0001071411-08-000030.txt : 20081006 0001071411-08-000030.hdr.sgml : 20081006 20081003175109 ACCESSION NUMBER: 0001071411-08-000030 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20081003 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081006 DATE AS OF CHANGE: 20081003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FUSION TELECOMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001071411 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 582342021 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32421 FILM NUMBER: 081107763 BUSINESS ADDRESS: STREET 1: 420 LEXINGTON AVENUE STREET 2: SUITE 1718 CITY: NEW YORK STATE: NY ZIP: 10170 BUSINESS PHONE: (212) 201-2400 MAIL ADDRESS: STREET 1: 420 LEXINGTON AVENUE STREET 2: SUITE 1718 CITY: NEW YORK STATE: NY ZIP: 10170 8-K 1 form_8-k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934

October 4, 2008		(September 17, 2008)
Date of Report	(Date of earliest event reported)

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation)

001-32421

(Commission File Number)

58-2342021

(IRS Employer Identification No.)

420 Lexington Avenue, Suite 1718, New York, NY 10170

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (212) 201-2400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))\

Item 1.01 Entry into a Material Definitive Agreement.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off–Balance Sheet Arrangement of a Registrant.

On September 17, 2008, Fusion Telecommunications International, Inc. (the “Company”) and a lender agreed to amend (“Amendment”) a promissory note dated May 27, 2008, as previously amended and restated on July 15, 2008, evidencing $200,000 borrowed from the lender. Under the note, as amended (i) interest on the outstanding principal balance from May 27, 2008 through July 14, 2008 shall be paid at the rate of 10% per annum, (ii) interest on the outstanding principal balance from July 15, 2008 until the date of maturity shall be paid at the rate of 12% per annum, and (iii) the maturity date of the promissory note is extended to October 15, 2008. This Amendment, as well as the original note, grants the lender a collateralized security interest in the Company’s account(s) receivable. The proceeds are being used for general working capital purposes. The Form of Amended and Restated Promissory Note and Security Agreement issued in this transaction is filed as exhibit 10.1 to this report.

On September 18, 2008, the Company borrowed $25,000 from a Director. The loan is evidenced by a promissory note providing for repayment of the outstanding principal balance on November 17, 2008, plus interest at the rate of 10% per annum. If the note is not paid by the maturity date, it automatically converts to a demand note, and the lender has the right to demand payment of all principal and accrued interest with ten (10) days notice. The note also grants the lender a collateralized security interest in the Company’s account(s) receivable. The proceeds are being used for general working capital purposes. The Form of Promissory Note and Security Agreement issued in this transaction is filed as exhibit 10.2 to this report.

On September 30, 2008 the Company borrowed $250,000 from an entity that is a shareholder of the Company. The loan is evidenced by a promissory note, providing for repayment of the outstanding principal balance on October 31, 2008, plus interest at the rate of 10% per annum The note also grants the lender a collateralized security interest in the Company’s account(s) receivable. The proceeds are being used for general working capital purposes. The Form of Promissory Note and Security Agreement issued in these transactions is filed as exhibit 10.5 to this report.

Item 3.02 Unregistered Sales of Equity Securities

On September 22, 2008, the Company entered into subscription agreements with eight (8) individual investors for an offering of 1,955,885 shares of Common Stock and five-year warrants to purchase 782,358 shares of Common Stock, in consideration for $332,500. Each warrant to purchase Common Stock is exercisable at $.20 per share, which is equal to 120% of the closing price of the Company’s Common Stock on the business day before closing. The Form of Subscription and Rights Agreement and the Form of Common Stock Purchase Warrant are filed as an exhibit to this report.

The securities described above were offered by the Company and no commission or similar remuneration was paid in connection with the sales. Each of the investors represented that it was an “accredited investor” and was acquiring the securities for its own account, for investment purposes only and acknowledged that the securities were not registered under Federal or State securities laws and that the securities could not be transferred or disposed of absent such registration or the availability of an applicable exemption from registration. In addition, each certificate evidencing the securities bears or will bear a legend describing the restrictions on transferability under applicable law. No general solicitation or advertising was used in connection with this offering. The securities were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations there under including Rule 506 of Regulation D. The proceeds of the offering will primarily be used for general corporate purposes. The Company has agreed to file a registration statement with the Securities and Exchange Commission as soon as practicable following the final closing of this Offering.

Page 2of 3
Fusion Telecommunications International, Inc. – Form 8–K

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1	Form of Amended and Restated Promissory Note and Security Agreement
10.2	Form of Promissory Note and Security Agreement
10.3	Form of Subscription and Rights Agreement
10.4	Form of Common Stock Purchase Warrant
10.5	Form of Promissory Note and Security Agreement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.

		Fusion Telecommunications International, Inc.

	By:		/s/ MATTHEW D. ROSEN
			MATTHEW D. ROSEN
October 4, 2008			as Chief Executive Officer

Index to Exhibits

No.	Description
10.1	Form of Amended and Restated Promissory Note and Security Agreement
10.2	Form of Promissory Note and Security Agreement
10.3	Form of Subscription and Rights Agreement
10.4	Form of Common Stock Purchase Warrant
10.5	Form of Promissory Note and Security Agreement

Page 3of 3
Fusion Telecommunications International, Inc. – Form 8–K

EX-10 2 exh10_2.htm

PROMISSORY NOTE

SECURITY AGREEMENT

$ [INSERT AMOUNT]

[INSERT DATE]

     For value received, the undersigned maker (“Maker”), whose address is 420 Lexington Avenue, Suite 1718, New York, NY 10170, promises to pay to the order of [INSERT LENDER’S NAME], “Lender”, whose address is [INSERT LENDER’S ADDRESS], the principal sum of [INSERT AMOUNT] Dollars ($ [NUMERIC VALUE]) together with all interest accrued from the date of execution of the Note at the rate of [INSERT PERCENT] percent ([NUMERIC VALUE] %) per annum upon the unpaid balance until maturity, payable in U.S. Dollars at the Payee’s address set forth above, or at such other address as Payee may designate. The maturity date of this note is [INSERT MATURITY DATE].

