Current Report Filing (8-k)

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

November 18, 2015

Date of Report (Date of earliest event reported)

LATTICE INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Delaware	005-34249	22-2011859
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

7150 N. Park Drive, Suite 500 Pennsauken, New Jersey	08109
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (856) 910-1166

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

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

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

Item 1.01 Entry into a Material definitive Agreement

As previously disclosed in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, on November 2, 2015, Lattice Incorporated (“Company” or “we”) entered into agreements (collectively, the “Purchase Agreement”) with Barron Partners LP (“Barron”) pursuant to which the Company agreed to purchase from Barron all of the securities of the Company owned by Barron, namely 2,239,395 shares of the Company’s common stock, 3,589,488 shares of the Company’s Series A Convertible Preferred Stock, 520,000 shares of the Company’s Series C Convertible Preferred Stock, and 590,910 shares of the Company’s Series D Convertible Preferred Stock for $74,466, $461,502, $188,577 and $425,455, respectively. The Company closed on the purchase of all such securities except for the common shares on November 30, 2015, and no further purchases may be made after such date.

The disclosure contained in Items 2.03 and 3.02 is incorporated by reference in this Item 1.01.

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

As previously disclosed in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, on November 2, 2015, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Cantone Asset Management, LLC (“Cantone”), pursuant to which Cantone agreed to loan the Company a gross amount of $580,000, less an original issue discount of $58,000 (the “Loan”), of which $136,800 (plus interest) would be used to pay off an outstanding bridge loan to Cantone. The closing of the transactions contemplated by the Loan Agreement was contingent on the Company raising sufficient funds, when added with the net proceeds of the Loan, to repurchase all of the securities pursuant to the terms of the Barron Agreement. The funds were released from escrow on November 30, 2015 to permit the purchase of the preferred stock from Barron as described in Item 1.01.

The Company is obligated to issue 1,862,500 shares of its common stock to Cantone pursuant to the Loan Agreement, and will pay Cantone a 3% origination fee and a 2% non-accountable expense allowance. The Loan is secured by a first priority security interest in the revenues and proceeds from certain of the Company’s contracts. In connection with the Loan Agreement and the transactions contemplated thereby, the Company issued a promissory note in the aggregate principal amount of $580,000 to Cantone (the “Note”). The Note will not begin to bear interest until February 6, 2015, at which point it will bear interest at a rate of 14% per year. The Note will mature on May 2, 2016. The Note provides for customary events of default, including the failure to pay any amount due under the Note on the applicable due date (subject to a cure period), defaulting on any other indebtedness by the Company, the Company becoming insolvent, or the company filing for voluntary bankruptcy. In the event of a default, the interest rate on the Note would increase to 18% per year and the Company would be obligated to pay 10% of the total amount due as liquidated damages.

Cantone received piggy-back registration rights for the shares issued in connection with the Loan.

Item 3.02 Unregistered Sales of Equity Securities

As previously disclosed in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, on November 2, 2015 and November 3, 2015, pursuant to the terms of a Securities Purchase Agreement dated November 2, 2015 (the “Placement Agreement”), the Company sold an aggregate of 11,570,000 shares of its common stock under subscription agreements to 15 accredited investors for aggregate gross proceeds of $416,520. Between November 6 and December 3, 2015, the Company sold an additional 9,075,000 shares of its common stock under subscription agreements to 26 accredited investors for additional gross proceeds of $326,700 (an aggregate of $743,220 in gross proceeds). No further purchases may be made under the Placement Agreement.

In connection with the sale of the shares, the Company will pay an aggregate placement agent fee of $30,861 in cash to Boenning & Scattergood, Inc. (“B&S”) and will issue B&S warrants to purchase 514,340 shares of the Company’s common stock at the price of $0.036 per share. The investors were granted piggyback registration rights in connection with the Placement Agreement. The net proceeds of the transaction were used to purchase the securities owned by Barron pursuant to the Purchase Agreement. The securities will be issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions will not involve a public offering.

The disclosure contained in Item 2.03 is incorporated by reference in this Item 3.02.

The 1,862,500 shares of the Company’s common stock to be issued to Cantone will be issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transaction did not involve a public offering.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
10.1		Loan and Security Agreement dated November 2, 2015, between Cantone Asset Management, LLC and the Company
10.2		Promissory Note dated November 2, 2015 made in favor of Cantone Asset Management, LLC
10.3		Agreements with Barron Partners LP dated November 2, 2015
10.4		Subscription Agreement dated November 2, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated December 16, 2015

LATTICE INCORPORATED

By: /s/ Paul Burgess
Name: Paul Burgess
Title: Chief Executive Officer

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”) made as of the 2nd day of November, 2015 by and between Cantone Asset Management LLC, a Pennsylvania limited liability company, its successors and assigns (the “Lender”), and LATTICE INCORPORATED, a Delaware corporation, its successors and assigns (the “Borrower”). (The Lender and the Borrower are sometimes referred to collectively in this Agreement as the “Parties” or singly as a “Party.”)

BACKGROUND

At the request of and on behalf of the Borrower, the Lender proposes to extend to the Borrower a term loan in the principal sum of Five Hundred Eighty Thousand Dollars ($580,000) (the “Loan”) to be used for the repurchase of certain outstanding preferred stock and common stock of Barron Partners, the repayment of a Lender bridge loan in the amount of $136,800, plus interest, and for working capital and secured by the revenues and proceeds of certain agreements identified below (the “Collateral”).

NOW THEREFORE, in consideration of the promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to the legally bound, the Parties agree as follows:

1. Definitions

The following terms used in this Agreement shall have the meanings set forth below:

(a) “Agreement” means this Agreement.

(b) “Business Day” shall mean any day other than a Saturday, a Sunday, a United States federal government legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close in the Commonwealth of Pennsylvania.

(c) “Collateral” means the collateral in which the Lender is granted a security interest by this Agreement and which shall include the following: all of the Borrower’s right, title and interest in the revenues of certain telecommunications contracts with correctional facilities identified in Exhibit A (the “Contracts”), and the proceeds from such Contracts; including all insurance proceeds, and rights to refunds or indemnification whatsoever owing, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, which any of the same may represent, and all right, title, security and guaranties with respect to each contract.

(c) “Loan Documents” means this Agreement, the $580,000 Note of even date from Borrower to Lender (the “Note”), the UCC-1 Financing Statement naming Borrower as debtor and Lender as secured party to be filed with the New Jersey Department of State, an affidavit of business use and all other loan documents listed on the Closing Checklist attached as Exhibit B, including all riders, supplements and addenda to such documents.

(d) “Loan” means the $580,000 Loan, as advanced, extended and otherwise made under this Agreement.

(e) “Person” shall mean any individual, sole proprietorship, partnership, joint venture, limited liability company, limited liability partnership, trust, incorporated organization, association, corporation, institution, entity, party or government (including any division, agency or department thereof), and, as applicable, the successors, heirs and assigns of each.

(f) “Principal Amount” initially means up to $580,000 as advanced by the Lender, reduced by any payments of principal by Borrower.

