants”) to purchase up to an aggregate of 150,000,000 shares of the
Company’s Common Stock, $0.01 par value per share (the “Common Stock”). The Notes are convertible into either Section 5(a) Preferred Stock (as defined in the Notes) or Section 5(b) Preferred Stock (as defined in the
Notes) (the Section 5(a) Preferred Stock and Section 5(b) Preferred Stock are collectively referred to as the “Preferred Conversion Shares”). The shares of Common Stock issued or issuable upon conversion of the Preferred
Conversion Shares are collectively referred to herein as the “Common Conversion Shares.” The Preferred Conversion Shares and the Common Conversion Shares 

 
are sometimes hereinafter collectively referred to herein as the “Conversion Shares.” The shares of Common Stock issued or issuable upon
exercise of the Warrants are collectively referred to herein as the “Warrant Shares.” The Notes, the Warrants, the Preferred Conversion Shares, the Common Conversion Shares and the Warrant Shares are sometimes hereinafter
collectively referred to as the “Securities.” 
 1.2 Agreement to Sell and Purchase the Notes. Subject to the terms
and conditions of this Agreement, each Investor, severally and not jointly, agrees to purchase at a Closing (as such term is defined in Section 1.3(a) hereof), and the Company agrees to issue and sell to each such Investor at the
Closing, a Note in the principal amount set forth opposite each such Investor’s name on Exhibit A attached hereto. 
 1.3
Delivery of the Notes at Closing. 
 (a) The completion of the purchase and sale of the Notes hereunder shall take place at one or more
closings (each, a “Closing”) at the offices of Goodwin Procter LLP, Exchange Place, Boston, MA 02109, beginning on the date hereof at 10:00 a.m. (the “Initial Closing”), or such other date and at such time as may be
mutually agreed upon. At each Closing, the Company shall execute and deliver the Notes to the Investors, against payment of the purchase price thereof (as set forth on Exhibit A with respect to each Investor) by wire transfer. Each Investor
purchasing Notes after the Initial Closing shall sign a joinder to this Agreement to be prepared by the Company and shall be deemed to be an “Investor” for all purposes hereunder. Notwithstanding the foregoing, no Closing shall take place
after May 16, 2008. Notwithstanding anything to the contrary, the Company shall update Exhibit A from time to time as necessary to reflect the issuance and sale of additional Notes at each Closing. 
 (b) The Company’s obligation to issue the Notes to the Investors at each Closing shall be subject to the following conditions, any one or more of
which may be waived by the Company: 
 (i) receipt by the Company of a wire transfer of funds to an account designated by the Company
in the full amount of the Notes being purchased hereunder at such Closing as set forth on Exhibit A; 
 (ii) the accuracy of the
representations and warranties made by the Investors and the satisfaction of the undertakings of the Investors to be fulfilled prior to the date of such Closing; and 
 (iii) at the Initial Closing, the Investors shall have entered into subordination agreements with Silicon Valley Bank and NEIPF, L.P. ( the “Senior Lenders”) wherein the Investors shall have agreed to
subordinate payment of the Notes to the prior payment of the indebtedness under the Company’s existing credit facilities with the Senior Lenders (the agreements, documents and instruments relating to such credit facilities are collectively
referred to as the “Credit Facilities”). 
 (c) The Investors’ obligations to purchase the Notes at each Closing shall
be subject to the following conditions, any one or more of which may be waived by the Specified Investors (as hereinafter defined) on behalf of all the Investors: 
 (i) at the Initial Closing, the Company shall have entered into amendments of the Credit Facilities wherein such Senior Lenders shall have consented to the transactions provided for in this Agreement, waived events of
default existing as of December 31, 2007, January 31, 2008 and February 29, 2008, and amended certain covenants of the Company, on terms and conditions satisfactory to the Investors (such amendments are collectively referred to
as the “Credit Agreement Amendments”); 
  

 
Securities Purchase Agreement – Page 2 

 (ii) at the Initial Closing, the Company having authorized, unissued and unreserved shares sufficient to
permit issuance of all of the Shares proposed to be sold hereunder, subject (as to the Common Conversion Shares and Warrant Shares) to the Charter Amendment (as hereinafter defined); 
 (iv) the representations and warranties of the Company set forth herein shall be true, correct and complete as of the date of such Closing in all
respects (except for representations and warranties that speak as of a specific date, which representations and warranties shall be true, correct and complete as of such date); 
 (v) performance and compliance by the Company with all covenants, agreements obligations and conditions required to be performed on or before the date
of such Closing; 
 (vi) the issuance of the Notes to the Investors participating in such Closing; 
 (vii) at the Initial Closing, the execution of a Consent and Waiver Agreement in substantially the form attached hereto as Exhibit C (the
“Consent and Waiver Agreement”); and 
 (viii) at the Initial Closing, the Investors participating in such Initial Closing
shall have received such documents as the Investors shall reasonably have requested, including, a standard opinion of Company counsel as to the matters set forth in the form attached as Exhibit D hereto and as to exemption from the
registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), of the sale of the Notes. The Notes, the Warrants, the Credit Agreement Amendments and the Consent and Waiver Agreement shall collectively
be referred to herein as the “Ancillary Agreements.” 
 1.4. Rights Offering. Pursuant to Section 3.4 of the
2004 Agreement, Section 3.4 of the 2005 Agreement, Section 3.1 of the February 2006 Agreement and Section 3.1 of the December 2006 Agreement, promptly following the execution and delivery of this Agreement by the Investors listed on
Exhibit A, the Company shall submit this Agreement and all Ancillary Agreements to the 20% Investors (as defined in the 2004 Agreement, 2005 Agreement and February 2006 Agreement), the 30% Investors (as defined in the December 2006 Agreement)
and each other person or entity that has such a right (each an “ROFR Offeree” and collectively, the “ROFR Offerees”), all of whom are listed on Exhibit E attached hereto. As set forth in more detail in the
Prior Agreements and subject to the terms and conditions hereof and thereof, each ROFR Offeree shall have the right to purchase a Note (the “ROFR Notes”) equal to (x) that portion of the Notes as the number of shares of Common
Stock then held (including shares then issuable upon the exercise or conversion of outstanding securities) by such ROFR Offeree bears to the total number of shares of issued and outstanding Common Stock calculated on a fully diluted basis to include
(i) the total number of shares of Common Stock subject to outstanding awards granted under stock plans of the Company and (ii) the total number of shares that could be issued upon the exercise or conversion of outstanding securities (the
“Basic Amount”), and (y) such additional principal amount of the Notes (subject to the Cap) as such ROFR Offeree shall indicate it will purchase should the other ROFR Offerees subscribe for less than their Basic Amounts, on the
terms and conditions set forth herein (the “Offer”), which Offer by its terms shall remain open and irrevocable for a period of twenty (20) days from receipt of the Offer. Upon receipt of a Notice of Acceptance (as defined in
the Prior Agreements) from any ROFR Offeree, the Company shall issue and sell to such ROFR Offeree the ROFR Notes in accordance with Section 3.4 of the 2004 Agreement, Section 3.4 of the 2005 Agreement, Section 3.1 of the February
2006 Agreement and Section 3.1 of the December 2006 Agreement, as applicable. 
 1.5 Charter Amendment. At the Initial Closing,
the Company shall prepare and deliver to the Investors: 
  

 
Securities Purchase Agreement – Page 3 

 (a) a certificate of amendment to the Company’s Amended and Restated Certificate of Incorporation,
as amended (the “Certificate of Incorporation”), in substantially the form attached hereto as Exhibit F (the “Charter Amendment”), to increase the number of authorized shares of capital stock of the Company
to 780,000,000 shares and number of authorized shares of Common Stock to 750,000,000 shares, or such other number of shares of capital stock and/or Common Stock as is approved by the Company’s Board of Directors (the “Board of
Directors”); and 
 (b) a Written Consent in Lieu of Special Meeting of the Stockholders in substantially the form attached hereto
as Exhibit G (the “Written Consent”) to approve the Charter Amendment. Each Investor hereby agrees to execute and deliver the Written Consent and take such further action as is reasonably necessary to approve the Charter
Amendment. 
 1.6 Special Purchase Right. Notwithstanding anything to the contrary set forth in this Agreement, the Notes or the Prior
Agreements, before consummating any sale of Notes after the date hereof, at the sole discretion of M/C Ventures (as defined below), the Company shall first offer each Investor identified on Exhibit A under the heading “Initial
Investors” (each an “Initial Investor”) the right to purchase an additional Note in a principal amount up to such Initial Investor’s Additional Amount (as hereinafter defined). Subject to the terms and conditions of this
Section 1.6, each Initial Investor shall have the right, but not the obligation, under this Section 1.6 to purchase such additional Notes, and any such purchase shall be made in accordance with the applicable terms and
conditions of this Agreement. The term “Additional Amount” means, as of the date of determination and with respect to each Initial Investor, an amount (but not less than zero) equal to the difference between (A) the product of
(i) the percentage set forth opposite such Initial Investor’s name or group of Initial Investors’ names on Exhibit A (the “Applicable Percentage”) multiplied by (ii) $7,500,000 less (B) the
aggregate principal amount of Notes purchased by such Initial Investor hereunder as of such date (immediately prior to the proposed closing). The Initial Investors acknowledge and agree that the Applicable Percentage for each Initial Investor or
group of Initial Investors is based on each Initial Investor’s or group of Initial Investors’ investment in the Company’s Series D Preferred Stock and Series E Preferred Stock. 
 ARTICLE II 
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 2. Except as disclosed by the Company in a written Disclosure Schedule provided by the Company to the Investors (the “Disclosure
Schedule”), the Company hereby represents, warrants and covenants to the Investors, as follows: 
 2.1 Organization.
The Company is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization. Each of the Company and its Subsidiaries (as such term is defined in Rule 405 under the Securities Act) has all
requisite corporate power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and as described in the documents filed by the Company under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the “Exchange Act”), since June 30, 2004 through the date hereof, including, without limitation, its most recent report on Form 10-K (the “Exchange Act
Documents”) and is registered or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the location of the properties owned or leased by it requires such qualification and
where the failure to be so qualified would have a material adverse effect upon the condition (financial or otherwise), results of operations, business or business prospects, properties or operations of the Company and its Subsidiaries, considered as
one enterprise (a “Material Adverse Effect”), and no proceeding to which the Company or any Subsidiary is a party has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification. 
  