     In the event that the note is not repaid by the maturity date, the note will automatically convert to a demand note, and the principal sum and all accrued interest will be payable in full upon ten days notice of demand from the lender.

     If an event of default shall occur, neither the failure of the holder hereof promptly to exercise its right to declare the outstanding principal and accrued by unpaid interest hereunder to be immediately due and payable, nor the failure to exercise any other right or remedy the holder may have for default, nor the acceptance by the holder of late or partial payments shall constitute a waiver of such rights in connections with any future default on the part of the undersigned or any other person who may be liable hereunder.

     This Note is to be construed and enforced according to the laws of the State of [INSERT STATE],.

     This Note is secured by the Maker’s accounts receivable and Maker hereby grants Lender a security interest in all such Accounts Receivable.

     In order to perfect a security interest in the Accounts Receivable, Maker agrees to execute and deliver to the Lender appropriate UCC-l financing statements.

     Maker waives any right of exemption and waives presentment, protest and demand, notice of protest, demand, and/or dishonor and nonpayment of this Note.

Maker:

Fusion Telecommunications International, Inc.

By: _________________________________

Printed Name: [INSERT NAME], [INSERT TITLE]

Date: [INSERT DATE]

Page 1 of 1

Exhibit 10.2 Form of Promissory Note and Security Agreement

EX-10 3 exh10_3.htm

No:
Name:
Number of Shares Subscribed for:

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

SUBSCRIPTION AND RIGHTS AGREEMENT

[INSERT INFORMATION HERE]

Fusion telecommunications international, inc.

OFFERING INFORMATION, LEGENDS, AND NOTICES

THE SECURITIES OFFERED HEREBY, HAVE NOT BEEN FILED OR REGISTERED WITH OR APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”), NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS. NO STATE SECURITIES LAW ADMINISTRATOR HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR THE ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IT IS INTENDED THAT THE SECURITIES OFFERED HEREBY WILL BE MADE AVAILABLE TO ACCREDITED INVESTORS, AS DEFINED IN REGULATION D AND RULE 501 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES OFFERED HEREBY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS FOR NONPUBLIC OFFERINGS. SUCH EXEMPTIONS LIMIT THE NUMBER AND TYPES OF INVESTORS TO WHICH THE OFFERING WILL BE MADE AND RESTRICT SUBSEQUENT TRANSFERS OF THE INTERESTS.
THE SECURITIES OFFERED HEREBY SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS OFFERING.
NO SECURITIES MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION UNDER THE APPLICABLE FEDERAL OR STATE SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH REGISTRATION REQUIREMENTS.
THE OFFEREE, BY ACCEPTING DELIVERY OF THE OFFERING MATERIALS, AGREES TO RETURN THE OFFERING MATERIALS AND ALL ACCOMPANYING OR RELATED DOCUMENTS TO THE COMPANY UPON REQUEST IF THE OFFEREE DOES NOT AGREE TO PURCHASE ANY OF THE SECURITIES OFFERED HEREBY.
ANY OFFERING MATERIALS SUBMITTED IN CONNECTION WITH THE PRIVATE PLACEMENT OF THE SECURITIES DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. ANY REPRODUCTION OR DISTRIBUTION OF ANY OFFERING MATERIALS IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF THEIR CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, IS PROHIBITED. ANY PERSON ACTING CONTRARY TO THE FOREGOING RESTRICTIONS MAY PLACE HIM/HERSELF AND THE COMPANY IN VIOLATION OF FEDERAL OR STATE SECURITIES LAWS.

NASAA UNIFORM LEGEND

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

FOR RESIDENTS OF PENNSYLVANIA

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE PENNSYLVANIA SECURITIES ACT AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF WITHIN 12 MONTHS AFTER THE DATE OF PURCHASE, UNLESS SUBSEQUENTLY REGISTERED UNDER THE PENNSYLVANIA SECURITIES ACT OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM REGISTRATION BY SECTION 203(d), DIRECTLY FROM THE ISSUER OR AFFILIATE OF THE ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON WITHIN 2 BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF PURCHASE, WITHIN 2 BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED.

FOR RESIDENTS OF GEORGIA

THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH THIRTEEN (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

FOR RESIDENTS OF FLORIDA

PURSUANT TO THE LAWS OF THE STATE OF FLORIDA, IF SALES ARE MADE TO FIVE (5) OR MORE INVESTORS IN FLORIDA, ANY FLORIDA INVESTOR MAY, AT ITS OPTION, WITHDRAW, UPON WRITTEN (OR TELEGRAPHIC) NOTICE, ANY PURCHASE HEREUNDER WITHIN A PERIOD OF THREE (3) DAYS AFTER (A) THE INVESTOR FIRST TENDERS OR PAYS TO THE COMPANY AN AGENT OF THE COMPANY OR AN ESCROW AGENT THE CONSIDERATION REQUIRED HEREUNDER, (B) THE INVESTOR DELIVERS ITS EXECUTED SUBSCRIPTION AGREEMENT, OR (C) THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER.