(g) “Taxes” mean any federal, state, local or foreign income sales, use, transfer, payroll, property, occupancy, franchise or other tax, levy, impost, fee, imposition, assessment or similar charge, together with any interest or penalties thereon.

(h) “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New Jersey.

2. Terms of the Loan

(a) Lender agrees to extend the Loan to Borrower for business purposes only. Borrower has executed an affidavit of business use of even date. The term of the Loan (the “Term”) shall be for approximately six months from the date of the final funding of the Loan and due on May 2, 2016 (the “Due Date”).

(b) The Parties will use their best efforts to complete this transaction as soon as practicable. The Parties intend to execute the Loan Documents on November 2, 2015 and the Lender will place the net proceeds of the Loan in escrow pursuant to the escrow agreement attached as Exhibit A. The Escrow Agent (as defined in the Escrow Agreement) will hold all funds and executed Loan Documents in escrow until the escrow conditions are met. The closing of the transaction (the “Closing”) will take place upon satisfaction of the escrow conditions and release of the net proceeds of the Loan from escrow.

(c) Borrower acknowledges that the Lender is making the Loan at a 10% original issue discount. Borrower will pay no additional interest if the entire Principal Amount is paid on or before February 2, 2016. If not paid by February 2, 2016, Borrower will pay interest at fourteen percent (14%) annually (the “Interest Rate”), with interest accruing on the outstanding Principal Amount beginning February 2, 2016, paid monthly, interest only, in arrears, in the amount of $6,766.67 per month, with the first payment due March 2, 2016, and payable on the second of each month until the outstanding Principal Amount and all accrued but unpaid interest is paid in full.

(d) The outstanding unpaid Principal Amount of the Loan and all accrued but unpaid interest shall be paid in full on or before the Due Date. The Borrower has the right to repay the Principal Amount and accrued interest at any time before the Due Date without premium or penalty. In any Event of Default (as defined in the Note), the Interest Rate shall increase to 18%. In the event that the Borrower does not pay the outstanding Principal Amount plus accrued interest by the Due Date, the Borrower will issue to the Lender 2,500,000 shares of the Borrower’s restricted common stock as a late payment penalty and $50,000 shall be added to the Principal Amount and begin accruing interest at the Default Rate.

(e) To evidence the obligation of Borrower to Lender to repay the Loan with interest at the Interest Rate in accordance with the provisions of this Agreement, Borrower shall execute and deliver to Lender at Closing the Note, a form of which is attached as Exhibit C.

(f) To secure the Note, Borrower shall execute and deliver to Lender at Closing and cause to be filed a UCC-1 Financing Statement, which grants to Lender a perfected first security interest in the Collateral (the “Financing Statement”).

3. Fees

(a) The Borrower will pay the Lender an origination fee of 3% of the Principal Amount plus 862,500 shares of the Borrower’s restricted common stock. Borrower will also pay the Lender a non-accountable expense allowance of 2% of the Principal Amount (which shall include the Lender’s legal fees of $3,000). In addition, as an inducement for the Lender to fund the Loan quickly, the Borrower will issue to the Lender 1,000,000 shares of the Lender’s restricted common stock at the Closing of the Loan. Such cash fees will be deducted from the gross amount of the Loan, with the Borrower receiving the net proceeds on the Closing Date. The Borrower will issue the restricted stock deliverable under this Section 3(a) to the Lender within five business days of the Closing.

(b) The Parties acknowledge that the Borrower is selling the Note to the Lender at a 10% original issue discount.

(c) Upon any Event of Default, as defined in the Note, the Borrower will begin accruing interest on the Note at 18% simple annual interest (the “Default Rate”), to be accrued and paid monthly.

(d) The Borrower hereby agrees that Lender will have “piggyback” registration rights for all shares of Borrower restricted stock issued to the Lender or any of its affiliates on any registration statement filed by the Borrower with the Securities and Exchange Commission (the “Commission”) except for registration statements on forms S-4 (for merger transactions) or S-8 (for employee plans). If the Borrower files such a registration statement, the Borrower undertakes to use commercially reasonable efforts to make the registration statement effective within a reasonable time and to keep such registration statement effective until all of the shares of restricted stock held by the Lender or its affiliates are sold.

4. Collateral for the Loan

The Parties agree that the collateral and security for the Loan shall be a first priority security interest in the Collateral.

5. Covenants of Borrower. In addition to the covenants and agreements of the Borrower contained in the other Loan Documents, and as long as the Loan is outstanding, the Borrower hereby covenants and agrees as follows:

(a) Borrower shall promptly give notice in writing to Lender of the occurrence of any material litigation, arbitration or governmental proceeding affecting Borrower, and of any governmental investigation or labor dispute pending or, to the knowledge of Borrower, threatened which could reasonably be expected to interfere substantially with normal operations of the business of Borrower or materially adversely, affect the financial condition of Borrower.

(b) Borrower shall promptly give notice in writing to Lender of the occurrence of any Event of Default (as defined in the Note) and of any condition, event, act or omission which, with the giving of notice or the lapse of time or both, would constitute an event of default under this Agreement or under the Loan Documents.

(c) Any and all payments by the Borrower hereunder or under the Note to or for the benefit of Lender shall be made free and clear of and without deduction for any and all present or future Taxes, deductions, charges or withholdings

(d) The Borrower may not reduce the exercise or conversion price of any options, warrants or convertible securities outstanding on or after October 23, 2015 without prior approval from Lender.

(e) The Borrower shall not pay or declare any dividends or make any distributions to equity holders (common or preferred) while this Loan is outstanding.

(f) Unless required by law, prior to the Closing, Borrower shall not make any public statements about the contemplated transaction without the prior written consent of the Lender.

6. Construction of this Agreement

(a) Time is of the essence in connection with any act, undertaking or matter to be performed under this Agreement.

(b) This Agreement is intended as a separate agreement between the Parties enforceable in accordance with its terms and is in addition to any other agreements between the Parties including but not limited to the Loan Documents, and this Agreement shall not be deemed to replace, modify, substitute for, be merged with or into or amend or alter the Loan Documents in any way except to the extent expressly provided for herein.

(c) Unless otherwise specified herein or unless the context otherwise indicates, all capitalized terms used in this Agreement shall have the same definitions and meanings as used in and defined in the Loan Documents.

(d) Borrower acknowledges that it was represented by legal counsel in connection with this Agreement and the Loan Documents and that it was under no economic duress or other compulsion in entering into this Agreement.

7. Representations and Warranties of Borrower

(a) Except as disclosed in Borrower’s filings with the Commission, Borrower hereby represents and warrants that:

(i) Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to do business and is in good standing wherever the nature of the business conducted by Borrower makes such qualification necessary.

(ii) Borrower has the corporate power and authority to own its property and to conduct its business and holds such licenses and certificates as may be applicable and required for the conduct of its business; and Borrower has the corporate power and authority to enter into this Agreement and to consummate all transactions contemplated in this Agreement.

(iii) This Agreement and the Loan Documents constitute valid, continuing, legal and binding obligations of Borrower and are enforceable against Borrower in accordance with their terms, subject however, to creditors’ rights generally.