 
Securities Purchase Agreement – Page 4 

 2.2 Due Authorization and Valid Issuance. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement and the Ancillary Agreements, and this Agreement and the Ancillary Agreements have been duly authorized and validly executed and delivered by the Company and constitutes
the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying
such laws, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Notes have been be duly authorized and, upon issuance and payment therefore pursuant to the terms hereof, will be
validly issued. The Preferred Conversion Shares will be, upon issuance in connection the conversion of the Notes, duly authorized, validly issued, fully-paid and nonassessable. The Common Conversion Shares will be, upon issuance in connection the
conversion of the Preferred Conversion Shares, duly authorized, validly issued, fully-paid and nonassessable. The Warrants will be, upon issuance in connection with the conversion of the Notes, duly authorized, validly issued, fully-paid and
nonassessable. The Warrant Shares will be, upon issuance in connection the exercise of the Warrants, duly authorized, validly issued, fully-paid and nonassessable. 
 2.3 Non-Contravention. The execution and delivery of this Agreement and the Ancillary Agreements, the issuance and sale of the Securities under the terms hereof, the Notes and/or the Warrants, as the case may
be, the fulfillment of the terms of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not (a) conflict with or constitute a violation of, or default (with the
passage of time or otherwise) under, (i) any bond, debenture, note or other evidence of indebtedness, lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or
any Subsidiary is a party or by which it or any of its Subsidiaries or their respective properties are bound, (ii) the charter, by-laws or other organizational documents of the Company or any Subsidiary, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any Subsidiary or their respective properties, except in the case of clauses (i) and (iii) for
any such conflicts, violations or defaults which are not reasonably likely to have a Material Adverse Effect or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of
the material properties or assets of the Company or any Subsidiary or an 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 is a party or by which any of them is bound or to which any of the material 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 or any other person is required for the execution and delivery of this
Agreement or the Ancillary Agreements by the Company, the valid issuance and sale of the Securities under the terms hereof, the Notes and/or the Warrants, as the case may be, and the performance by the Company of its other obligations hereunder and
thereunder, other than such as have been made or obtained, and except for any post-closing securities filings or notifications required to be made under federal or state securities laws. 
 2.4 Capitalization. The capitalization of the Company as of March 17, 2008 is as set forth on Schedule 2.4, increased as set forth in
the next sentence. The Company has not issued any capital stock since that date other than pursuant to (a) employee benefit plans disclosed in the Exchange Act Documents, or (b) outstanding warrants, options or other securities disclosed
in the Exchange Act 

  

 Securities Purchase Agreement – Page 5 

 
Documents. The Company has a sufficient number of authorized, unissued, unreserved and undesignated shares of preferred stock such that, upon conversion of
the Notes pursuant to Sections 5(a) or 5(b) thereof, a sufficient number of shares of Section 5(a) Preferred Stock or Section 5(b) Preferred Stock may be issued to the holders of the Notes. The designations, powers, preferences, rights
qualifications, limitations and restrictions in respect of the Preferred Conversion Shares will be as set forth in a Certificate of Powers, Designations, Preferences and Rights that will be substantially similar to those set forth in that certain
Certificate of Powers, Designations, Preferences and Rights of the Series E Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on November 30, 2006, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth in or contemplated by
the Exchange Act Documents, there are no 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 Subsidiary, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party or of which the Company has knowledge and relating to the issuance or sale of any capital
stock of the Company or any Subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options. Without limiting the foregoing and except as provided herein, no preemptive right, co-sale right, right of first
refusal, registration right, or other similar right exists with respect to the issuance and sale of the Securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of
the Securities. The Company owns the entire equity interest in each of its Subsidiaries, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest, other than as described in the Exchange Act Documents. Except
as disclosed in the Exchange Act Documents, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Common Stock to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders. 
 2.5 Legal Proceedings; Disagreements with Advisors. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened to which the Company or any Subsidiary is or may be a party or of which the business or property of the Company or any Subsidiary is subject that is not disclosed in the
Exchange Act Documents. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the accountants and lawyers formerly or presently employed by the Company and the Company is current with
respect to any fees owed to its accountants and lawyers. 
 2.6 No Violations. Except as set forth in Schedule 2.6, neither the
Company nor any Subsidiary is in violation of (a) its charter, bylaws, or other organizational document; (b) in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company or any Subsidiary, which violation, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect; or (c) is in default (and there exists no condition which, with the passage
of time or otherwise, would constitute a default) in the performance of any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or by which the properties of the Company or any Subsidiary are bound, which would be reasonably likely to have a Material Adverse Effect. 
 2.7 Governmental Permits, Etc. With the exception of the matters which are dealt with separately in Sections 2.1, 2.12,
2.13, and 2.14, each of the Company and its Subsidiaries has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or 

  

 Securities Purchase Agreement – Page 6 

 
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 and as described in the Exchange Act Documents except where the failure to currently possess could not reasonably be expected to have a Material Adverse Effect. 
 2.8 Intellectual Property. Except as specifically disclosed in the Exchange Act Documents (a) each of the Company and its Subsidiaries owns
or possesses sufficient rights to use all patents, patent rights, trademarks, copyrights, licenses, inventions, trade secrets, trade names and know-how (collectively, “Intellectual Property”) described or referred to in the Exchange
Act Documents as owned or possessed by it or that are necessary for the conduct of its business as now conducted or as proposed to be conducted as described in the Exchange Act Documents, except where the failure to currently own or possess would
not have a Material Adverse Effect, (b) neither the Company nor any of its Subsidiaries is infringing, or has received any notice of, or has any knowledge of, any asserted infringement by the Company or any of its Subsidiaries of, any rights of
a third party with respect to any Intellectual Property that, individually or in the aggregate, would have a Material Adverse Effect and (c) neither the Company nor any of its Subsidiaries has received any notice of, or has any knowledge of,
infringement by a third party with respect to any Intellectual Property rights of the Company or of any Subsidiary that, individually or in the aggregate, would have a Material Adverse Effect. Except as specifically disclosed in the Exchange Act
Documents, all software applications and portions of applications, including, without limitation, interfaces, functions, and class definitions included in whole or in part in any Company Software (as hereinafter defined) are either: (a) owned
by the Company, (b) currently in the public domain or otherwise available for use, modification and distribution by the Company without a license from or the approval or consent of any third party, or (c) licensed or otherwise used by the
Company pursuant to the terms of valid, binding written agreements (a “Software Contract”). Except as specifically disclosed in the Exchange Act Documents, no Software Contract creates, or purports to create, obligations or
immunities with respect to any intellectual property rights of the Company enforceable in any jurisdiction of the world, including but not limited to, obligations requiring the disclosure or distribution of all or a portion of the source code for
any Company Software. For purposes of this Agreement, “Company Software” means any and all computer programs or portions thereof owned, licensed, distributed, copied, modified, displayed, sublicensed or otherwise used by the Company
in connection with the operation of its business as now conducted or as now proposed to be conducted as described in the Exchange Act Documents. 
 2.9 Financial Statements; Solvency; Obligations to Related Parties. 
 (a) The financial statements of the Company and
the related notes contained in the Exchange Act Documents present fairly, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its Subsidiaries as of the dates
indicated, and the results of its operations and cash flows for the periods therein specified consistent with the books and records of the Company and its Subsidiaries except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which are not expected to be material in amount except as otherwise described in the Exchange Act Documents. Such financial statements (including the related notes) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods therein specified, except as may be disclosed in the notes to such financial statements, or in the case of unaudited statements, as may be permitted by the Securities and Exchange Commission (the
“SEC”) on Form 10-Q under the Exchange Act and except as disclosed in the Exchange Act Documents. The other financial information contained in the Exchange Act Documents has been prepared on a basis consistent with the
financial statements of the Company. 
 (b) The (i) fair saleable value of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing liabilities and other obligations as such 

  