Subscription and Rights Agreement

Page 2

SUBSCRIPTION AND RIGHTS AGREEMENT
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

SUBSCRIPTION AND RIGHTS AGREEMENT (this “Subscription Agreement”) by and between FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware Corporation (the “Company”) and the SUBSCRIBER whose name appears on the signature page to this Subscription Agreement (“Subscriber”).
This Subscription Agreement is executed and delivered in connection with the offering of up to $[INSERT INFORMATION HERE] (the “Offering”) in shares (the “Shares”) of the Company’s Common Stock, $.01 par value per share (the “Common Stock”) and accompanying Common Stock Purchase Warrants (the “Warrants”) to purchase one share of Common Stock (“Warrant Shares”) for each [INSERT INFORMATION HERE] Shares purchased in the Offering. The Company, in its sole discretion and without notice, may increase the size of the Offering by an additional $[INSERT INFORMATION HERE]. The Common Stock and the Warrants are sometimes collectively referred to as the “Securities”). The Offering and the Securities are more fully described in the Company’s Confidential Private Placement Memorandum dated [INSERT INFORMATION HERE] (the “Memorandum”). The Form of Common Stock Purchase Warrant is attached as Exhibit “[INSERT INFORMATION HERE]” to the Memorandum.

A. General.

(1) Subscriber hereby subscribes for and agrees to purchase from the Company, and the Company agrees to sell to Subscriber, the dollar amount of Shares set forth on the signature page hereof.

(2) Subscriber herewith tenders to the Company the entire amount of the purchase price by check made payable to the order of “[INSERT INFORMATION HERE]” or by wire transfer of immediately available funds to the Escrow Account below:

Bank Name:          [INSERT INFORMATION HERE]
ABA Number          [INSERT INFORMATION HERE]
Account Name:     [INSERT INFORMATION HERE]
Account Number:      [INSERT INFORMATION HERE]

(3) Subscriber herewith delivers a completed and signed Subscription Agreement and completed and signed Qualified Purchaser Questionnaire for Shares of Fusion Telecommunications International, Inc. (“Qualified Purchaser Questionnaire”) to the Company at:

[INSERT INFORMATION HERE]
Attn: [INSERT INFORMATION HERE]

(4) Subscriber acknowledges and understands that closings of the Offering will be held no less frequently than twice per week and, possibly, more frequently, as described in the Memorandum. However, until such time as Subscriber’s subscription is accepted and a closing of the purchase and sale of the Securities being subscribed to by Subscriber takes place, Subscriber will not have access to its subscription funds and will not be a stockholder of the Company.

(5) In the event the Company elects, in its sole discretion, to accept Subscriber’s payment of the purchase price for the Securities by check and include Subscriber in a closing of the Offering prior to the time that Subscriber’s subscription payment becomes available to the Company in cleared US dollars (“Cleared Funds”), the Company will treat Subscriber’s check as an obligation to pay us the amount of the check, with such obligation being satisfied when Cleared Funds are available to us. The Company will not be required to deliver certificates evidencing Securities to Subscriber until we receive payment for the Securities in Cleared Funds; and we will retain a purchase money security interest in the Securities until we receive Cleared Funds or determine in our sole discretion to rescind the subscription due to lack of Cleared Funds. Subscriber understands that the holding period for the Shares under Rule 144 will not commence until the closing occurs and the Company receives payment for the Shares in Cleared Funds.

B. Securities offered have not been registered under the Securities Act of 1933, as amended

Subscriber acknowledges that (i) the Securities have not been registered under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “1933 Act”), or the securities laws of any state; (ii) absent an exemption, any transfer of the Securities would require registration; (iii) the Securities are being offered for sale in reliance upon exemptions from registration contained in the 1933 Act and applicable state laws; and (iv) the Company's reliance upon such exemption is based in part upon Subscriber's representations, warranties and agreements contained in this Subscription Agreement and in the Qualified Purchaser Questionnaire that Subscriber is also delivering to the Company.

C. Representations, Warranties, Acknowledgements and Agreements

In order to induce the Company to accept this Subscription Agreement, Subscriber represents, warrants, acknowledges and covenants to the Company as follows:

(1)     Subscriber understands that (i) this Subscription Agreement may be accepted or rejected in whole or in part by the Company in its sole and absolute discretion, and (ii) this Subscription Agreement shall survive Subscriber's death, disability or insolvency, except that Subscriber shall have no obligation in the event that this Subscription Agreement is rejected by the Company. In the event that the Company does not accept Subscriber's subscription, or if the Offering is terminated for any reason, Subscriber's subscription payment (or portion thereof, as the case may be) will be returned to Subscriber without interest or deduction.

(2)     Subscriber has carefully read this Subscription Agreement, the Qualified Purchaser Questionnaire, and the Memorandum, including the Company’s Annual Report on Form 10-[INSERT INFORMATION HERE]for the fiscal year ended December 31, [INSERT INFORMATION HERE] (including, without limitation, the risks set forth under the heading “Risk Factors”), its Quarterly Report on Form 10-Q for the quarter ended March 31, [INSERT INFORMATION HERE] and its Current Reports, attached as exhibits thereto (collectively, the “Offering Materials”). In making the decision to invest in the Securities, Subscriber has relied solely upon the information provided by the Company in the Offering Materials. To the extent necessary, Subscriber has discussed with his, her or its counsel the representations, warranties and agreements which Subscriber makes by signing this Subscription Agreement, the applicable limitations upon Subscriber's resale of the Securities, and the investment, tax and legal consequences of this Subscription Agreement. Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s consideration of an investment in the Securities other than the Offering Materials.