(iv) The making of this Agreement has been duly authorized by all necessary corporate action on the part of Borrower, including Board of Directors approval, does not require the approval of, or the giving of notice to, any other entity or third person; and will not violate any provision of law or of Borrower’s Articles of Incorporation or Bylaws, or result in the breach of, constitute a default under, contravene any provision of, or result in the creation of any lien, charge, encumbrance or security interest upon any property or assets of Borrower.

(v) The individuals executing this Agreement on behalf of Borrower are duly authorized officers of Borrower and are authorized to execute this Agreement and to take any and all other actions contemplated or required by this Agreement.

(vi) There are no suits or proceedings pending or, to the knowledge of Borrower, threatened in any court or before any regulatory commission, board or other administrative or governmental agency against Borrower, which if adversely determined would have a material adverse effect on the financial condition of Borrower or the business of Borrower or which if determined adversely to the Borrower would result in the inability of Borrower to perform this Agreement.

(vii) The Financing Statement constitutes a valid and enforceable security interest in the Collateral described therein.

(ix) There are no mortgages, pledges, security interests, liens, charges, leases, encumbrances or claims on or with respect to the Collateral, or any part thereof, or any title interest therein or any proceeds thereof, which have a priority superior to the lien and priority positions of the Lender’s security interest.

(x) As of the date of this Agreement, Borrower is not insolvent as defined by the United States Bankruptcy Code, the Delaware Fraudulent Conveyances Act, by the insolvency provisions of the Delaware Business Corporation Law or by law or usage of any court of law or equity of the State of Delaware.

(xi) As of the date of this Agreement, Borrower has complied with all the terms and conditions of this Agreement.

(xii) The execution, delivery and performance of this Agreement and the Loan Documents will not violate any provisions of any indenture, agreement, or other instrument to which Borrower or any of Borrower’s properties or assets are bound, and will not be in conflict with, result in a breach of, or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement, or other instrument, or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever upon any of the properties or assets of Borrower.

(xiii) No authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign is necessary to the valid execution and delivery of this Agreement, the Loan Documents or any other documents evidencing or relating to the Loan.

(xiv) The most recent financial statements of Borrower delivered to the Lender represent fairly its financial position as of the date thereof; and the results of its operations for the period indicated; and show all known liabilities, direct or contingent, of Borrower as of the date thereof. Since the date of such financial statements, there has been no material adverse change in the condition, financial or otherwise, of Borrower or in the business and properties of Borrower and, since such date, Borrower has not incurred, other than in the ordinary course of business, any indebtedness, liabilities, obligations or commitments, contingent or otherwise.

(xv) Neither this Agreement nor any other document, statement, financial statement, or certificate furnished to Lender by or on behalf of Borrower in connection herewith, contains an untrue statement of a material fact with respect to the financial condition or properties of Borrower or omits to state a material fact necessary to make the statements contained therein not misleading or, insofar as Borrower can now foresee, may in the future materially adversely affect the financial condition or properties of Borrower which has not been set forth in this Agreement or in a document, statement, financial statement or certificate furnished to Lender in connection herewith.

(xvi) The Borrower is in compliance with all laws, rules, regulations, judgments, decrees, orders, agreements and requirements which affect in any material way the Borrower, its assets or the operation of its business and has not received, and has no knowledge of, any order or notice of any governmental investigation or of any violation or claim of violation of any law, regulation, judgment, decree, order, agreement, or other governmental requirement. The Borrower is not in default under any term of any indenture, contract, lease, agreement, instrument or other commitment to which any of them is a party or by which any of them is bound. The Borrower knows of no dispute regarding any indenture, contract, lease, agreement, instrument or other commitment which could reasonably be expected to have a material adverse effect on the Borrower’s financial condition.

(b) Borrower hereby confirms, represents and warrants that the representations and warranties set out in the Loan Documents are true and correct as of the date of this Agreement.

8. Further Events of Default - Remedies

(a) The following events shall be an Event of Default under the Loan and in addition to the Events of Default as defined in the Note; and Lender shall thereupon have the option (which is not intended to diminish, alter or limit Lender’s rights described in this Agreement, the Loan Documents or any related instruments, agreements and documents) to declare Borrower in default under this Agreement and the Loan Documents, and all other agreements with Lender, and declare all existing and future liabilities, indebtedness and obligations accelerated and immediately due and payable, including, but not limited to, interest, principal, expenses, advances to protect Lender’s position and reasonable counsel fees to enforce this Agreement, the Loan Documents, and all related instruments, agreements and documents, and all of Lender’s rights hereunder and thereunder, all without demand, notice, presentment or protest, or further action of any kind, except as specified herein.

(i) If Lender shall discover evidence that any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower in connection with this Agreement or otherwise, or to induce Lender to enter into this Agreement, was false or misleading in any material respect when made or furnished.

(ii) If any action, suit or proceeding is brought in law or in equity or in any bankruptcy or receivership proceeding by Borrower or any of its creditors or any other party to enjoin or set aside this Agreement.

(iii) If Borrower shall fail to pay any principal, interest, costs and fees when due under the Loan Documents or this Agreement within five (5) days after written notice from Lender to Borrower.

(iv) The dissolution, termination of existence, insolvency, business failure, appointment of a receiver of, or of any part of the property of, or the commencement of any proceeding under any bankruptcy, arrangement, reorganization or insolvency laws by or against Borrower.

(v) If Borrower shall fail to observe or perform any obligation or covenant to be observed or performed by Borrower hereunder or under any of the Loan Documents, which are not cured within ten (10) days following written notice from Lender to Borrower.

(vi) If any financial statement, material representation, warranty, statement or certificate made or furnished to Lender in, or in connection with, this Agreement, or as inducement to Lender to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Lender, shall be materially false, incorrect, or misleading when made;

(vii) If Borrower shall admit an inability to pay its debts as they mature, or shall make a general assignment for the benefit of its or any of its creditors.

(viii) If proceedings in bankruptcy, or for reorganization of Borrower, or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced by Borrower, or shall be commenced against Borrower and shall not be dismissed within sixty (60) days of its commencement.

(ix) If a receiver or trustee shall be appointed for Borrower or for any substantial part of its assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of Borrower, and if such appointment or proceedings are involuntary, such receiver or trustee shall not be discharged within sixty (60) days of appointment, or such proceedings shall not be discharged within sixty (60) days of its commencement, or Borrower shall discontinue its businesses or materially change the nature of its businesses.

(b) After any acceleration of the Loan, Lender shall have in addition to the rights and remedies given it by this Agreement and the Loan Documents, all those allowed by all applicable laws including, without limitation, the UCC as enacted in a jurisdiction in which any Collateral may be located.

9. No Agency, Partnership or Joint Venture

Neither this Agreement nor the Loan Documents nor the exercise by Lender of any of its rights or remedies hereunder or thereunder shall create, or shall be deemed to have created (i) a relationship of principal and agent between Borrower and Lender, or (ii) a partnership or joint venture, as between Lender and Borrower, or (iii) to render Lender in any way responsible for the debts, losses or liabilities of Borrower, or (iv) to render Lender a principal of, an insider in, or in any manner in control of Borrower or its business affairs.