 Securities Purchase Agreement – Page 7 

 
matures or is otherwise payable; (ii) Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted taking into account the current and projected capital requirements of the business conducted by the Company and projected capital availability; and (iii) current cash flow of the Company,
together with the proceeds the Company would receive upon liquidation of its assets, after taking into account all anticipated uses of such amounts, would be sufficient to pay all such liabilities and obligations when such is required to be paid.
The Company does not intend to incur liabilities and other obligations beyond its ability to pay such as they mature or are required to be paid. The Company has no knowledge of any facts or circumstances which lead it to believe that it will be
required to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction, and has no present intention to so file. 
 (c) Except as set forth in any Exchange Act Documents, there are no obligations of the Company to officers, directors, stockholders or employees of the Company other than: 
 (i) for payment of salary for services rendered and for bonus payments; 
 (ii) reimbursements for reasonable expenses incurred on behalf of the Company; 
 (iii) for other standard
employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors); 
 (iv) obligations listed in the Company’s financial statements; and 
 (v) under applicable laws. 
 (d) Except as described above or in any Exchange Act Filings, (i) none of
the officers, directors or, to the best of the Company’s knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $60,000;
and (ii) none of the officers, directors or, to the best of the Company’s knowledge, key employees have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has
a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with the Company.
Except as described above, no officer, director, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated
between the Company and any such person. Except as set forth in any Exchange Act Documents, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 
 2.10 No Material Adverse Change. Except as disclosed in the Exchange Act Documents, since June 30, 2007, there has not been (a) any
material adverse change in the financial condition or results of operations of the Company and its Subsidiaries considered as one enterprise, (b) any material adverse event affecting the Company or its Subsidiaries, (c) any obligation,
direct or contingent, that is material to the Company and its Subsidiaries considered as one enterprise, incurred by the Company, except obligations incurred in the ordinary course of business or with respect to the transactions contemplated by this
Agreement, (d) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of its Subsidiaries, or (e) any loss or damage (whether or not insured) to the physical property of the Company or
any of its Subsidiaries which has been sustained which has a Material Adverse Effect. 
  

 Securities Purchase Agreement – Page 8 

 2.11 Disclosure. The representations and warranties of the Company contained in this
ARTICLE II as of the date hereof and as of the Closing Date, do 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 light of
the circumstances under which they were made, not misleading. The Company understands and confirms that the Investors will rely on the foregoing representations in effecting transactions in the securities of the Company. 
 2.12 Exchange Act and OTCBB Compliance. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is quoted on The
Nasdaq Stock Market, Inc.’s OTC Bulletin Board quotation service (the “OTCBB”), 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 removal from quotation of the Common Stock from the OTCBB, nor has the Company received any notification that the SEC, the OTCBB or the Financial Industry Regulatory Authority, Inc. (“FINRA”) is contemplating
terminating such registration or quotation, except as disclosed in the Exchange Act Documents. 
 2.13 Reporting Status. The Company
has filed in a timely manner all documents that the Company was required to file under the Exchange Act during the twelve (12) months preceding the date of this Agreement. The following documents complied as to form in all material respects
with the SEC’s requirements as of their respective filing dates, and the information contained therein as of the date thereof did 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: 
 (a) all Forms 10-K,
10-Q, 8-K (including any and all amendments thereto) and all Definitive Proxy Statements on Schedule 14A and additional Definitive Proxy Materials filed with the SEC since June 30, 2007; and 
 (b) all other documents, if any, filed by the Company with the SEC since June 30, 2007. 
 2.14 Issuance and Quotation. The Company shall comply with all requirements of the FINRA and the SEC with respect to the issuance of the
Securities and the OTCBB with respect to the quotation of the Common Conversion Shares and the Warrant Shares. 
 2.15 No Manipulation of
Stock. The Company has not taken and will not, in violation of applicable law, take, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Securities. 
 2.16 Company Not an “Investment Company”. The Company has been advised of the rules
and requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company is not, and immediately after receipt of payment for the Notes will not be, an “investment company” within
the meaning of the Investment Company Act and shall conduct its business in a manner so that it will not become subject to the Investment Company Act. 
 2.17 Foreign Corrupt Practices; Embargoed Person. 
 (a) Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, corruptly used any funds 

  

 Securities Purchase Agreement – Page 9 

 
for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose to the extent required by law any contribution made by the Company (or
made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 
 (b) None of the funds or other assets of the Company constitute or shall constitute property of, or shall be beneficially owned, directly or indirectly,
by any person with whom U.S. persons are restricted from engaging in financial or other transactions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. § 1701
et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any executive orders or regulations promulgated under any such United States laws (each, an “Embargoed Person”), with the
result that the investments evidenced by the Shares are or would be in violation of law and (i) no Embargoed Person has or shall have any interest of any nature whatsoever in the Company with the result that the investments evidenced by the
Shares are or would be in violation of law; and (ii) none of the funds of the Company are or shall be derived from any unlawful activity with the result that the investments evidenced by the Shares are or would be in violation of law; provided,
that with respect to the covenants contained in this Section 2.17(b), the Company may assume that the Investors are not Embargoed Persons. The Company certifies that, to the Company’s knowledge, the Company has not been designated,
and is not owned or controlled, by an Embargoed Person. 
 2.18 Accountants. To the Company’s knowledge, KPMG LLP and Vitale
Caturano & Company, Ltd, each of whom the Company expects will express their respective opinion with respect to the financial statements to be incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended
June 30, 2005, 2006 and/or 2007, as applicable, into the Registration Statement (as defined below) are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder and are registered with the
Public Company Accounting Oversight Board. 
 2.19 Contracts. The contracts filed as exhibits to the Exchange Act Documents are in
full force and effect on the date hereof, and neither 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 which would have a Material Adverse Effect. The Company
has filed with the SEC all contracts and agreements required to be filed by the Exchange Act. 
 2.20 Taxes. The Company has
filed all necessary federal, state and foreign income and franchise tax returns due to be filed as of the date hereof and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it which would have a Material Adverse Effect. 
 2.21 Transfer Taxes. All stock
transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to the Investor hereunder will be, or will have been, fully paid or provided for by the Company and
all laws imposing such taxes will be or will have been fully complied with. 
 2.22 Private Offering. Assuming the correctness of the
representations and warranties of the Investors set forth in ARTICLE V hereof, the offer and sale of Securities hereunder is exempt from registration under the Securities Act. The Company has not in the past nor will it hereafter take any
action to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the 

  

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offer, issuance or sale of the Notes as contemplated by this Agreement, 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. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Securities Act). The Company has offered the Securities for sale only to the Investors and certain other “accredited investors” within the meaning of Rule 501 of
Regulation D under the Securities Act. 
 2.23 Controls and Procedures. The Company is in material compliance with all provisions of
the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company has established and maintains an effective system of internal control over financial reporting (as such term is defined in the Exchange Act ) regarding the
reliability of financial reporting and preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that (i) pertain to maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the issuer’s assets that could have a Material Adverse Effect on the financial statements. Except as set forth in the Exchange Act Documents, the Company has established and maintains disclosure controls and procedures (as
defined in 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 SEC’s rules and forms, 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 Act is accumulated and
communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in the applicable Exchange Act Documents their conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the periods covered by such Exchange Act Documents based on such evaluation. Since the last such evaluation date, there has been no change in the Company’s internal control over financial reporting that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting, and no significant deficiencies or material weaknesses in internal controls over financial reporting, or other factors that could
significantly affect the Company’s internal control over financial reporting, have been identified. 
  

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 ARTICLE III 
 AFFIRMATIVE COVENANTS OF THE COMPANY 
 The Company hereby covenants (i) with respect to
Section 3.3, with all of the Investors for so long as such Investors beneficially own any Conversion Shares and/or Warrant Shares; (ii) with respect to Section 3.1, who, after conversion of the Notes, will beneficially
own 25% of the Common Stock (calculated on a fully diluted basis) (the “Specified Investors”) for so long as such Investors beneficially own 25% of the Common Stock (calculated on a fully diluted basis); and (iii) in addition
to and not in lieu of the foregoing, with respect to Sections 3.1-3.2 and Sections 3.4-3.10, M/C Venture Partners (as defined on Exhibit A) for so long as M/C Venture Partners owns at least 50% of either the
(1) Preferred Conversion Shares issued or issuable upon conversion of the Notes initially issued to it hereunder or (2) Common Conversion Shares issued or issuable upon conversion of the Preferred Conversion Shares issued upon conversion
of the Notes initially issued to it hereunder, as follows: 
 3.1 Right of First Refusal. 
 (a) Right of First Refusal. The Company shall not issue, sell or exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, in a transaction not involving a public offering, any (i) shares of Common Stock, (ii) any other equity security of the Company, including without limitation, preferred shares, (iii) any debt
security of the Company (other than debt with no equity feature) including without limitation, any debt security which by its terms is convertible into or exchangeable for any equity security of the Company, (iv) any security of the Company
that is a combination of debt and equity, or (v) any option, warrant or other right to subscribe for, purchase or otherwise acquire any such equity security or any such debt security of the Company, unless in each case the Company shall have
first offered to sell such securities (the “Offered Securities”) to the Specified Investors and each other person or entity, if any, that has such a right (each an “Offeree” and collectively, the
“Offerees”) as follows: Each Offeree shall have the right to purchase (x) that portion of the Offered Securities as the number of shares of Common Stock then held (including shares then issuable upon the exercise or conversion
of outstanding securities) by such Offeree bears to the total number of shares of issued and outstanding Common Stock of the Company calculated on a fully diluted basis to include (i) the total number of shares of Common Stock subject to
outstanding awards granted under stock plans of the Company and (ii) the total number of shares that could be issued upon the exercise or conversion of outstanding securities (the “Basic Amount”), and (y) such additional
portion of the Offered Securities as such Offeree shall indicate it will purchase should the other Offerees subscribe for less than their Basic Amounts (the “Undersubscription Amount”), at a price and on such other terms as shall
have been specified by the Company in writing delivered to such Offeree (the “Offer”), which Offer by its terms shall remain open and irrevocable for a period of twenty (20) days from receipt of the offer. 
 (b) Notice of Acceptance. Notice of each Offeree’s intention to accept, in whole or in part, any Offer made shall be evidenced by a writing
signed by such Offeree and delivered to the Company prior to the end of the 20-day period of such offer, setting forth such of the Offeree’s Basic Amount as such Offeree elects to purchase and, if such Offeree shall elect to purchase all of its
Basic Amount, such Undersubscription Amount as such Offeree shall elect to purchase (the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Offerees are less than the total Offered Securities, then each Offeree who
has set forth Undersubscription Amounts in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, all Undersubscription Amounts it has subscribed for; provided, however, that should the
Undersubscription Amounts subscribed for exceed the difference between the Offered Securities and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Offeree who has subscribed for any Undersubscription
Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Undersubscription Amount subscribed for by such Offeree bears to the total Undersubscription Amounts subscribed for by all Offerees, subject to
rounding by the Board of Directors to the extent it reasonably deems necessary. 
  