(3)     Subscriber understands that no federal or state agency has made any finding or determination regarding the fairness of the Offering, or any recommendation or endorsement of the Securities.

(4)     Subscriber is purchasing the Securities for Subscriber's own account, with the intention of holding the Securities for investment purposes, with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Securities; and Subscriber agrees not to make any sale, transfer or other disposition of the Securities without registration under the 1933 Act and applicable state securities laws unless counsel acceptable to the Company is of the opinion that such registration is not required. Subscriber is not acquiring the Securities, or any interest therein, on behalf of another person and Subscriber, if an entity, was not formed for the purpose of purchasing the Securities.

(5)     Subscriber's overall commitment to investments which are not readily marketable is not disproportionate to Subscriber's net worth, and Subscriber's investment in the Securities will not cause such overall commitment to become excessive.

(6)     Subscriber, if an individual, has adequate means of providing for his or her current needs and personal and family contingencies and has no need for liquidity in his or her investment in the Securities.

(7)     Subscriber is an “accredited investor” as that term is defined in Rule 501(a) under Regulation D promulgated by the Securities and Exchange Commission (the “SEC”) under the 1933 Act. Subscriber is financially able to bear the economic risk of this investment, including the ability to afford holding the Securities for an indefinite period or to afford a complete loss of this investment.

(8)     The address shown on the signature page to this Subscription Agreement is Subscriber's principal residence if he or she is an individual, or its principal business address if a corporation or other entity.

(9)     Subscriber, together with any offeree representatives of Subscriber (as identified in the Qualified Purchaser Questionnaire) has such knowledge and experience in financial business matters as to be capable of evaluating the merits and risks of an investment in the Securities. Subscriber acknowledges that the Offering Materials may not contain all information that is necessary to make an investment decision with respect to the Company and the Securities and that Subscriber must rely on his, her or its own examination of the Company and the terms and conditions of the Offering prior to making any investment decision with respect to the Securities.

(10)     Subscriber has been given the opportunity to ask questions of and receive answers from the Company and its executive officers concerning the business and operations of the Company and the terms, provisions, and conditions of the Offering and to obtain any such additional information that Subscriber deems necessary or advisable to verify the accuracy of the information contained in the Memorandum, or such other information as Subscriber desired in order to evaluate an investment in the Company; and Subscriber availed himself, herself or itself of such opportunity to the extent considered appropriate in order to evaluate the merits and risks of the proposed investment.

(11)     Subscriber has made an independent evaluation of the merits of the investment and acknowledges the highly speculative nature of an investment in the Securities including, without limitation, the information under “Risk Factors” in the Memorandum.

(12)     The information provided by Subscriber in the Qualified Purchaser Questionnaire is true, complete and accurate and Subscriber has duly executed and delivered such Qualified Purchaser Questionnaire and any applicable exhibits thereto.

(13)

(i) Subscriber understands that the Securities have not been registered under the 1933 Act or any state securities laws in reliance on exemptions for private offerings; and that the Securities cannot be resold or otherwise disposed of unless they are subsequently registered under the 1933 Act and applicable state securities laws or an exemption from registration is available. The certificate(s) representing the Securities will bear a legend substantially similar to the legend set forth immediately below until (i) such Securities shall have been registered under the 1933 Act and effectively disposed of in accordance with a registration statement, or (ii) in the opinion of counsel reasonably satisfactory to the Company such securities may be sold without registration under the 1933 Act:

“These securities have not been registered under the securities act of 1933, as amended (the "1933 act"), or the "blue sky" or securities laws of any state and may not be offered, sold, pledged, hypothecated, assigned or transferred except (i) pursuant to a registration statement under the 1933 act which has become effective and is current with respect to these securities, or (ii) pursuant to a specific exemption from registration under the 1933 act but only upon a holder thereof first having obtained the written opinion of counsel reasonably satisfactory to the company, that the proposed disposition is consistent with all applicable provisions of the 1933 act as well as any applicable "blue sky" or similar securities laws."

(ii) Subscriber also understands that, except as set forth in Section D of this Subscription Agreement, Subscriber will have no rights to require the Company to register the Shares, the Warrants or the Warrant Shares under the 1933 Act or any state securities laws; Subscriber may have to hold the Securities indefinitely and it may not be possible for Subscriber to liquidate his, her or its investment in the Company at the time Subscriber desires to do so. Subscriber has been advised to refrain from purchasing the Securities unless he, she or it can afford a complete loss of his, her or its investment and bear the burden of such loss for an indefinite period of time.

(14)     Subscriber, if an individual, is at least 21 years of age.

(15)     If at any time prior to issuance of the Securities to Subscriber, any representation or warranty of Subscriber shall no longer be true, Subscriber promptly shall give written notice thereof to the Company specifying which representations and warranties are not true and the reason therefore, whereupon Subscriber's subscription may be rejected by the Company in whole or in part.

(16)     Notwithstanding the place where this Subscription Agreement may be executed by any of the parties hereto, all of the terms, provisions, and conditions hereof shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to its conflict of laws principles. Any dispute that may arise out of or in connection with this Subscription Agreement shall be adjudicated before a court located in New York City and the parties hereto submit to the exclusive jurisdiction and venue of the state and local courts of the State of New York located in New York City and of the federal courts in the Southern District of New York with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Subscription Agreement or any acts or omissions relating to the sale of the Securities, and Subscriber consents to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth below or such other address as Subscriber shall furnish in writing to the Company.