10. Notices

All notices to be given pursuant to this Agreement shall be given by the parties hereto either by certified mail, postage pre-paid, with return receipt requested or by expedited delivery service or by hand delivery, with a receipt being obtained therefor, at the following addresses, or at such other addresses as to which the parties hereto may be notified in accordance herewith from time to time.

If to the Borrower:

Lattice Incorporated

7150 N. Park Drive

Suite 500

Pennsauken, NJ 08109

Phone: (856) 910-1166

Facsimile: (856) 910-1811

With copies to:

Mitchell Nussbaum, Esq.

Loeb & Loeb, LLP

345 Park Avenue

New York, NY 10154

Telephone: (212) 407-4159

Facsimile: (212) 504-3013

If to the Lender:

Cantone Asset Management, LLC

C/o Cantone Research, Inc.

766 Shrewsbury Ave.

Suite E401

Tinton Falls, NJ 07724

Telephone: 732-450-3500

Facsimile: 732-450-3520

Attention: Anthony Cantone

With copies to:

Christopher P. Flannery, Esq.

4 Hillman Drive

Suite 104

Chadds Ford, PA 19317

Telephone: (610) 361-8016

Facsimile: (610) 558-4882

Notice shall be effective upon receipt.

11. Remedies Are Cumulative

Lender’s rights and remedies under this Agreement are cumulative and not alternative. Neither the failure nor any delay on the part of Lender in exercising any right, power or privilege under any of the Loan Documents or this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No claim or right arising out of this Agreement or the Loan Documents can be discharged by Lender in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by Lender.

12. Entire Agreement

This Agreement and the Loan Documents are intended by the Parties as a final expression of their agreements with respect to the subject matter thereof, and are intended as a complete and exclusive statement of the terms and conditions of that agreement. This Agreement and the Loan Documents may not be modified, rescinded, or terminated orally, and no modification, rescission, termination or attempted waiver of any of the provisions thereof shall be valid unless in writing, supported by consideration, and signed by the Party against whom the same is sought to be enforced.

13. Assignments, Successors and No Third Party Rights

This Agreement shall apply to and shall be binding in all respects upon, and shall inure to the benefit of, the successors and assigns of Lender and Borrower. Except as explicitly stated herein, nothing expressed or referred to in this Agreement is intended or shall be construed to give any person or entity other than the Parties any legal or equitable right, remedy or claim under or with respect to this Agreement, or any provision hereof, it being the intention of the Parties that this Agreement, and all of its provisions and conditions, are for the sole and exclusive benefit of the Parties and for the benefit of no other person or entity and are personal to the Parties unless otherwise expressly provided.

14. Action Taken at Closing

The execution and delivery of this Agreement at Closing and all other actions to be taken and transactions to occur in connection with this Agreement at Closing, and the consummation at Closing of certain acts and transactions to which reference is made in this Agreement, are to be and were considered effected simultaneously as part of a number of interrelated transactions, and all deliveries of documents and other acts are to be deemed in escrow until all transactions referred to in, and relating to, this Agreement have been completed.

15. Survival of Representation, Warranties and Covenants

The representations, warranties and covenants set forth in this Agreement shall survive the execution and delivery of this Agreement and the Closing.

16. Section Headings, etc.

The headings of Sections contained in this Agreement are provided for convenience only and form no part of this Agreement, and shall not affect its construction or interpretation. All references to Sections and paragraphs refer to the corresponding Sections and paragraphs in Sections of this Agreement. All words used herein shall be construed to be of such gender or number as the circumstances require. This “Agreement” shall mean this Agreement as a whole and as the same may, from time to time hereafter, be amended, supplemented or modified. The words “herein”, “hereof”, “hereby”, “hereto”, “hereunder, and words of similar import, refer to this Agreement as a whole and not to any particular Section, paragraph, clause or other subdivision hereof, unless otherwise specifically noted.

17. Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement.

18. Governing Law; Jurisdiction and Venue

This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania, all rights and remedies being governed by such laws, and any provision hereof which may prove to be unenforceable shall not affect the validity of any other provision of this Agreement. The Parties agree and consent that any action brought to enforce or interpret any of the Loan Documents must be brought in the United States District Court for the Eastern District of Pennsylvania or in the Commonwealth of Pennsylvania Court of Common Pleas sitting in the County of Philadelphia or in one of the five counties of Pennsylvania adjacent thereto.

19. Amendments. This Agreement may not be amended, revised, altered or terminated except by an Agreement in writing executed by all of the Parties.

20. Term of Agreement and Reinstatement. This Agreement and the Loan Documents shall remain in full force and effect until all obligations of Borrower under the Loan is paid in full. If any sums paid to Lender on account of the Loan are required to be returned or refunded by Lender, this Agreement and the Loan Documents shall be revived and reinstated as to all such sums, including the liens of the Financing Statements.

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement, under seal the day and year first, above written.

SIGNED, SEALED AND	LENDER:
DELIVERED IN THE	CANTONE ASSET MANAGEMENT, LLC
PRESENCE OF:
	By: /s/ Anthony J. Cantone (SEAL)
_________________________	Anthony J. Cantone, Managing Member
Witness

	BORROWER:
	LATTICE INCORPORATED
	a Delaware corporation



_________________________	By: /s/ Paul Burgess (SEAL)
Witness	Paul Burgess, President

	[CORPORATE SEAL]

EXHIBIT A

CONTRACTS

EXHIBIT B

CLOSING CHECKLIST

EXHIBIT C

Form of Note

Exhibit 10.2

LATTICE INCORPORATED

14% SECURED NOTE

Thompson, Pennsylvania

$580,000.00

November 2, 2015

1. Obligation. For value received and intending to be legally bound, Lattice Incorporated, a Delaware corporation ("Maker"), hereby promises to pay on or before the Due Date (as defined below) to the order of Cantone Asset Management, LLC (including its successors and assigns, collectively, the "Payee"), the principal sum of up to FIVE HUNDRED EIGHTY Thousand Dollars ($580,000.00), lawful money of the United States of America together with interest thereon in the amount of fourteen percent annual simple interest (the “Rate”) on the terms and conditions stated in this Note, based on the gross amount advanced by the Payee before deductions. The loan represented by this note is for business purposes only. The principal sum added to the accrued but unpaid interest (including Default Interest, defined below) is referred to in this Note as the "Amount Due." Any term capitalized herein and not defined shall have the same meaning as in the Loan and Security Agreement between the Maker and the Payee of even date.

The payments under this Note shall be made in funds immediately available to Payee at its office at Thompson, Pennsylvania, or at such other location as the Payee shall designate. In the event the due date of any payment under this Note is a Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania, such payment shall be due on the next succeeding date which is not a Saturday, Sunday or such legal holiday, provided that the principal sum shall continue to accrue interest until paid.