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 (c) Conditions to Acceptances and Purchase. 
 (i) Permitted Sales of Refused Securities. In the event that Notices of Acceptance are not given by the Offerees in respect of all the Offered
Securities, the Company shall have ninety (90) days from the expiration of the period set forth above to close the sale of all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Offerees (the
“Refused Securities”) to the Person or Persons specified in the Offer, but only for cash and otherwise in all respects upon terms and conditions, including, without limitation, unit price and interest rates, which are no more
favorable, in the aggregate, to such other person or persons or less favorable to the Company than those set forth in the Offer. 
 (ii)
Reduction in Amount of Offered Securities. In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified above), then each Offeree may, at its sole option and
in its sole discretion, reduce the number of, or other units of the Offered Securities specified in its respective Notices of Acceptance to an amount which shall be not less than the amount of the Offered Securities which the Offeree elected to
purchase pursuant to (b) above multiplied by a fraction, (i) the numerator of which shall be the amount of Offered Securities which the Company actually proposes to sell, and (ii) the denominator of which shall be the amount of all
Offered Securities the Company proposed to sell in its writing delivered pursuant to Section 3.1(a) above. In the event that any Offeree so elects to reduce the number or amount of Offered Securities specified in its respective Notices
of Acceptance, the Company may not sell or otherwise dispose of more than the reduced amount of the Offered Securities until such securities have again been offered to the Offerees in accordance with Section 3.1(a). 
 (iii) Closing. Upon the closing, which shall include full payment to the Company, of the sale to such other person or persons of all or less than
all the Refused Securities, the Offerees shall purchase from the Company, and the Company shall sell to the Offerees, the number of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 3.1(b) above if
the Offerees have so elected, upon the terms and conditions specified in the Offer. The purchase by the Offerees of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Offerees of a
purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Company and the Offerees and their respective counsel. 
 (d) Further Sale. In each case, any Offered Securities not purchased by the Offerees or other person or persons in accordance with Section 3.1(c)(iii) above may not be sold or otherwise disposed of
until they are again offered to the Offerees under the procedures specified in Section 3.1(c)(i)-(iii) above. 
 (e)
Exceptions. The rights of the Investors under this Section 3.1 shall not apply to: 
 (i) Common Stock issued as a stock
dividend to holders of Common Stock or upon any subdivision or combination of shares of Common Stock; 
 (ii) any capital stock or
derivative thereof granted to an employee, director or consultant under a stock plan approved by the Board of Directors and the Company’s stockholders; 
 (iii) any securities issued as consideration for the acquisition of another entity by the Company by merger or share exchange (whereby the Company owns no less than 51% of the voting power of the surviving entity) or
purchase of substantially all of such entity’s stock or assets, if such acquisition is approved by the Board of Directors; 
  

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 (iv) any securities issued in connection with a strategic partnership, joint venture or other similar
agreement, provided that the purpose of such arrangement is not primarily the raising of capital and that such arrangement is approved unanimously by the Board of Directors; 
 (v) any securities issued to a financial institution in connection with a bank loan or lease with such financial institution provided that such is
approved unanimously by the Board of Directors; 
 (vi) securities issuable upon the exercise or conversion of securities outstanding on the
date of the Initial Closing; and 
 (vii) the Securities. 
 3.2 Further Assurances. The Company hereby agrees to take all further actions, execute all further documents and perform all further things necessary to give effect to the provisions of this Agreement and
consult with and keep informed, and shall cause the appropriate officers, directors and legal counsel to consult with and keep informed, legal counsel to the Investors (including, without limitation, legal counsel to M/C Venture Partners) including,
but not limited to the status of the Credit Facilities. 
 3.3. Registration of the Shares; Compliance with the Securities Act.

 (a) Registration Procedures and Other Matters. The Company shall: 
 (i) subject to receipt of necessary information from the Investors, after prompt request from the Company to the Investors to provide such information,
prepare and file with the SEC within ninety (90) days of receipt of demand in writing from the Specified Investors (the date such registration statement is filed, the “Filing Date”), a registration statement on Form S-3 or Form
S-1 (the “Registration Statement”) to enable the resale of the Common Conversion Shares and the Warrant Shares, as applicable, by the Investors from time to time through any quotation system on which the Common Stock is quoted or
listed, if applicable, or in privately-negotiated transactions (as used in this Section 3.3 and in Section 3.7 only, the term “Common Conversion Shares” shall include any securities into which the
Common Conversion Shares are reclassified after the date hereof); 
 (ii) use its best efforts, subject to receipt of necessary information
from the Investors after prompt request from the Company to the Investors, to provide such information (provided that failure on the part of one Investor shall not relieve the Company from its obligation to use best efforts with respect to complying
Investors), to cause the Registration Statement to become effective as soon as reasonably practicable after (A) being informed by the staff of the SEC (the “Staff”) that the Staff has decided not to review the Registration
Statement, or (B) being informed by the Staff that the Staff have no further comments on such Registration Statement (the date the Registration Statement is initially declared effective by the SEC, the “Effective Date”), such
efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC in such period any financial statements that are required to be filed prior to the effectiveness of such Registration Statement; and, in the
event that the filing referred to in Section 3.3(a)(i) above is on a form other than Form S-3, the Company shall use its best efforts, subject to receipt of necessary information from the Investors after prompt request from the
Company to the Investors to provide such information (provided that failure on the part of one Investor shall not relieve the Company from its obligation to use best efforts with respect to complying Investors), to 

  

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prepare and file with the SEC, as soon as reasonably practicable after the Company first becomes eligible to file a registration statement on Form S-3, a
registration statement on Form S-3 (the “S-3 Registration Statement”) to enable the resale of the Common Conversion Shares and the Warrant Shares by the Investors from time to time through any quotation system on which the Common
Stock is quoted or listed or in privately-negotiated transactions; and to use its best efforts to cause the S-3 Registration Statement to become effective as soon as reasonably practicable thereafter, such efforts to include, without limiting the
generality of the foregoing, preparing and filing with the SEC as promptly as reasonably practicable any financial statements that are required to be filed prior to the effectiveness of such S-3 Registration Statement (the term “Registration
Statement” shall mean the Form S-1 Registration Statement until the S-3 Registration Statement is declared effective by the SEC, after which time it shall mean the S-3 Registration Statement); 
 (iii) use its best efforts to prepare and file with the SEC such amendments and supplements to the Registration Statement and the Prospectus (as used
herein, the term “Prospectus” shall mean (1) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Common
Conversion Shares and/or Warrant Shares covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and
(2) any “free writing prospectus” as defined in Rule 163 under the Securities Act) used in connection therewith as may be necessary to keep the Registration Statement current, effective and free from any material misstatement or
omission to state a material fact for a period not exceeding, with respect to each Investor’s Common Conversion Shares or Warrant Shares purchased hereunder, the earlier of (x) the date on which such Investor may sell all Common Conversion
Shares and/or Warrant Shares then held by the Investor without restriction by the volume limitations of Rule 144(e) of the Securities Act and (y) such time as all Common Conversion Shares and/or Warrant Shares held by such Investor have
been sold pursuant to a registration statement; 
 (iv) comply with Rule 172 of the Securities Act and (x) advise the Investors
promptly of any failure by the Company to satisfy the conditions of such Rule 172 and (y) promptly furnish to the Investors with respect to the Common Conversion Shares and/or Warrant Shares registered under the Registration Statement such
number of copies of the Registration Statement, Prospectuses and Preliminary Prospectuses in conformity with the requirements of the Securities Act and such other documents as the Investors may reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Common Conversion Shares and/or Warrant Shares by the Investors; 
 (v) file documents
required of the Company for blue sky clearance in states specified in writing by any Investor and use its best efforts to maintain such blue sky qualifications during the period the Company is required to maintain the effectiveness of the
Registration Statement pursuant to Section 3.3(a)(iii); provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified
or has not so consented; 
 (vi) bear all expenses in connection with the procedures in paragraphs (i) through (v), (viii) and the
last paragraph of this Section 3.3(a) and the registration of the Common Conversion Shares and/or Warrant Shares pursuant to the Registration Statement; 
 (vii) advise the Investors, 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 or threat of any proceeding for that purpose; and it will promptly use its 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