(17) subscriber hereby waives trial by jury in any action or proceeding involving, directly or indirectly, any matter (whether sounding in tort, contract, fraud or otherwise) in any way arising out of or in connection with this subscription agreement or subscriber's purchase of the securities.

(18)     Subscriber acknowledges that he, she or it understands the meaning and legal consequences of the representations, warranties and acknowledgments contained in this Subscription Agreement and in the Qualified Purchaser Questionnaire, and hereby agrees to indemnify and hold harmless the Company, and each of its stockholders, officers, directors, affiliates, controlling persons, agents and representatives, from and against any and all loss, damage, expense, claim, action, suit or proceeding (including the reasonable fees and expenses of legal counsel) as incurred arising out of or in any manner whatsoever connected with (i) a breach of any representation or warranty of Subscriber contained in this Subscription Agreement or in the Qualified Purchaser Questionnaire (ii) any sale or distribution by Subscriber in violation of the 1933 Act or any applicable state securities laws or (iii) any untrue statement of a material fact made by Subscriber and contained herein or in the Qualified Purchaser Questionnaire, or omission to state herein or in the Qualified Purchaser Questionnaire, a material fact necessary in order to make the statements contained herein or in the Qualified Purchaser Questionnaire, in light of the circumstances under which they were made, not misleading. Subscriber acknowledges that such damage could be substantial since (a) the Securities are being offered without registration under the 1933 Act in reliance upon the exemption pursuant to Section 4(2) and/or Regulation D of the 1933 Act for transactions by an issuer not involving a public offering and, in various states, pursuant to exemptions from registration, (b) the availability of such exemptions is, in part, dependent upon the truthfulness and accuracy of the representations made by Subscriber herein and in its Qualified Purchaser Questionnaire, and (c) the Company will rely on such representations in accepting Subscriber's Subscription Agreement.

(19)     Subscriber is not subscribing for the Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, any seminar or meeting, or any solicitation of a subscription by a person not previously known to Subscriber in connection with investments in securities generally.

(20)     Unless otherwise indicated on a separate sheet of paper that details any such affiliation submitted by Subscriber to the Company along with this completed Subscription Agreement, Subscriber is not affiliated directly or indirectly with a member broker-dealer firm of the National Association of Securities Dealers, Inc. As an employee, officer, director, partner or shareholder or as a relative or member of the same household of an employee, director, partner or shareholder of an NASD member broker-dealer firm.

(21)     Except as expressly provided herein, this Subscription Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and may be amended only by a writing executed by all of the parties hereto. Subscriber represents that he, she or it has full power and authority (corporate, statutory or otherwise) to execute and deliver this Subscription Agreement and the other Offering Materials to which Subscriber is a party and to purchase the Securities. The execution, delivery and performance of this Subscription Agreement and the Qualified Purchaser Questionnaire will not: (i) violate, conflict with or result in a default under any provision of the Certificate or By-Laws (or analogous organizational documents), if any, of Subscriber; or (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order of, or any restriction imposed by any court or other governmental agency applicable to Subscriber, except for those which do not, or are not reasonably likely to, adversely affect Subscriber’s ability to perform its obligations under this Subscription Agreement and the Qualified Purchaser Questionnaire and to consummate the transactions contemplated hereby and thereby. This Subscription Agreement constitutes the legal, valid and binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms. This Subscription Agreement supersedes all prior arrangements or understandings with respect thereto, whether oral or written. The terms and conditions of this Subscription Agreement shall inure to the benefit of and be binding upon the parties and their respective successors, heirs and assigns.

(22)     Subscriber understands that the Company intends to use the net proceeds from the Offering for, among other things, sales and marketing, capital expenditures, and other corporate and working capital purposes.

In order to induce Subscriber to execute and deliver this Subscription Agreement, the Company represents, warrants, and covenants to Subscriber as follows:

(1) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly authorized to transact business as a foreign corporation in the State of New York. The Corporation has full power and authority to own its properties and to carry on its business as currently conducted.

(2) The execution, delivery and performance by the Company of this Subscription Agreement and the Offering and sale of Shares to accredited investors contemplated hereby shall, assuming the representations and warranties of Subscriber are correct, be in compliance with the exemptions from registration set forth in Regulation D and/or Section 4(2) of the 1933 Act and applicable state securities “blue sky” laws, and the Company, in reliance on the representations and warranties of Subscriber, shall make all filings required to qualify for such exemptions. No additional permit, license, exemption, consent, authorization or approval of, or the giving of any notice by the Company to, any governmental or regulatory body, agency or authority is required in order for the Company to execute, deliver and perform its obligations hereunder, which has not been made, or will not when required be made, by the Company. No notice by the Company to any third party, and no consent or approval of any third party, of the Company’s execution, delivery and performance of this Subscription Agreement is required which has not been given or obtained.

(3) The Company has the requisite power and authority to execute and deliver this Subscription Agreement, and perform its obligations herein, and consummate the transactions contemplated hereby. Upon the acceptance of Subscriber’s subscription by the Company and the execution of this Subscription Agreement by the Company, this Subscription Agreement will be a valid, legal and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (regardless of whether such enforcement is considered in a proceeding at law or at equity).

(4) The Company has reserved a sufficient number of shares of Common Stock for issuance upon exercise of the Warrants included in the Securities subscribed to hereunder.

(5) The Shares and the Warrants have been duly authorized and when issued in accordance with the terms hereof will be validly issued, fully paid and non-assessable. The Warrant Shares have been duly authorized and when paid for and issued in accordance with the terms of the Warrants, will be validly issued, fully paid and non-assessable.