Maker acknowledges that this Note is delivered to the Payee at a 10% original issue discount. Maker will pay no interest if the $580,000 principal is paid on or before February 2, 2016; 14% annual interest accrues on the principal sum beginning February 2, 2016 if the principal remains outstanding, with interest paid monthly, in arrears, on the twenty-seventh day of the month, at $6,766.67 per month with first interest payment due March 2, 2016, and will continue until the Amount Due is paid. If any event of default occurs as defined in this Note, including a failure to pay interest when due, interest will accrue at the rate of 18% (the “Default Rate”). Interest payable at the Default Rate shall be known as “Default Interest” under this Note.

The Amount Due is due and payable on or before May 2, 2016 (the “Due Date”). If the Maker fails to pay the Amount Due on the Due Date, Default Interest at the Default Rate will begin to accrue until the Amount Due is paid in full. If the Amount Due is not paid in full by the Due Date, in addition to any Default Interest, late fees or other charges, the Maker will immediately issue to the Payee a certificate representing 2,500,000 shares of the Maker’s common stock as a late payment penalty and not as interest and $50,000 will be added to the principal amount and begin accruing Default Interest.

2. Prepayment. Maker may prepay all or any portion of the Amount Due at any time without premium or penalty.

3. Application of Payments. All payments on this Note shall be applied first to interest at the Rate, then Default Interest, then all other sums due hereunder, and the balance thereof to principal or in such other order as Payee may elect.

4. Late Charge. If any payment of interest payable under Section 1, above is not made by the twenty-ninth day of the month in which it is due, or if the Amount Due is not paid when due under the terms of this Note and remains unpaid ten (10) days after the Due Date, then, in either case, there shall also be immediately due and payable a late charge at the rate of Five Percent (5%) of such delinquent payment. The amount of any such late charge not paid promptly following demand therefor shall be deemed outstanding and payable pursuant to the Note.

5. Collateral. The payment of the Amount Due on the Due Date shall be secured by a first lien on the revenues and other proceeds of certain contracts of the Maker, listed on Exhibit A, to be evidenced by a filing on form UCC-1.

6. Default; Acceleration; Remedies.

a. Should there occur and exist any Default (as defined below in Section 6 b), then Payee, at its option and after written notice to Maker, may declare immediately due and payable the entire unpaid balance of Amount Due and accrued interest by Maker hereunder, together with interest accrued thereon at the Rate to the date of Default and thereafter at a rate of interest equal to the Default Rate, anything herein to the contrary notwithstanding. Payment of the Amount Due may be enforced and recovered in whole or in part at any time by one or more of the remedies provided Payee in this Note. If Payee employs counsel to enforce this Note by suit or otherwise, Maker will reimburse Payee for all reasonable costs of suit and other expenses in connection therewith, whether or not suit is actually instituted, together with a reasonable attorney's fee for collection of Ten Percent (10%) of the total amount then due by Maker to Payee but in no event less than Five Thousand Dollars ($5,000.00) together, to the extent permitted by applicable law, with interest on any judgment obtained by Payee at the Default Rate, including interest at the Default Rate from and after the date of execution, judicial or foreclosure sale until actual payment is made to Payee of the full amount due Payee.

b. As used in this Note, "Default" shall mean the occurrence of any of the following events:

(1) Any default in the payment when due of interest or the Amount Due on the Due Date, or any other sums due, under this Note, which default is not cured within ten (10) days after the due date of such payment;

(2) Any default in the performance of any of the provisions of this Note, which is not cured within ten (10) days;

(3) Any default in any other indebtedness of the Maker, which default is not cured within ten (10) days of the date of such default;

(4) The making of any misrepresentation to Payee;

(5) The appointment of a committee of Maker’s creditors;

(6) The making by Maker of a general assignment or offer of settlement for the benefit of creditors;

(7) The voluntary or involuntary application for, or appointment of, a receiver, custodian, guardian, trustee, or other personal representative for Maker or its property;

(8) The filing of a voluntary or involuntary (to the extent not dismissed within 30 days) petition under any of the provisions of the Federal Bankruptcy Code or any similar state statute;

(9) The occurrence of any other act of insolvency (however expressed or indicated);

(10) The issuance of a warrant of attachment or for distraint, or the notice of tax lien against Maker’s assets;

(11) An entry of judgments against Maker or its assets;

(12) The failure to pay, withhold, collect or remit any taxes or tax deficiency when assessed or due, unless such taxes are being diligently contested in good faith by appropriate proceedings;

(13) The general failure of Maker to pay its debts and obligations as the same become due and payable.

7. Remedies Cumulative, Etc.

a. The remedies of Payee provided in this Note shall be cumulative and concurrent, may be pursued singly, successively, or together at the sole discretion of Payee, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

b. The recovery of any judgment by Payee shall not affect in any manner or to any extent any rights, remedies or powers of Payee under this Note, but such rights, remedies and powers of Payee shall continue unimpaired as before. The exercise by Payee of its rights and remedies and the entry of any judgment by Payee shall not adversely affect in any way the interest rate payable hereunder on any amounts due to Payee but interest shall continue to accrue on such amounts at the rates specified herein.

c. Maker agrees that any action or proceeding against it to enforce this Note may be commenced in the Commonwealth of Pennsylvania Court of Common Pleas in the County of Philadelphia or in such court sitting in any of the five adjacent counties in the Commonwealth of Pennsylvania, or in the United States District Court for the Eastern District of Pennsylvania. Maker also consents to venue in any federal court having subject matter jurisdiction located in the Commonwealth of Pennsylvania. The provisions of this Section shall not limit or otherwise affect the right of Payee to institute and conduct action in any other appropriate manner, jurisdiction or court.

8. Additional Waivers. Maker hereby waives presentment for payment, demand, demand for payment, notice of demand, notice of nonpayment or dishonor, notice of acceleration, protest and notice of protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of the Note. Maker agrees that its liability shall be unconditional without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee. Maker consents to any and all extensions of time, renewals, waivers or modifications that may be granted by Payee with respect to payment or other provisions of this Note.

9. Costs and Expenses. Maker shall pay upon demand all reasonable costs and expenses incurred by Payee in the exercise of any of its rights, remedies or powers under this Note and any amount thereof not paid promptly following demand therefor shall be added to the principal sum hereunder and shall bear interest at the Default Rate from the date of such demand until paid in full.

10. Severability. If any provision of this Note is held to be invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Note shall remain in full force and effect and shall be liberally construed in favor of Payee in order to effectuate the provisions of this Note.

11. Limitation of Interest to Maximum Lawful Rate. In no event shall the rate of interest payable hereunder exceed the maximum rate of interest permitted to be charged by applicable law (including choice of law rules) and any interest paid in excess of the permitted rate shall be refunded to Maker. Such refund shall be made by application of the excessive amount of interest paid against any sums outstanding under this Note and shall be applied on such order as Payee may determine. If the excessive amount of interest paid exceeds the sums outstanding under this Note, the portion exceeding the sums outstanding under this Note shall be refunded in cash by Payee. Any such crediting or refund shall not cure or waive any default by Maker hereunder. Maker agrees, however, that in determining whether or not any interest payable under this Note exceeds the highest rate permitted by law, any non-principal payment, including without limitation prepayment fees and late charges, shall be deemed to the extent permitted by law to be an expense, fee, premium or penalty rather than interest. Maker acknowledges that the loan represented by this Note is for business purposes only.