  

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 (viii) provide a “Plan of Distribution” section of the Registration Statement substantially in
the form attached hereto as Exhibit H hereto (subject to the comments of the SEC). 
 Notwithstanding anything to the contrary herein,
the Registration Statement shall cover only the Common Conversion Shares, the Warrant Shares and any other securities with respect to which the Company has registration obligations as of the date hereof. In no event at any time before the
Registration Statement becomes effective shall the Company publicly announce or file any other registration statement, other than registrations on Form S-8, without the prior written consent of each individual holder (together with any
Affiliates of such holder) of 25% in interest of either the Preferred Conversion Shares and/or or Common Conversion Shares (the “Specified Investors’ Consent”). 
 The Company understands that the Investors disclaim being underwriters, but any Investor being deemed an underwriter by the SEC shall not relieve the
Company of any obligations it has hereunder; provided, however that if the Company receives notification from the SEC that a Investor is deemed an underwriter, then the period by which the Company is obligated to submit an acceleration
request to the SEC shall be extended to the earlier of (a) the 90th day after such SEC notification, or (b) 120 days after the initial filing of the Registration Statement with the SEC. 
 Within three (3) business days of the Effective Date, the Company shall advise its transfer agent that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon notice of a sale by a Investor and confirmation by such Investor that it has complied with the prospectus delivery requirements, provided that the Company has not advised the
transfer agent orally or in writing that the registration statement has been suspended; provided, however, in the event the Company’s transfer agent requires an opinion of counsel to the Company for an such reissuance, within three
business days of any such request for an opinion by the transfer agent, the Company shall cause its counsel to issue a blanket opinion to the transfer agent stating the foregoing. 
 (b) Transfer of Common Conversion Shares and Warrant Shares After Registration; Suspension. 
 (i) Each Investor, severally and not jointly, agrees that it will not effect any disposition of the Common Conversion Shares or the Warrant Shares or its
right to purchase the Common Conversion Shares or the Warrant Shares that would constitute a sale within the meaning of the Securities Act except as contemplated in the Registration Statement referred to in Section 3.3(a) and as
described below or as otherwise permitted by law, and that it will promptly notify the Company of any material changes in the information set forth in the Registration Statement regarding the Investor or its plan of distribution. 
 (ii) Except in the event that paragraph (iii) below applies, the Company shall (A) if deemed necessary 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 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; (B) provide the
Investors copies of any documents filed pursuant to Section 3.3(b)(ii)(A); and (C) inform each Investor that the Company has complied with its obligations in Section 3.3(b)(ii)(A) (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 

  

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notify the Investor to that effect, will use its best efforts to secure the effectiveness of such post-effective amendment as promptly as possible and will
promptly notify the Investor pursuant to Section 3.3(b)(ii)(A) hereof when the amendment has become effective). 
 (iii)
Subject to paragraph (iv) below, in the event (A) 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 a
Registration Statement or related Prospectus or for additional information; (B) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (C) 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 Common Conversion Shares and/or Warrant
Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (D) of any event or circumstance which, upon the advice of its counsel, 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 any omission 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 any omission 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 deliver a notice in writing to each Investor (the “Suspension
Notice”) to the effect of the foregoing and, upon receipt of such Suspension Notice, the Investor will refrain from selling any Common Conversion Shares and/or Warrant Shares pursuant to the Registration Statement (a
“Suspension”) until the Investor’s is advised in writing by the Company that the Suspension is no longer effective. In the event of any Suspension, the Company will use its best efforts to cause the Suspension to be terminated
as soon as reasonably practicable within twenty (20) business days after the delivery of a Suspension Notice to the Investors. In addition to and without limiting any other remedies (including, without limitation, at law or at equity) available
to the Investors, each Investor shall be entitled to specific performance in the event that the Company fails to comply with the provisions of this Section 3.3(b)(iii). 
 (iv) Notwithstanding the foregoing paragraphs of this Section 3.3(b), the Investors shall not be prohibited from selling Common Conversion
Shares and/or the Warrant Shares under the Registration Statement as a result of Suspensions on more than two occasions of not more than thirty (30) days each in any twelve (12) month period, unless, in the good faith judgment of the Board
of Directors, upon the advice of counsel, the sale of Common Conversion Shares and/or Warrant Shares under the Registration Statement in reliance on this Section 3.3(b)(iv) would be reasonably likely to cause a violation of the
Securities Act or the Exchange Act and result in liability to the Company. 
 (v) Provided that a Suspension is not then in effect, any
Investor may sell Common Conversion Shares and/or Warrant Shares under the Registration Statement upon compliance with its obligations under this Section 3.3. 
 (vi) In the event of a sale of Common Conversion Shares and/or Warrant Shares by a Investor pursuant to the Registration Statement, the Investor must
also deliver to the Company’s transfer agent, with a copy to the Company, a Certificate of Subsequent Sale substantially in the form attached hereto as Exhibit I, so that the Common Conversion Shares and/or Warrant Shares, as
applicable, may be properly transferred. 
  

 Securities Purchase Agreement – Page 17 

 (c) Indemnification. 
 (i) For the purposes of this Section 3.3(c): 
 (A) the term “Selling Stockholder” shall include each Investor and any Affiliate of such Investor; 
 (B) the term “Registration Statement” shall include the Prospectus in the form first filed with the SEC pursuant to Rule 424(b) of the Securities Act or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 3.3(a); and 
 (C) the term “untrue statement” shall include any untrue statement or alleged untrue statement, 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. 
 (ii) The Company agrees to indemnify and hold harmless each Selling Stockholder from and against any losses, claims, damages or liabilities to which
such Selling Stockholder 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 (A) any breach of the
representations or warranties of the Company contained in this Section 3.3 or failure to comply with the covenants and agreements of the Company contained in this Section 3.3, (B) any untrue statement of a material fact
contained in the Registration Statement as amended at the time of effectiveness or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (C) any failure by the Company to
fulfill any undertaking included in the Registration Statement as amended at the time of effectiveness, and the Company will reimburse such Selling Stockholder for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, 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 or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading in reliance upon
and in conformity with written information furnished to the Company by or on behalf of such Selling Stockholder specifically for use in preparation of the Registration Statement or the failure of such Selling Stockholder to comply with its covenants
and agreements contained in Section 3.3(b) hereof respecting sale of the Common Conversion Shares and/or Warrant Shares or, in the event the Company has advised the Investors in writing that the Company does not meet the conditions for
using Rule 172 of the Securities Act and has provided the Investors with a copy of a current Prospectus, any statement or omission in any earlier Prospectus that is corrected in the Prospectus so delivered to the Investors and delivered to the
Selling Stockholder prior to the pertinent sale or sales by the Selling Stockholder. The Company shall reimburse each Selling Stockholder for the amounts provided for herein on demand as such expenses are incurred. 
 (iii) Each Investor, severally but 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, 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,
(A) any failure to comply with the covenants and 

  

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agreements contained in Section 3.3(b) hereof respecting sale of the Common Conversion Shares and/or Warrant Shares, or (B) any untrue
statement of a material fact contained in the Registration Statement or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading if such untrue statement or omission was made in
reliance upon and in conformity with written information furnished by or on behalf of such Investor specifically for use in preparation of the Registration Statement, and such Investor will reimburse the Company (or such officer, director or
controlling person), as the case may be, for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however that such Investor’s
obligation to indemnify the Company shall be limited to the net amount received by such Investor from the sale of the Common Conversion Shares and/or Warrant Shares giving rise to such obligation. 
 (iv) 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 3.3(c), 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 person will not relieve it from any liability which it may have to any indemnified person under this Section 3.3(c) (except to the extent that such omission materially and adversely affects the indemnifying person’s
ability to defend such action) or from any liability otherwise than under this Section 3.3(c). 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 person promptly after receiving the aforesaid notice from such indemnified person, 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, 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 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 at the reasonable 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 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. 
 (v) If the indemnification provided for in this Section 3.3(c) is unavailable to or insufficient to hold
harmless an indemnified person under subsection (ii) or (iii) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying person shall contribute
to the amount paid or payable by such indemnified person 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 applicable Investor, as well as any other Selling Shareholders under such registration statement 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 

  

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untrue statement relates to information supplied by the Company on the one hand or an Investor, or other Selling Stockholder on the other and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and each Investor, severally but not jointly, agree that it would not be just and equitable if contribution
pursuant to this subsection (v) were determined by pro rata allocation (even if the Investor and other Selling Stockholders 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 (v). The amount paid or payable by an indemnified person as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection
(v) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (v), each
Investor shall not be required to contribute any amount in excess of the amount by which the net amount received by such Investor from the sale of the Common Conversion Shares and/or the Warrant Shares to which such loss relates exceeds the amount
of any damages which such Investor has otherwise been required to pay 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. Each Investor’s obligations in this subsection to contribute shall be in proportion to its sale of Common Conversion Shares and/or Warrant Shares to which
such loss relates and shall not be joint with any other Selling Stockholders. 
 (vi) 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 3.3(c), and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 3.3(c) 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. The parties are advised that federal or state public policy as interpreted by the courts in certain jurisdictions may be contrary to certain of the provisions
of this Section 3.3(c), and the parties hereto hereby expressly waive and relinquish any right or ability to assert such public policy as a defense to a claim under this Section 3.3(c) and further agree not to attempt to
assert any such defense. 
 (d) Termination of Conditions and Obligations. The conditions precedent imposed by Section 5.5
or this Section 3.3 upon the transferability of the Common Conversion Shares and/or Warrant Shares shall cease and terminate as to any particular number of the Common Conversion Shares and/or Warrant Shares when such Common Conversion
Shares and/or Warrant Shares, as the case may be, 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 Common Conversion Shares and/or Warrant Shares, at the time such shares are eligible for sale pursuant to Rule 144(k) (and the Investor provides the Company with such reasonable and appropriate customary representations as may be
reasonably requested by the Company) or at such time as an opinion of counsel reasonably 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.