D. Registration Rights

(1) The Company shall use its best efforts to file a registration statement with the SEC in order to register the resale of the Shares and Warrant Shares subscribed to hereunder (hereinafter collectively referred to in this Section D as the “Registrable Securities”) under the 1933 Act. In addition, the Company shall use its best efforts to cause such registration statement to become effective as soon as practicable after the date of such initial filing. Notwithstanding the foregoing, the Company shall have no obligation to register any Registrable Securities that may be sold pursuant to Rule 144 under the 1933 Act ("Rule 144”) without regard to provisions applicable to sales by affiliates, or that are otherwise freely transferable without registration under the Securities Act..

(2) In connection with the registration statement described in Section D(1), the Company shall use its best efforts to:

(a) cause the registration statement with respect to the Registrable Securities to remain effective for the earliest of (i) the second anniversary of the date the registration statement has been declared effective, (ii) such time as all of the Registrable Securities can be sold without regard to volume limitations pursuant to Rule 144 under the Securities Act ("Rule 144”) and (iii) the date all of the Registrable Securities have been sold by Subscriber;

(b) prepare and file with the SEC such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective for the applicable period in accordance with the provisions of Section D(2), above;

(c) notify Subscriber, promptly after it shall receive notice thereof, of the time when such registration statement or a supplement to any prospectus forming a part of such registration statement has become effective;

(d) notify Subscriber of the occurrence of any event that results in the registration statement no longer being current; and prepare and file with the SEC any amendments or supplements to such registration statement or prospectus which is required under the 1933 Act or the rules and regulations promulgated thereunder in connection with the resale of the Registrable Securities by Subscriber;

(e) advise Subscriber promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Division of Enforcement of the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and

(f) indemnify and hold harmless Subscriber against any and all losses, claims, damages or liabilities to which Subscriber shall become subject, under the 1933 Act or otherwise, that arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the effective registration statement or any prospectus that forms a part thereof or any amendment or supplement thereto, or arise out of or are based upon any omission or alleged omission to state therein A material fact required to be stated therein or necessary to make the statements there in not misleading; provided, however, that no such indemnification shall be available to subscriber (and subscriber shall indemnify and hold harmless the company) with respect to, and to the extent there is liability attributable to, written information provided by subscriber to the company for use in such registration statement or prospectus thereunder or any amendment or supplement thereto, or any related preliminary prospectus.

(3) The parties also agree that:

(a) All fees, costs and expenses of and incidental to the registration of Registrable Securities shall be borne by the Company; provided, however, that Subscriber shall bear the commissions and other selling costs and transfer taxes attributable to its sales, as well as any professional fees or costs of accounting, financial or legal advisors to Subscriber.

(b) The fees, costs and expense of registration to be borne by the Company as provided in Section D(3)(a) above shall include, without limitation, all registration, filing fees, exchange or market listing fees, printing expenses, fees and disbursements of counsel and accountants for the Company, and all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered and qualified.

(c) Upon the proper and lawful transfer of any of the Registrable Securities by Subscriber prior to such time as the Securities have been resold pursuant to a registration statement contemplated by this Section D, the registration rights attendant to such Registrable Securities shall be transferable hereunder if: (i) Subscriber gives prior written notice to the Company; (ii) such transferee agrees to execute a counterpart to this Subscription Agreement agreeing to comply with the terms and provisions of this Subscription Agreement, whereupon such transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Subscription Agreement as if such transferee had originally been a party hereto; (iii) such transfer is otherwise in compliance with this Subscription Agreement; and (iv) such transfer is otherwise effected in accordance with applicable securities laws.

(d) The registration statement described in this Section D may include shares and warrant shares (“Other Securities”) acquired by other subscribers in the Offering (who, collectively with Subscriber, are referred to as “Participating Holders”). The registration statement shall be prepared in accordance with applicable rules and regulations of the SEC at the time the registration statement is filed (“Applicable Rules”). In the event that Applicable Rules do not permit registration of all of the Registrable Securities and all of Other Securities, Subscriber authorizes the Company to revise the number of securities covered by the registration statement in such manner as the Company, in the exercise of its good faith judgment, may determine so that the securities covered by the registration statement comply with Applicable Rules; provided that, to the extent reasonably feasible, the Company shall include each Participating Holder’s pro-rata portion of registrable securities in the filing. Subject to the foregoing, in the event Applicable Rules do not permit the Company to include all Subscriber’s Registrable Securities in the registration statement, the Company shall file such amendments to the registration statement, and/or such other and further registration statements, as and when permitted by Applicable Rules, such that all of the Registrable Securities are covered by an effective registration statement.

F. Notice Provisions

Any and all notices, demands or requests required or permitted to be given under this Subscription Agreement shall be given in writing and sent, by registered or certified U.S. mail, return receipt requested, by facsimile transmission with proof of electronic transmission, by hand, or by overnight courier, addressed to the parties hereto at their addresses set forth above or such other addresses as they may from time-to-time designate by written notice, given in accordance with the terms of this Section E, together with copies thereof as follows:

In the case of the Company to:

[INSERT INFORMATION HERE]
Attn: [INSERT INFORMATION HERE]

With a copy to:

[INSERT INFORMATION HERE]

Attn: [INSERT INFORMATION HERE]

And with a copy to:

[INSERT INFORMATION HERE]

Attention: [INSERT INFORMATION HERE].

In the case of Subscriber, to the address of Subscriber on the signature page to this Agreement.