12. Limitation on Payee's Waivers. Payee shall not be deemed, by any act or omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by Payee, and then only to the extent specifically set forth in the writing. A waiver as to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

13. No Offset. The obligations of Maker under this Note shall not be subject to any abatement or offset as a consequence of any claim, event or transaction otherwise occurring or arising between Maker, Payee and/or any affiliate of any of them, except as Maker and Payee may otherwise agree.

14. Applicable Law. This instrument shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania, without regard to its doctrine regarding conflicts of laws.

15. Captions. The captions or headings of the paragraphs in this Note are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of the Note.

16. Pronouns. Pronouns used herein shall be deemed to include the masculine, feminine or neuter, singular or plural, as their contexts may require. The words "Payee" and "Maker" shall be deemed to include the respective heirs, personal representatives, successors and assigns of Payee and Maker.

17. Construction. The language in this Agreement shall be construed as a whole according to its fair meaning, strictly neither for nor against any party, and without implying a presumption that its terms shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the person who drafted it.

18. Computation. The unpaid principal amount of this Note, the unpaid interest accrued thereon, the interest rate or rates applicable to such unpaid principal amount, the duration of such applicability, and all other Amounts Due owing by Maker to Payee pursuant to this Note shall at all times be ascertained from the records of Payee, which shall be conclusive absent manifest error.

19. Assignment. This Note may not be assigned or otherwise transferred by Maker without the prior written consent of Payee.

20. Stamp Taxes. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by the laws of the Commonwealth of Pennsylvania (or any of its political subdivisions) or the United States of America to be affixed to this note, and if any taxes are imposed under the laws of the Commonwealth of Pennsylvania (or any of its political subdivisions) or the United States of America with respect to evidences of indebtedness, Maker shall pay or reimburse Payee upon demand the amount of such taxes without credit against any indebtedness evidenced by this Note.

21. Notices. All notices, requests, waivers, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given, made and received when hand delivered against receipt, or on the day after it is sent by United States certified or registered mail, postage prepaid, return receipt requested, by nationally recognized overnight courier service, or by facsimile, to:

If to Maker:

Lattice Incorporated

7150 N. Park Drive

Suite 500

Pennsauken, NJ 08109

Telephone (856) 910-1166

Facsimile: (856) 910-1811

If to Payee:

Cantone Asset Management, LLC

C/o Cantone Research, Inc.

766 Shrewsbury Ave

Suite E 401

Tinton Falls, NJ 07724

Telephone: 732-450-3500

Facsimile: 732-450-3520

Attention: Anthony Cantone

Or such other address as shall be specified from time to time (in compliance with the requirements of this Section 21 for the giving of notice) by the parties entitled to receive such notices.

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed the day and year first above written.

MAKER:

LATTICE INCORPORATED.

By: /s/ Paul Burgess

Paul Burgess, Chief Executive Officer

EXHIBIT A

COLLATERAL

Exhibit 10.3

SECURITIES SALE AGREEMENT

THIS SALE AGREEMENT, (the “Agreement”) dated as of November 2, 2015, is made by and between Barron Partners LP, a Delaware Limited Partnership (the “Seller”) and Lattice Incorporated, a Delaware Corporation (the “Buyer”).

WHEREAS, Seller is the owner of the 3,589,488 shares of Series A Convertible Preferred Stock of the Buyer (the “Series A Shares”)

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree the following:

Seller agrees to sell to the Buyer and the Buyer agrees to buy from the Seller 3,589,488 Series A Shares (the “LTTC Shares”) for a total purchase price of $461,502 by no later than November 30, 2015. In the event that the closing does not take place by November 30, 2015, this agreement shall terminate. Upon closing, Buyer shall cancel the LTTC Shares kept by the Buyer on its books and records in the name of the Seller upon Seller’s confirmation of the receipt of the Purchase Price.

In connection with the purchase of the LTTC Shares, the Buyer represents to the Seller, the following:

that the Buyer has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

that the Buyer acknowledges and understands that the Seller is not providing any assurance to the Buyer as to the fair market value of the LTTC Shares and that the value of the LTTC Shares may be significantly less than the amount the Buyer is paying for them; that the Buyer hereby waives any and all claims, whether at law, in equity or otherwise, that it may now have or may hereafter acquire, whether presently known or unknown, against Seller or any of its agents, affiliates, subsidiaries, successors or assigns relating to the value of the LTTC Shares; and that the Buyer is aware that the Seller is relying on the acknowledgement and waiver above in connection with the sale of the LTTC Shares.

The Buyer’s Board of Directors has determined that the purchase of the LTTC Shares with funds raised specifically for that purpose will not impair the capital of the Buyer.

After the Buyer acquires the LTTC Shares, the LTTC Shares will be canceled and become unauthorized and unissued shares of their respective classes.

In connection with the sale of the LTTC Shares, the Seller represents to the Buyer:

that the Seller is transferring the LTTC Shares free and clear of all liens and encumbrances other than those created by the terms of the Company’s organizational documents or imposed by applicable federal and state securities laws.

that the Seller has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

that the Seller acknowledges and understands that the Buyer may possess or have access to material non-public information about itself that has not been communicated to Seller; that the Seller hereby waives any and all claims, whether at law, in equity or otherwise, that it may now have or may hereafter acquire, whether presently known or unknown, against Buyer or any of its agents, affiliates, subsidiaries, successors or assigns relating to any failure to disclose any nonpublic information in connection with Buyer’s purchase of the LTTC Shares, including, without limitation, any such claims arising under securities or other laws, rules and regulations; and that the Seller is aware that the Buyer is relying on the acknowledgement and waiver above in connection with the purchase of the LTTC Shares.

Buyer, for itself and its subsidiaries, directors, officers, employees, attorneys and agents, (the “Releasors”), for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby forever remise, release and discharge the Seller, along with its subsidiaries, divisions, stockholders, directors, officers, managers, employees, attorneys and agents (the “Releasees”), from all debts, demands, actions, causes of action, suits, dues, sum and sums of money, accounts, reckonings, bonds, specialties, covenants, contracts, controversies, agreements, promises, doings, omissions, variances, damages, extents, executions and liabilities and any and all other claims of every kind, nature and description whatsoever (upon any legal or equitable theory, whether contractual, common-law, statutory, federal, state, local or otherwise including, without limitation, for dilution and breach of any and all duties) whether known or unknown, that relate to, arise from or are associated with the resale, disposition or retirement of the LTTC Shares or any decrease in the value of the LTTC Shares.