 (e) Information Available. So long as the Registration Statement is effective covering the resale of Common Conversion Shares
and/or Warrant Shares owned by any Investor, the Company will furnish to such Investors, upon the reasonable request of a Investor, an adequate number of copies of the Prospectuses to supply to any other party requiring such Prospectuses; and upon
the reasonable request of such Investor, the President or the Chief Financial Officer of the Company (or an appropriate designee thereof) will meet with such Investor or a representative thereof at the Company’s headquarters to discuss all
information relevant for disclosure in the Registration Statement covering the Common Conversion Shares and/or Warrant Shares, as the case may be, and will otherwise cooperate 

  

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with any Investor conducting an investigation for the purpose of reducing or eliminating such Investor’s 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 any Investor until and unless
the Investor shall have entered into a confidentiality agreement in form and substance reasonably satisfactory to the Company with the Company with respect thereto. 
 3.4 Reserved. 
 3.5 Reservation of Shares. From and after the Closing Date, subject to filing
of the Charter Amendment, the Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion or exercise, as the case may be, of any of the Securities, all shares of Preferred Conversion Shares and/or
Common Stock, as the case may be, issuable from time to time upon such conversion and/or exercise, as the case may be. If at any time the number of authorized but unissued shares of preferred stock and/or Common Stock, as the case may be, shall not
be sufficient to effect the conversion of any of the Securities, without limitation of any remedies available to any Investor, the Company will forthwith take such corporate action (and shall use its best efforts to cause the Company’s
stockholders to take such action) as may be necessary to increase its authorized but unissued shares of preferred stock and/or Common Stock, as the case may be, to such number of shares as shall be sufficient for such purposes. The Company shall
obtain any authorization, consent, approval or other action by, or make any filing with, any court or administrative body that may be required under applicable state securities laws in connection with the issuance of shares of the preferred stock
and/or Common Stock, as the case may be, upon conversion of the Notes, conversion of the Preferred Conversion Shares and exercise of the Warrants. 
 3.6 Reserved. 
 3.7 Removal of Legends. Upon the earlier of (i) registration of the Conversion Shares and the
Warrant Shares for sale pursuant to Section 3.3 or (ii) Rule 144(k) becoming available with respect to an Investor’s Conversion Shares and/or Warrant Shares, the Company shall, (A) deliver to the transfer agent for the
Common Stock (the “Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Common Stock without legends upon receipt by such Transfer Agent of the legended certificates
for such shares, together with either (1) a customary representation by such Investor that Rule 144(k) of the Securities Act applies to the shares of Common Stock represented thereby or (2) the Certificate of Subsequent Sale in
substantially the form of Exhibit G hereto, and (B) cause its counsel to deliver to the Transfer Agent one or more blanket opinions to the effect that the removal of such legends in such circumstances may be effected under the Securities
Act. From and after the earlier of such dates, upon an Investor’s written request, the Company shall promptly cause certificates evidencing such Investor’s securities to be replaced with certificates which do not bear such restrictive
legends, and Conversion Shares subsequently issued upon conversion of the Shares or the due exercise of the Warrants shall not bear such restrictive legends. When the Company is required to cause unlegended certificates to replace previously issued
legended certificates, if unlegended certificates are not delivered to an Investor within three (3) business days of submission by that Investor of legended certificate(s) to the Transfer Agent as provided above (or to the Company, in the case
of the Warrants), the Company shall be liable to such Investor for a penalty equal to 1% of the aggregate purchase price of the Conversion Shares evidenced by such certificate(s) for each thirty (30) day period (or portion thereof) beyond such
three (3) business day period that the unlegended certificates have not been so delivered; provided that in no event shall the aggregate amount of cash to be paid to such Investor pursuant to this Section 3.7 exceed 9% of
such aggregate purchase price. 
 3.8 Reserved. 
  

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 3.9 Prior Round Liquidated Damages. The Company shall property account for and record as a
liability on the Company’s balance sheet all accrued and unpaid liquidated damages payable with respect to prior financings (which the Company hereby acknowledges remain outstanding). 
 3.10 Charter Amendment and Further Assurances. Upon receipt of the executed Written Consent, the Company shall promptly take such further actions,
execute all further documents and perform all further acts necessary, including, without limitation, the preparation and filing of an Information Statement on Schedule 14C with the SEC and file the Charter Amendment with the Secretary of State of
Delaware. 
 ARTICLE IV 
 NEGATIVE COVENANTS OF THE COMPANY 
 For so long as any Preferred Conversion Shares are issued and outstanding, the Company
hereby covenants with (i) M/C Venture Partners that so long as M/C Venture Partners owns at least 50% of (1) the aggregate principal of the Notes initially issued to it hereunder, or (2) the Preferred Conversion Shares issued or
issuable upon conversion of the Notes, or (3) the Common Conversion Shares issued or issuable upon conversion of the Preferred Conversion Shares and (ii) with respect to Sections 4.6 and 4.11, with all of the Specified
Investors for so long as such Investors beneficially own 25% of the Common Stock (calculated on a fully diluted basis), in addition to any other vote required by law or the Company’s certificate of incorporation, without the prior written
consent of M/C Venture Partners, the Company will not: 
 4.1 Change in Control; Sale of Assets; Merger. Enter into any transaction,
or series of related transactions, constituting a Change of Control (or agree to enter into any such transaction or series of related transactions, or permit any Subsidiary to do so). For purposes of this Section 4.1, “Change of
Control” shall mean the existence or occurrence of any of the following: (a) the sale, conveyance or disposition of all or substantially all of the assets of the Company; (b) the effectuation of a transaction or series or related
transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of (other than as a direct result of normal, uncoordinated trading activities in the Common Stock generally); (c) the consolidation, merger
or other business combination of the Company with or into any other entity, immediately following which the prior stockholders of the Company fail to own, directly or indirectly, at least fifty percent (50%) of the voting equity of the
surviving entity; and (d) a transaction or series of related transactions in which any person or group, other than the Investors and their affiliates, acquires more than fifty percent (50%) of the voting equity of the Company,
provided, that the Company shall not be deemed to have violated this Section 4.1(d) in the event the Investors sell, convey or transfer more than 50% of the outstanding equity securities of the Company to an unaffiliated third
party. 
 4.2 Creation of Senior or Pari Passu Equity; Issuance of Equity Securities. Create or authorize the creation of any
additional class or series of shares of stock (or any debt security which by its terms is convertible into or exchangeable for any equity security of the Company and any security which is a combination of debt and equity) unless the same ranks
junior to the Common Stock as to dividends and the distribution of assets on the liquidation, dissolution or winding up of the Company; or issue, or agree to issue, any equity security (or any security convertible, exercisable or exchangeable for or
into any equity security) of the Company other than securities set forth in Section 3.1(e). 
 4.3 Repurchases, Redemptions,
Dividends. Purchase or redeem, or set aside any sums for the purchase or redemption of, or pay any dividend or make any distribution on, any shares of capital stock of 

  