Notice given as provided in this Section shall be deemed effective: (i) on the business day hand delivered (or, if it is not a business day, then the next succeeding business day thereafter), (ii) on the first business day following the sending thereof by overnight courier, and (iii) on the seventh calendar day (or, if it is not a business day, then the next succeeding business day thereafter) after the depositing thereof into the exclusive custody of the U.S. Postal Service. As used herein, the term business day (other than Saturday or Sunday) shall mean any day when commercial banks are open in the State of New York to accept deposits.

G. Miscellaneous.

(1)     This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Subscription Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

(2)     No term or provision contained herein may be modified, amended or waived except by written agreement or consent signed by the party or parties to be bound thereby. A waiver by either party of a breach of any provision of this Subscription Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

(3)     Subscriber acknowledges that the subscription made hereby is not binding upon the Company until the Company accepts it. The Company has the right to accept or reject this subscription in whole or in part in its sole and absolute discretion. If this subscription is rejected in whole, the Company shall return the Purchase Price to Subscriber, without interest or deduction, and the Company and Subscriber shall have no further obligation to each other by reason of this Subscription Agreement or the subscription made hereby.

Subscription and Rights Agreement

Page 1

SIGNATURE PAGE FOR:

INDIVIDUAL INVESTOR

IN WITNESS WHEREOF, this Subscription Agreement has been executed by Subscriber and by the Company on the respective dates set forth below.


Signature                               Signature (If Purchased Jointly)

Name                                    Name
Please Print                              Please Print

Address                               Address

Telephone # Telephone #

Fax # Fax #

Email: Email:

Social Security # Social Security #

Date: Date:

EXACT Name in which Securities are to be Registered: _________________________________________

Purchase Price: $ __________________________

Form of Joint Ownership (if applicable): |_| JTTEN |_| JTWROS |_| JTTIC

-------------------------------------------------------------------------------------------------------------------------------
Subscription Accepted:
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

By:

Name: [INSERT INFORMATION HERE]
Title: [INSERT INFORMATION HERE]

Date:

Subscription and Rights Agreement

Page 2

SIGNATURE PAGE FOR:
PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY OR TRUST

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below:

Name of Partnership, Corporation, and Limited Liability Company or Trust

By: Federal Tax ID Number

Name:

Title: State of Organization

Address:

Telephone:

Fax:

Email:

Date:

EXACT Name in which Securities are to be Registered: _________________________________________

Purchase Price: $ __________________________
-------------------------------------------------------------------------------------------------------------------------------

Subscription Accepted:
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

By:

Name: [INSERT INFORMATION HERE]

Title: [INSERT INFORMATION HERE]

Date:

EX-10 4 exh10_4.htm

EXHIBIT D – FORM OF COMMON STOCK PURCHASE WARRANT

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, (2) THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR A BONA FIDE PLEDGE OR CUSTODIAL ARRANGEMENT WITH RESPECT TO SUCH SECURITIES OR (3) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IS DELIVERED STATING THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. 1 Up to [_________] shares of

Common Stock, subject to adjustment

Warrant

Fusion Telecommunications International, Inc.

Fusion Telecommunications International, Inc. (the "Company" or the "Issuer"), a Delaware corporation, for value received, hereby certifies that _____, or its registered permitted assigns, is the registered holder (the "Holder") of rights to purchase from the Issuer up to [___________(_____)]¹ (the "Warrant Number") duly authorized, validly issued, fully paid and non-assessable shares of common stock, par value $0.01 per share (the "Common Stock"), of the Issuer at a price per share equal to the Warrant Price (as defined herein), subject to the terms, conditions and adjustments set forth below in this warrant (this "Warrant").Table of Contents

Page

1. Warrant. 3 2. Reservation of Shares. 4 3. Transfer and Assignment. 4 4. Taxes. 4 5. Adjustments. 4 6. Business Combinations 5 7. Lost or Stolen Warrant. 6 8. Agent. 6 9. Notice. 6 10. Miscellaneous. 6

1. Warrant.

The Warrant represented hereby has been issued pursuant to the Subscription and Rights Agreement dated [INSERT INFORMATION HERE] (the “Subscription Agreement”), and is subject to the terms and conditions thereof. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the Subscription Agreement.

- 1

1.1 Warrant Number and Price; Warrant Term.

(a) Warrant Number and Price. Subject to the provisions of this Warrant:

(i) this Warrant entitles the Holder to purchase at any time during the Warrant Term for the Warrant Price up to the Warrant Number of shares of Common Stock, subject to adjustment as set forth herein;

(ii)

The "Warrant Price" shall be a price per share equal to [INSERT INFORMATION HERE]% of the purchase price of the Common Stock purchased².

(b) Warrant Term.

The "Warrant Term" shall mean from and after the Closing Date (herein defined) until sixty months thereafter³

-3-.

1.2 Manner of Exercise. (a)

The Warrant may be exercised by the Holder, in whole or in part, from time to time during the Warrant Term, by presentation and surrender hereof to the Issuer at its principal office with of a notice in substantially the form attached to this Warrant as Exhibit 1 duly executed by such Holder (a "Warrant Notice") and accompanied by payment of the Warrant Price for the number of shares of Common Stock specified in such form. Any such exercise shall be irrevocable. As soon as practicable after each such exercise of this Warrant, but not later than five (5) Business Days from the receipt the Warrant Notice, the Issuer shall issue and deliver to the Holder a certificate or certificates for the shares of Common Stock issuable upon such exercise, registered in the name of the Holder or its designee.