IN WITNESS WHEREOF, the parties have caused this Sale Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

SELLER:

BARRON PARTNERS LP

By: Barron Capital Advisors, LLC,

its General Partner

By: /s/ Andrew Barron Worden

Andrew Barron Worden

Managing Partner

730 Fifth Avenue, 16th Floor New York NY 10019

BUYER:

LATTICE INCORPORATED

By: /s/ Paul Burgess

Name:

Title:

SECURITIES SALE AGREEMENT

WHEREAS, Seller is the owner of the 520,000 shares of Series C Convertible Preferred Stock of the Buyer (the “Series C Shares”)

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree the following:

Seller agrees to sell to the Buyer and the Buyer agrees to buy from the Seller 520,000 Series C Shares (the “LTTC Shares”) for a total purchase price of $188,577 by no later than November 30, 2015. In the event that the closing does not take place by November 30, 2015, this agreement shall terminate. Upon closing, Buyer shall cancel the LTTC Shares kept by the Buyer on its books and records in the name of the Seller upon Seller’s confirmation of the receipt of the Purchase Price.

In connection with the purchase of the LTTC Shares, the Buyer represents to the Seller, the following:

that the Buyer has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

The Buyer’s Board of Directors has determined that the purchase of the LTTC Shares with funds raised specifically for that purpose will not impair the capital of the Buyer.

After the Buyer acquires the LTTC Shares, the LTTC Shares will be canceled and become unauthorized and unissued shares of their respective classes.

In connection with the sale of the LTTC Shares, the Seller represents to the Buyer:

that the Seller has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

IN WITNESS WHEREOF, the parties have caused this Sale Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

SELLER:

BARRON PARTNERS LP

By: Barron Capital Advisors, LLC,

its General Partner

By: /s/ Andrew Barron Worden

Andrew Barron Worden

Managing Partner

730 Fifth Avenue, 16th Floor New York NY 10019

BUYER:

LATTICE INCORPORATED

By: /s/ Paul Burgess

Name:

Title:

SECURITIES SALE AGREEMENT

WHEREAS, Seller is the owner of the 590,910 shares of Series D Convertible Preferred Stock of the Buyer (the “Series D Shares”)

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree the following:

Seller agrees to sell to the Buyer and the Buyer agrees to buy from the Seller 590,010 Series D Shares (the “LTTC Shares”) for a total purchase price of $425,455 by no later than November 30, 2015. In the event that the closing does not take place by November 30, 2015, this agreement shall terminate. Upon closing, Buyer shall cancel the LTTC Shares kept by the Buyer on its books and records in the name of the Seller upon Seller’s confirmation of the receipt of the Purchase Price.

In connection with the purchase of the LTTC Shares, the Buyer represents to the Seller, the following:

that the Buyer has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

The Buyer’s Board of Directors has determined that the purchase of the LTTC Shares with funds raised specifically for that purpose will not impair the capital of the Buyer.

After the Buyer acquires the LTTC Shares, the LTTC Shares will be canceled and become unauthorized and unissued shares of their respective classes.

In connection with the sale of the LTTC Shares, the Seller represents to the Buyer:

that the Seller has all of the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

IN WITNESS WHEREOF, the parties have caused this Sale Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

SELLER:

BARRON PARTNERS LP

By: Barron Capital Advisors, LLC,

its General Partner

By: /s/ Andrew Barron Worden

Andrew Barron Worden

Managing Partner

730 Fifth Avenue, 16th Floor New York NY 10019

BUYER:

LATTICE INCORPORATED

By: /s/ Paul Burgess

Name:

Title:

Exhibit 10.4

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of November 2, 2015, between Lattice Incorporated, a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined below), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.
DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Additional Purchasers” shall have the meaning ascribed to such term in Section 2.1(b).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Agreement” shall have the meaning ascribed to such term in the introduction, as the same may be amended from time to time.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1. In the event there is more than one closing, the term “Closing” shall apply to each such closing unless otherwise specified.

“Closing Date” means each date on which a Closing takes place.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Company” shall have the meaning ascribed to such term in the introduction.

“Disclosure Schedules” shall mean those schedules delivered in connection with Section 3.1.

"Disqualification Event" shall have the meaning ascribed to such term in Section 3.1(ii).

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

“Initial Closing” means the initial closing of the purchase and sale of the Shares pursuant to Section 2.1(a) resulting in gross proceeds to the Company of not less than [$500,000].

“Initial Closing Date” means the date that the Initial Closing takes place.

“Knowledge” means the actual knowledge (i.e., the conscious awareness of facts and other information) of the chief executive officer and chief financial officer of the Company.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“OFAC” shall have the meaning ascribed to such term in Section 3.1(gg).

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Purchase Price” means $0.036, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions that occur after the date of this Agreement.

“Purchaser” and “Purchasers” shall have the meanings ascribed to such terms in the introduction.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shares” means the shares of Common Stock issued to each Purchaser pursuant to this Agreement in the aggregate amount of up to 46,600,000 shares.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).

“Trading Day” means a day on which the principal Trading Market for the Common Stock is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board or the OTC Market (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement and all schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 17 Battery Place, New York, NY 10004, and any successor transfer agent of the Company.

ARTICLE II.
PURCHASE AND SALE

2.1 Closing.

(a) The initial purchase and sale of the Shares shall take place on the Initial Closing Date. On the Initial Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, that number of Shares specified on the signature pages hereto at the Purchase Price per share.

(b) After the Initial Closing, the Company may sell, on the same terms and conditions as those contained in this Agreement, additional Shares to one or more purchasers (the “Additional Purchasers”), provided that (i) such subsequent sale is consummated prior to [20] days after the Initial Closing, (ii) the second Closing hereunder is for a number of Shares such that the aggregate gross proceeds of the Initial Closing and the second Closing is not less than [$725,000], (iii) the third Closing hereunder is for a number of Shares such that the aggregate gross proceeds of the Initial Closing, the second Closing and the third Closing is not less than [$1,200,000], and (iv) each Additional Purchaser shall become a party to the Transaction Documents, by executing and delivering a counterpart signature page to each of the Transaction Documents.

(c) At each Closing, each Purchaser purchasing Shares at such Closing shall deliver to the Company, via wire transfer, such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Shares, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at such Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, each Closing shall occur remotely or at such physical location as the parties shall mutually agree.

2.2 Deliveries.

(a) On or prior to the applicable Closing Date, the Company shall deliver or cause to be delivered to each applicable Purchaser the following:

(i) this Agreement duly executed by the Company; and

(ii) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a certificate evidencing the number of Shares to issuable to such Purchaser hereunder, registered in the name of such Purchaser.