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the Company or permit any Subsidiary to do any of the foregoing, except for (1) dividends or other distributions payable on the Common Stock solely in
the form of additional shares of Common Stock; (2) redemption of the Shares as contemplated by the Certificate of Designations and/or the Company’s certificate of incorporation; (3) the dividends and/or distributions with respect to
the Shares contemplated by the Certificate of Designations and/or the Company’s certificate of incorporation; and (4) the repurchase of shares of Common Stock from employees or consultants at the original purchase price thereof pursuant to
awards granted prior to the date hereof under a stock plan approved by the Board of Directors. 
 4.4 Transfers of Intellectual
Property. Transfer any ownership or interest in, or material rights relating to, or the granting of any liens or encumbrances on, any of the Intellectual Property to any person or entity which is not a member of the consolidated group of the
Company and its Subsidiaries; provided, however, that this restriction shall not apply to transfers of Intellectual Property accomplished in the ordinary course of business (such as pursuant to software license agreements in the ordinary
course of business) or liens or encumbrances previously granted pursuant to the Credit Facilities. 
 4.5 Liquidation or Dissolution.
Consent to or effect any liquidation, dissolution or winding up of the Company or any recapitalization or reorganization of the Company, or permit any Subsidiary to do any of the foregoing. 
 4.6 Change in Size of Board. Increase or decrease the number of directors constituting the size of the Board of Directors from eight (8)
members. 
 4.7 Change to Charter/By-laws. Amend, alter or repeal any provision of the certificate of incorporation or by-laws
of the Company. 
 4.8 Change in Nature of Business. Make, or permit any Subsidiary to make, any change in the nature of its business
in the Exchange Act Documents existing on the Closing Date. 
 4.9 Restrictions on Indebtedness. Except for indebtedness under the
existing Credit Facilities, create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any liability with respect to indebtedness for money borrowed which exceeds, in the
aggregate, $3,000,000, provided that indebtedness for borrowed money assumed, guaranteed, endorsed or upon which the Company or any Subsidiary has otherwise become directly or contingently liable on, shall count as indebtedness for money
borrowed for the purpose of this restriction. 
 4.10 Change in Authorized Capital Stock. Increase or decrease in the authorized
amount of any shares of capital stock of the Company, whether any such change shall be by means of amendment to the Company’s certificate of incorporation or by merger, consolidation or otherwise. 
 4.11 No Disparate Voting Rights. Take any action, including, without limitation, amendments to the certificate of incorporation, that would enable
any holder of a share of capital stock of the Company to vote such shares on any matter at a rate exceeding the number of votes that such share would be entitled to had it been purchased at a purchase price equal to one share of Common Stock of the
Company on the date of its purchase (and the Company shall not use indebtedness to evade this covenant). 
 4.12 Issuance of Compensatory
Equity Awards. Grant any options or other rights to purchase capital stock except to employees, directors and consultants as authorized by vote of the Board of Directors or its Compensation Committee, if such committee has been formed.

  

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 4.13 Adjustments to Warrants. Take any action which would cause any adjustment under
Section 8 of the Warrants. 
 4.14 Credit Facilities. Amend the Credit Facilities, any amendment thereto and/or the warrants
issued in connection therewith, or take any action that would cause any increase in the number of shares of Common Stock for which such warrants may be exercised. 
 ARTICLE V 
 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTORS 
 5. Each Investor, severally and not jointly, represents and warrants to, and covenants with, the Company that: 
 5.1 Authorization. The Investor has all requisite power and authority to execute, deliver and perform its obligations under this Agreement. The
execution of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of such Investor and this Agreement has been duly executed and delivered and constitutes the valid
and binding obligation of the Investor enforceable in accordance with its terms, except as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law). 
 5.2 Purchase Entirely for Own
Account. The Securities to be acquired by the Investor will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the
Securities Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. Such Investor does not have any contract, undertaking, agreement, or arrangement with any person to sell,
transfer, or grant participation to any person with respect to any of the Shares or the Warrants. Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. 
 5.3 Disclosure of Information. The Investor acknowledges that it has received all the information that it has requested relating to the Company
and the purchase of the Notes. The Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Notes. The foregoing, however, does not
limit or modify the representations and warranties of the Company in this Agreement or the right of the Investor to rely thereon. 
 5.4
Accredited Investor. The Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect and the Investor is also knowledgeable, sophisticated and experienced in
making, and is qualified to make decisions with respect to the transactions contemplated hereby. 
 5.5 Restricted Securities.
Investor understands that the Securities acquired hereunder are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering, and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. In this connection, the Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 
  

 Securities Purchase Agreement – Page 24 

 5.6 Legends. It is understood that the certificates evidencing the Conversion Shares and Warrant
Shares shall bear a legend, reading substantially as follows: 
 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS EXCEPT PURSUANT TO RULE 144(K) OR PURSUANT TO AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.” 
 5.7 Investor Questionnaire. The Investor covenants to execute and deliver to the Company at or promptly following the Closing an investor
questionnaire supplied by the Company to facilitate the registration of the Conversion Shares and the Warrant Shares pursuant to the registration rights set forth herein and the information contained therein shall be true and correct. 
 5.8 Prohibited Transactions. During the last thirty (30) days prior to the date hereof, neither such Investor nor any Affiliate of
such Investor which (a) had knowledge of the transactions contemplated hereby, (b) has or shares discretion relating to such Investor’s investments or trading or information concerning such Investor’s investments, including in
respect of the Securities, or (c) is subject to such Investor’s review or input concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has, directly or indirectly, effected or agreed
to effect any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act) with respect to the Conversion Shares or Warrant Shares, granted any other right
(including, without limitation, any put or call option) with respect to the Conversion Shares or Warrant Shares or with respect to any security that includes, relates to or derived any significant part of its value from the Conversion Shares or
Warrant Shares or otherwise sought to hedge its position in the Conversion Shares or Warrant Shares (each, a “Prohibited Transaction”). Prior to the earliest to occur of the termination of this Agreement or the Effective Date, such
Investor shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited Transaction. Such Investor acknowledges that the representations, warranties and covenants contained in this Section 5.8
are being made for the benefit of the Investors as well as the Company and that each of the other Investors shall have an independent right to assert any claims against such Investor arising out of any breach or violation of the provisions of this
Section 5.8. 
 5.9 Restrictions on Certain Payments. The Investor acknowledges and agrees that, pursuant to the
provisions of the Credit Facilities, the Company will be prohibited from (a) paying or declaring any dividends on or with respect to the Shares (except for dividends payable solely in stock of the Company) or (b) redeeming, retiring,
purchasing or otherwise acquiring any of the Shares until such time as all indebtedness under the Credit Facilities, and any extensions, renewals or refinancings thereof, has been repaid in full, without, in any case, obtaining the prior written
consent of Lender.  
  

 Securities Purchase Agreement – Page 25 

 ARTICLE VI 
 SURVIVAL; INDEMNITY 
 6.1 Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company herein shall survive the execution of this Agreement, the delivery to the Investors of the
Securities being acquired hereunder and the payment, if any, therefor; provided, that the representations and warranties of the parties hereunder shall only survive for a period of one year following the Closing Date. 
 6.2 Indemnity. Company agrees to indemnify and hold each Investor, and its respective directors, managers, officers, shareholders, members,
partners, affiliates, employees, attorneys and agents (each, an “Indemnified Person”), harmless from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses of any kind or nature
whatsoever (including attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) which may be instituted or asserted against or incurred by any such Indemnified Person as the result
of their investment in the Securities under this Agreement or with respect to any breach (or alleged breach) of any representation, warranty or covenant of the Company contained in this Agreement or with respect to the execution, delivery,
enforcement, performance and administration of, or in any other way arising out of or relating to, this Agreement or transactions contemplated by or referred to herein and any actions or failures to act with respect to any of the foregoing, except
to the extent that any such indemnified liability is finally determined by a court of competent jurisdiction to have resulted from such Indemnified Person’s gross negligence or willful misconduct. The Company shall reimburse each Investor for
amounts provided for herein on demand as such expenses are incurred. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO THE COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THEIR INVESTMENT IN THE SECURITIES UNDER THIS AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER. THE COMPANY SHALL NOT BE RESPONSIBLE OR LIABLE TO ANY INDEMNIFIED PERSON OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR SPECIAL DAMAGES WHETHER OR NOT SUCH DAMAGES WERE REASONABLY FORESEEABLE. 
 ARTICLE VII

 MISCELLANEOUS 
 7.1
Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (a) if within the United States by first-class registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (b) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given and received (i) if delivered by first-class registered or certified
mail, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if
delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed as follows: 
  

 Securities Purchase Agreement – Page 26 

 (a) if to the Company, to: 
 Vertical Communications, Inc. 
 Ten Canal Park 
 Suite 602 
 Cambridge, MA 02141 
 Attn: William Y. Tauscher, Chief Executive Officer 
 (b) with a copy to: 
 Andrews Kurth LLP 
 1717 Main Street, Suite 3700 
 Dallas, TX 75201 
 Attn: Victor B. Zanetti, Esq. 
 (c) if to the Investors, at their respective addresses on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in writing, with a copy to counsel to M/C Venture Partners: 
 Goodwin Procter LLP 
 Exchange Place 
 Boston, MA 02109 
 Attn: James R. Kasinger, Esq. 
 7.2 Changes. This Agreement may not be modified, waived or amended except pursuant to an instrument in writing signed by the Company and with Investors constituting the Specified Investors’ Consent (provided, that, if such
modification, waiver or amendment does not equally affect all Investors to whom such modification, waiver or amendment is applicable (taking into account the relative ownership interests of such Investors), such modification, waiver or amendment
must be signed by all Investors). 
 7.3 Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this Agreement. 
 7.4 Severability. In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 
 7.5 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER. 
  