2. Reservation of Shares.

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

3. Transfer and Assignment.

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

4. Taxes.

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

5. Adjustments. The number of share of Common Stock issuable upon exercise of the Warrant is subject to adjustment for stock splits, re-combinations, stock dividends and the like, as may be determined in good faith by the Company’s Board of Directors.

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

7. Lost or Stolen Warrant.

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

8. Agent.

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

9. Notice.

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

10. Miscellaneous.

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

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

10.3

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

10.4

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

10.5

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

10.6

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

10.7

The Issuer has agreed to register the shares of Common Stock issuable upon exercise of this Warrant to the extent set forth in the Subscription Agreement. The Issuer will not be obligated to deliver any Registrable Securities, and there are no contractual penalties for failure to deliver any such securities, if a registration statement is not effective at the time of exercise.

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

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

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

[Remainder of Page Left Blank Intentionally]

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

Dated: [INSERT INFORMATION HERE]

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

By: ______________________

Name: [INSERT INFORMATION HERE]

Title: [INSERT INFORMATION HERE]

Exhibit 1

[FORM OF WARRANT NOTICE]

(To Be Executed Upon Exercise Of Warrant)

[DATE]

Fusion Telecommunications International, Inc.
420 Lexington Avenue, Suite 1718
New York, New York 10170
Attention: [____________]

Re: Exercise of Warrant

Ladies and Gentlemen:

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

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

[TO BE ADDED]

[If the number of shares of Common Stock specified above is less than the total number of shares of Common Stock remaining under the Warrant, insert the following -- The undersigned requests that a new Warrant substantially identical to the attached Warrant be issued to the undersigned evidencing rights to exercise additional Warrants equal to the number of shares of Common Stock called for on the face of the current Warrant, as adjusted, minus the gross number of shares of Common Stock delivered to the undersigned in accordance with this Notice.]

HOLDER

By:____________________________________ Name:

Title:

By:____________________________________ Name:

Title:

¹ Insert [INSERT INFORMATION HERE]% of the number of shares of Common Stock issued to the holder

² [INSERT INFORMATION HERE]% of price of Issuer’s Common Stock determined at the closing date under the Subscription Agreement (the “ Closing Date”), as adjusted pursuant to this Warrant.

³ Date is 60^th monthly anniversary of Closing Date.

EX-10 5 exh10_5.htm

PROMISSORY NOTE

SECURITY AGREEMENT

$ [INSERT AMOUNT]

[INSERT DATE]

This Note is secured by the Maker’s account receivable and Maker hereby grants Lender a security interest, pari passu with other lenders, in all such Accounts Receivable.

In order to perfect a security interest in the Accounts Receivable, Maker agrees to execute and deliver to the Lender appropriate UCC-l financing statements.

Maker waives any right of exemption and waives presentment, protest and demand, notice of protest, demand, and/or dishonor and nonpayment of this Note.

Maker:

Fusion Telecommunications International, Inc.

By: _________________________________

Printed Name: [INSERT NAME], [INSERT TITLE]

Date: [INSERT DATE]

Page ?1 of 1

Exhibit 10.5 Form of Promissory Note and Security Agreement

EX-10 6 exh10_1.htm

[INSERT NUMBER HERE]

AMENDED AND RESTATED

PROMISSORY NOTE

&

SECURITY AGREEMENT

$ [INSERT AMOUNT HERE]

As of [INSERT DATE HERE]

     For value received, the undersigned maker (“Maker”), whose address is 420 Lexington Avenue, Suite 1718, New York, NY 10170, promises to pay to the order of [INSERT LENDER HERE], whose address is [INSERT ADDRESS HERE], the principal sum of [INSERT (AMOUNT) HERE] together with all interest accrued from [INSERT DATE HERE] at the rate of (i) [INSERT (PERCENT) HERE] per annum through [INSERT DATE HERE], and (ii) [INSERT (PERCENT) HERE] per annum thereafter until maturity, upon the unpaid balance, payable in U.S. Dollars at the Payee’s address set forth above, or at such address as Payee may designate. The maturity date of this note is [INSERT DATE HERE].

     It shall constitute an event of default hereunder if the Maker shall fail to make any payment when due as set forth herein. In the event of a default hereunder, the Maker will have ten (10) days to cure after written notice is received.

     If an event of default shall occur, neither the failure of the holder hereof promptly to exercise its right to declare the outstanding principal and accrued by unpaid interest hereunder to be immediately due and payable, nor the failure to exercise any other right or remedy the holder may have for default, nor the acceptance by the holder of late or partial payments shall constitute a waiver of such rights in connections with any future default on the part of the undersigned or any other person who may be liable hereunder.

     This Note is to be construed and enforced according to the laws of the State of [INSERT STATE HERE].

     This Note is secured by the Maker’s account receivable and Maker hereby grants Lender a security interest in all such Accounts Receivable.

     In order to perfect a security interest in the Accounts Receivable, Maker agrees to execute and deliver to the Lender appropriate UCC–1 financial statements.

     Maker waives any right of exemption and waives presentment, protest and demand, notice of protest, demand and/or dishonor and nonpayment of this Note.

     This note amends and restates Maker’s Amended and Restated Promissory Note and Security Agreement, dated as of [INSERT DATE HERE] (the “Old Note”). This Note is executed and delivered in substitution for, but not in satisfaction of, the Old Note and shall not constitute a refinancing or novation of the obligations under the Old Note.

Maker:

Fusion Telecommunications International, Inc.

By: _______________________________
Printed Name: ______________________, as __________________
Date: _____________________________

Page 1 of 1

Exhibit 10.1 Form of Amended and Restated Promissory Note and Security Agreement