(b) On or prior to the applicable Closing Date, each Purchaser purchasing Shares at such Closing shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser; and

(ii) such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with any Closing are subject to the following conditions being met:

(i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein, in which case such representations and warranties shall be true as of such specified date);

(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii) the delivery by each applicable Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b) The respective obligations of the Purchasers hereunder in connection with any Closing are subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein, in which case such representations and warranties shall be true as of such specified date);

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii) The agreement between the Company and Barron Partners LP dated November 2, 2015, pursuant to which the Company will purchase the securities of the Company owned by Barron Partners LP, is in full force and effect as of the Closing Date;

(iv) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and

(v) there shall have been no Material Adverse Effect with respect to the Company since the date hereof.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules (which may be updated by the Company as of each Closing Date), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or warranty made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser as of each Closing Date:

(a) Subsidiaries. The companies included in the SEC Reports are all direct or indirect subsidiaries of the Company (the “Subsidiaries”). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens other than Liens that could not if enforced, individually or in the aggregate, result or reasonably be expected to result in a Material Adverse Effect (as defined in Section 3.1(b) below), and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to have or result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Action has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification; provided, however, that no change, effect, event or occurrence to the extent arising or resulting from any of the following, either alone or in combination, shall constitute or be taken into account in determining whether there has been or will be a Material Adverse Effect: (i) general business or economic conditions not specific or peculiar to the Company or any Subsidiary, (ii) acts of war or terrorism or natural disasters not specific or peculiar to the Company, a Subsidiary or a jurisdiction in which any of them operates, (iii) catastrophic economic or significant regulatory or political conditions or changes, (iv) changes in any applicable accounting regulations or principles or the interpretations thereof, (vi) changes in laws, or (vii) changes in the price or trading volume of the Company’s stock.

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including the issuance and sale of the Shares, have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Shares and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to have or result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) as set forth on Schedule 3.1(e), (ii) the filings required pursuant to Section 4.4 of this Agreement, (iii) the filing of a Form D with the Commission, and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

(f) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

(g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than (i) pursuant to the exercise of employee stock options under the Company’s stock option plans, (ii) the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and (iii) the issuance of securities pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Shares or as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the Knowledge of the Company, between or among any of the Company’s stockholders.

(h) SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof or as set forth on Schedule 3.1(i): (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or their respective business, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made or deemed made.

(j) Litigation. Except as set forth in the SEC Reports, there is no action, claim, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to have or result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations. No material labor dispute exists or, to the Knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the Knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, have or reasonably be expected to have or result in a Material Adverse Effect.

(l) Compliance. Except as disclosed in the SEC Reports or as set forth on Schedule 3.1(l), neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree, or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case with respect to clauses (i) through (iii) as could not have or reasonably be expected to result in a Material Adverse Effect.

(m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

(n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o) Patents and Trademarks. Except as set forth on Schedule 3.1(o), the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any Knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have a Material Adverse Effect. To the Knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports or as set forth on Schedule 3.1(q), none of the officers or directors of the Company and, to the Knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 as of the date hereof and as of the Closing Date. Except as set forth on Schedule 3.1(r), the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

(s) Certain Fees. Except as set forth on Schedule 3.1(s), no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

(t) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.

(u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

(v) Registration Rights. Except as set forth on Schedule 3.1(v), no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(w) Listing and Maintenance Requirements. The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance or has not complied with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

(x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Shares and the Purchasers’ ownership of the Shares.

(y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

(z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

(aa) Indebtedness. Except as set forth on Schedule 3.1(aa), The SEC Reports set forth all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Except as set forth on Schedule 3.1(aa), neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

(bb) Tax Status. Except for matters that could not, individually or in the aggregate, have or reasonably be expected to have or result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith in appropriate proceedings, and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

(cc) No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchasers.

(dd) Foreign Corrupt Practices. 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, used any funds 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 fully 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.

(ee) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(ff) Regulation M Compliance. The Company has not, and to its Knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

(gg) Office of Foreign Assets Control. Neither the Company nor, to the Company's Knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

(hh) Money Laundering. The operations of the Company are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the such laws is pending or, to the Knowledge of the Company, threatened.

(ii) No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

(a) Organization; Authority. Such Purchaser is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) Own Account. Such Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Shares in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

(c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and as of the date hereof it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

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

(f) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) as of the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

(g) Disqualification Events. Such Purchaser is not a person specified in the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act.

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Shares in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

(c) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) following any sale of such Shares pursuant to Rule 144, or (ii) if requested by the holder of such Shares and such Shares are eligible for sale under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions.

4.2 Public Information. For a period of two (2) years from the Initial Closing Date, the Company covenants to use its best efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 15(d) of the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.4 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information. Each Purchaser covenants and agrees to not request material non-public information from the Company unless it has previously signed a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

4.5 Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder for the purposes set forth on Schedule 4.5 attached hereto.

4.6 Indemnification of Purchasers. Subject to the provisions of this Section 4.6, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party that constitutes fraud, gross negligence or willful misconduct. The indemnification required by this Section 4.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others, and (y) any liabilities the Company may be subject to pursuant to law.

4.7 Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed or quoted, and concurrently with each Closing, the Company shall apply to list or quote all of the Shares on such Trading Market (if applicable) and promptly secure the listing of all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing or quotation and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

4.8 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.

4.9 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced, and (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced, provided, that no Purchaser will engage in any Short Sales while it holds any of the Shares.

4.10 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers at each Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

4.11 Delivery of Shares After Closing. The Company shall deliver, or cause to be delivered, the respective Shares purchased by each Purchaser to such Purchaser within three (3) Trading Days of the applicable Closing Date.

4.12 Piggyback Registration Rights. If, at any time after the Initial Closing Date, the Company shall propose to file with the Commission a registration statement under the Securities Act other than on Forms S-4 or S-8 (or any successor to such forms), the Company shall give notice to each Purchaser and include in such registration statement all or any part of the Shares that such Purchaser requests to be registered; provided, however, that the Company shall not be required to register the resale of any Shares pursuant to this Section 4.12 that are eligible for resale pursuant to Rule 144 under the Securities Act without any requirement for the Company to maintain current public information and without any limitation on volume or manner of sale.

ARTICLE V.
MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Initial Closing has not been consummated on or before December 15, 2015; provided, however, that such termination will not affect the right of any party to sue for any breach by the other party (or parties).

5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.

5.3 Entire Agreement. The Transaction Documents, together with the schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2^nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, (i) in the case of an amendment, by the Company and (a) prior to the Initial Closing, Purchasers that have agreed to purchase at least fifty percent (50%) of the Shares, and (b) after the Initial Closing, Purchasers holding at least fifty percent (50%) of the Shares then outstanding, or, (ii) in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

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

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.6.

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then in addition to the obligations of the Company under Section 4.8, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10 Survival. The representations and warranties contained herein shall survive each Closing and the delivery of the Shares.

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

5.14 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser 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 Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents.

5.15 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

5.16 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.17 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

5.18 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

LATTICE INCORPORATED

Address for Notice:

7150 N. Park Drive
Pennsauken, New Jersey 08109
Attention: Chief Executive Officer
Facsimile:
Email:

By:

Name:

Title:

With a copy to (which shall not constitute notice):

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Attention: Giovanni Caruso

Facsimile: (212) 937-3943

Email: gcaruso@loeb.com

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: _________________________________________________________

Signature of Authorized Signatory of Purchaser: __________________________________

Name of Authorized Signatory: ________________________________________________

Title of Authorized Signatory: _________________________________________________

Email Address of Authorized Signatory: _________________________________________

Facsimile Number of Authorized Signatory: _______________________________________

Address for Notice of Purchaser:

Address for Delivery of Shares for Purchaser (if not same as address for notice):

Subscription Amount: $_________________

Shares: _________________

EIN Number: ________________________

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