 Securities Purchase Agreement – Page 27 

 7.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 
 7.7 Press Release. The Company shall within one (1) business day of the Initial Closing issue a press release disclosing the material terms
of the transactions contemplated hereby (including at least the principal amount of Notes issued hereunder and proceeds therefrom). 
 7.8
Prior Agreements. This Agreement, the Notes and the Warrants constitute the entire agreement between the parties and supersedes any prior understandings or agreements (including without limitation oral agreements) concerning the purchase and
sale of the Notes. 
 7.9 Costs, Expenses and Taxes. The Company agrees to pay the reasonable out-of-pocket costs and expenses of M/C
Venture Partners incurred in connection with the transactions contemplated by this Agreement, including the reasonable fees and expenses of Goodwin Procter LLP, special counsel for M/C Venture Partners, as well as the reasonable fees and
out-of-pocket expenses of legal counsel, independent public accountants, technical professionals and other outside experts retained by M/C Venture Partners in connection with the transactions contemplated by this Agreement and the amendment or
enforcement of this Agreement. 
 7.10 Transfer of Rights. All covenants and agreements contained in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including without limitation transferees of any Securities), whether so expressed or not. 
 7.11 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint
with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any other document, and no action taken by
any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Agreement. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the
other related documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. Each Investor has been represented by its own separate legal counsel in their review and
negotiation of this Agreement. The Company has elected to provide all Investors with the same terms and documents for the convenience of the Company and not because it was required or requested to do so by the Investors. 
 [Signature Page Follows] 
  

 Securities Purchase Agreement – Page 28 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written. 
  

			
	VERTICAL COMMUNICATIONS, INC.
		
	By:	 	 /s/ KENNETH M. CLINEBELL

	Name:	 	Kenneth M. Clinebell
	Title:	 	Chief Financial Officer and Secretary

			
	INVESTOR:
	
	M/C VENTURE PARTNERS V, L.P.
	
	 By: M/C VP, LLC, its General Partner

		
	 By:
	 	 /s/ JOHN WATKINS

	 Print Name:
	 	 Matthew J. Rubins

	 Title:
	 	 Manager

			
		
	 Address:
	 	 75 State Street, Suite 2500

		 	 Boston, MA 02109

		
	 Tax ID No.:
	 	 ################

		
	 Contact name:
	 	  

		
	 Telephone:
	 	 (617) 345-7200

	
	Name in which shares should be registered (if different):
	  

  

 -30- 

			
	INVESTOR:
	
	M/C VENTURE INVESTORS, LLC
		
	By:	 	 /s/ JOHN WATKINS

	Print Name:	 	John Watkins
	Title:	 	Manager

			
		
	Address:	 	75 State Street, Suite 2500
		 	Boston, MA 02109
		
	Tax ID No.:	 	################
		
	Contact name:	 	  

		
	Telephone:	 	(617) 345-7200
	
	Name in which shares should be registered (if different):
	  

 Signature Page to Securities Purchase Agreement 
  

			
	INVESTOR:
	
	CHESTNUT VENTURE PARTNERS, L.P.
	
	By: Chestnut Street Partners, Inc., its General Partner
		
	By:	 	 /s/ JOHN WATKINS

	Print Name:	 	John Watkins
	Title:	 	Manager

			
		
	Address:	 	75 State Street, Suite 2500
		 	Boston, MA 02109
		
	Tax ID No.:	 	################
		
	Contact name:	 	  

		
	Telephone:	 	(617) 345-7200
	
	Name in which shares should be registered (if different):
	  

 Signature Page to Securities Purchase Agreement 
  

			
	INVESTOR:
	
	 /s/ William Y. Tauscher

	WILLIAM Y. TAUSCHER, Individually
		
	Address:	 	c/o Vertical Communications, Inc.
		 	Ten Canal Park
		 	Cambridge, MA 02141
	
	Name in which shares should be registered (if different):
	
	The Tauscher Family Trust

  

 -33- 

 Signature Page to Securities Purchase Agreement 
  

			
	INVESTOR:
	
	PATHFINDER VENTURES IV, L.L.C.
	
	By: RRS Investment II, L.L.C., its Manager
	
	By Stolworthy Revocable Trust, its Manager
		
	By:	 	 /s/ R. Randy Stolworthy

		 	R. Randy Stolworthy, Trustee

			
		
	Address:	 	c/o RRS & Company
		 	21 East 6th Street, Suite 706
		 	Tempe, AZ 85281
	
	Name in which shares should be registered (if different):
	  

 EXHIBIT A 
 SCHEDULE OF INVESTORS 
 Initial Investors 
  

							
	 Investors
	  	Principal Amount of
Notes ($)	  	Applicable Percentage	 
	 M/C Venture Partners1 
	  			  		
	 M/C Venture Partners V, L.P.
	  	$	2,359,672.50	  	94.3869	%
	 M/C Venture Investors, LLC
	  	$	96,370	  	3.8548	%
	 Chestnut Venture Partners, L.P.
	  	$	43,957.50	  	1.7583	%
		  	 	 	  	 	 
	 M/C Venture Partners Total
	  	$	2,500,000	  	40.1	%
	 Pathfinder Ventures IV, L.L.C.
	  	$	1,750,000	  	23.9	%
	 William Y. Tauscher
	  	$	1,000,000	  	3.2	%
	 TOTALS
	  	$	5,250,000	  		

  

	 1
	 For purposes of the Agreement, the entities listed below are collectively referred to as “M/C Venture
Partners”. 

 EXHIBIT B 
 FORM OF NOTE 

 EXHIBIT C 
 CONSENT AND WAIVER 

 EXHIBIT D 
 FORM OF COMPANY COUNSEL OPINION 

 EXHIBIT E 
 LIST OF ROFR OFFEREES 
  

				
	 ROFR Offeree
	  	Principal Amount of Notes1
	 Special Situations Fund III, L.P.
	  	$	261,415.71
	 Special Situations Cayman Fund, L.P.
	  	$	124,871.01
	 Special Situations Private Equity Fund, L.P.
	  	$	123,036.57
	 Special Situations Technology Fund, L.P.
	  	$	12,754.93
	 Special Situations Technology Fund II, L.P.
	  	$	67,338.59
	 Special Situations Fund III QP, L.P.
	  	$	132,647.19
	 Coral’s Momentum Fund, Limited Partnership
	  	$	95,499.15
	 SRB Greenway Capital, L.P.
	  	$	7,396.10
	 SRB Greenway Capital (Q.P.), L.P.
	  	$	57,862.36
	 SRB Greenway Offshore Operating Fund, L.P.
	  	$	3,681.44
	 Walker Smith Capital, L.P.
	  	$	4,149.12
	 Walker Smith Capital (Q.P.), L.P.
	  	$	23,410.45
	 Walker Smith International Fund, Ltd.
	  	$	35,272.87
	 HHMI Investments, L.P.
	  	$	13,175.74

  
  

	 1
	 Includes amounts to be received upon the closing of a Qualifying Investment (as defined in the Notes) of $1,000,000.

 EXHIBIT F 
 CHARTER AMENDMENT 

 EXHIBIT G 
 WRITTEN CONSENT 

 EXHIBIT H 
 Plan of Distribution 
 The selling stockholders, which as used herein includes donees, pledgees, transferees
or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time
to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These
dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. 
 The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein: 
  

	 	-	 	 ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	 	-	 	 block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the
transaction; 

  

	 	-	 	 purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	 	-	 	 an exchange distribution in accordance with the rules of the applicable exchange; 

  

	 	-	 	 privately negotiated transactions; 

  

	 	-	 	 short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC; 

  

	 	-	 	 through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; 

  

	 	-	 	 broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; 

  

	 	-	 	 a combination of any such methods of sale; and 

  

	 	-	 	 any other method permitted pursuant to applicable law. 

 The selling stockholders may, from time to time, 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, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. 

 In connection with the sale of our common stock or interests therein, the selling stockholders may enter
into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our
common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares
such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). 
 The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right
to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise
of the warrants by payment of cash, however, we will receive the exercise price of the warrants. 
 The selling stockholders also may resell
all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule. 
 The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be
“underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. 
 To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to
the registration statement that includes this prospectus. 
 In order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with. 
 We have advised the selling stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. 
 We have
agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus. 

 We have agreed with the selling stockholders to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be
sold pursuant to Rule 144(k) of the Securities Act. 

 EXHIBIT I 
 CERTIFICATE OF SUBSEQUENT SALE 
 [Name and Address of Transfer Agent] 
  

			
	 RE:
	 	Sale of Shares of Common Stock of Vertical Communications, Inc. (the “Company”) pursuant to the Company’s Prospectus dated
                    ,              (the
“Prospectus”)

 Dear Sir/Madam: 
 The undersigned hereby certifies, in connection with the sale of shares of Common Stock of the Company included in the table of Selling Shareholders in the Prospectus, that the undersigned has sold the shares pursuant
to the Prospectus and in a manner described under the caption “Plan of Distribution” in the Prospectus and that such sale complies with all securities laws applicable to the undersigned, including, without limitation, the Prospectus
delivery requirements of the Securities Act of 1933, as amended. 
 Selling Shareholder (the beneficial owner):
                                        
                                        
        
 Record Holder (e.g., if held in name of nominee):
                                        
                                    
 Restricted Stock Certificate No.(s):
                                        
                                        
                    
 Number of Shares Sold:
                                        
                                        
                                    
 Date of Sale:
                                        
                                        
                                        
                
 In the event that you receive a stock
certificate(s) representing more shares of Common Stock than have been sold by the undersigned, then you should return to the undersigned a newly issued certificate for such excess shares in the name of the Record Holder and BEARING A RESTRICTIVE
LEGEND. Further, you should place a stop transfer on your records with regard to such certificate. 
  

					
		 	Very truly yours,
			
	Dated:                         	 	By:	 	  

			
		 	Print Name:	 	  

			
		 	Title:	 	  

			
		 	 cc:
	 	[Company Name and Address]

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