EXHIBIT 10.63
 
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SECURITIES
PURCHASE AGREEMENT AND SECURITY AGREEMENT
 
THIS SECOND AMENDMENT (this “Amendment”) is entered into as of June 16, 2015, by
and among FUSION NBS ACQUISITION CORP. a Delaware corporation (“Borrower”),
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation
(“Parent”), NETWORK BILLING SYSTEMS, L.L.C., a New Jersey limited liability
company (“NBS”), FUSION BVX LLC, a Delaware limited liability company (“BVX”),
PINGTONE COMMUNICATIONS, INC., a Delaware corporation (“PingTone,” and together
with Parent, NBS, BVX, the “Guarantors”, and together with the Borrower, the
“Credit Parties”), the financial institutions set forth on the signature pages
hereto (each a “Lender” and collectively, “Lenders”) and Praesidian Capital
Opportunity Fund III, LP as agent for Lenders (in such capacity, “Agent”).
 
BACKGROUND

WHEREAS, Credit Parties, Lenders and Agent are parties to a Second Amended and
Restated Securities Purchase Agreement and Security Agreement, dated as of
October 31, 2014 (as amended, restated, supplemented or otherwise modified from
time to time, the “Loan Agreement”), pursuant to which Agent and Lenders provide
Borrower with certain financial accommodations.
 
WHEREAS, Credit Parties have requested that Agent and Lenders amend certain
provisions of the Loan Agreement and Agent and Lenders are willing to do so on
the terms and conditions hereafter set forth.
 
WHEREAS, Parent has issued Warrants to the Lenders and Parent has requested that
the Lenders exercise the Warrants and Lenders are willing to do so on the terms
and conditions hereafter set forth;
 
NOW, THEREFORE, in consideration of any loan or advance or grant of credit
heretofore or hereafter made to or for the account of Borrower by Agent and
Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
 
1. Definitions.  All capitalized terms not otherwise defined herein shall have
the meanings given to them in the Loan Agreement.
 
2. Exercise of Warrants.  Subject to the satisfaction of the conditions
precedent set forth in Section 4 below, upon payment within 30 days of the date
hereof by Parent to each Lender of an amount equal to 150% of the “Cash Amount”,
as defined in the respective Warrant, provided that a Default does not then
exist, each Lender shall exercise its Warrant by completing and returning to
Parent the Notice of Exercise form attached to its Warrants.  The parties
confirm that two thirds of such amount shall by applied as an offset against the
“Payment Obligation”, as defined in and as provided in the Warrants and the
balance shall be retained by each Lender in consideration of the early exercise
of its Warrant.
 
 
 

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3. Amendment of Loan Agreement.  Subject to the satisfaction of the conditions
precedent set forth in Section 4 below, Sections 8.18 (e) and 8.18(f) are hereby
added to the Loan Agreement and Sections 9.01, 9.07(d), 9.15(e) and 9.15(f) of
the Loan Agreement are hereby amended to read in their entirety as follows:
 
8.18(e)              Not later than July 31, 2015 Parent shall sell equity
interests in Parent, on terms reasonably satisfactory to Lenders, with net sale
proceeds of not less than $3,000,000.
 
8.18(f)              Obligors covenant and agree that if, within one (1) year
from the date of exercise of the Warrants, any Lender sells its "Issued Warrant
Shares" (as defined in the Warrants) as a result of a merger or other
transaction not initiated by such Lender, then Obligors shall pay to each such
Lender an amount equal to 20% of the gain realized by such Lender as a result of
its sale of such Issued Warrant Shares. The amount of gain shall be calculated
by each Lender and shall be paid upon the closing of the merger or such other
transaction.  The obligations contained in this section 8.18(f) shall survive
the termination of this Agreement and the Transaction Documents and payment in
full of the Notes.
 
9.01           Fundamental Changes; Consolidations, Mergers and Acquisitions;
Asset Sales.  No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries to, directly or indirectly: (a) enter into any merger,
consolidation or other reorganization with or into any other Person or acquire
all or a substantial portion of the assets or Equity Interests of any Person or
permit any other Person to consolidate with or merge with it (other than the
merger of PingTone and BVX with and into NBS), or (b) sell, lease, transfer or
otherwise dispose of any of its properties or assets, except dispositions of
inventory in the Ordinary Course of Business.
 
9.07(d)              Indebtedness disclosed on Schedule 9.07 including up to
$7,000,000 aggregate amount of Indebtedness at any time in respect of equipment
financing leases, and any extension, renewal or refinancing thereof; provided
that in connection with any such extension, renewal or refinancing: (i) the
aggregate principal amount of such Indebtedness is not increased, (ii) the
scheduled maturity date of such Indebtedness is not shortened,  (iii) the
covenants or defaults are not materially more restrictive or more onerous than
analogous provisions in the
 
9.15(e)              Minimum Parent EBITDA.  The Parent shall not permit Parent
EBITDA, measured as of the last day of each period of four consecutive fiscal
quarters beginning with the four consecutive fiscal quarters ending
September 30, 2015, to be less than the amount of EBITDA for such period;
provided, however that if Parent sells its equity securities in accordance with
section 8.18(e) then the period for calculating compliance with this provision
shall be extended to March 31, 2016.
 
9.15(f)              Minimum Cash.  The Parent, on a non-Consolidated Basis,
shall at all times from and after July 31, 2015 have at least $1,000,000 of Cash
Equivalents in excess of the amount of the Working Capital Loans then
outstanding.
 
 
 

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4. Conditions of Effectiveness.  This Amendment shall become effective upon
satisfaction of the following conditions precedent:  Agent shall have received
(i) four (4) copies of this Amendment executed by Credit Parties and Required
Lenders, and (ii) payment of Lenders’ costs and expenses, including reasonably
attorneys’ fees and expenses in connection with this Amendment.
 
5. Representations and Warranties.  Each Credit Party hereby represents and
warrants as follows:
 
(a) This Amendment and the Loan Agreement constitute legal, valid and binding
obligations of each Credit Party and are enforceable against each Credit Party
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance or
transfer, moratorium or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally or  by general
principles of equity.
 
(b) Upon the effectiveness of this Amendment, each Credit Party hereby reaffirms
all covenants, representations and warranties made in the Loan Agreement, as
amended hereby, and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date of this
Amendment.
 
(c) No Event of Default or Default has occurred and is continuing immediately
prior to giving effect to this Amendment and no Event of Default or Default has
occurred and is continuing or would exist after giving effect to this Amendment.
 
(d) No Credit Party has any defense, counterclaim or offset with respect to the
Loan Agreement.
 
6. Effect on the Loan Agreement.
 
(a) The Loan Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, as amended hereby, shall
remain in full force and effect, and are hereby ratified and confirmed.
 
(b) Except as expressly provided in Sections 2 and 3, the execution, delivery
and effectiveness of this Amendment shall not constitute a modification of any
provision of the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection therewith.
 
(c) This Amendment shall be a Transaction Document for all purposes under the
Loan Agreement.
 
7. GOVERNING LAW.  THIS AMENDMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT
OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD RESULT IN
THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
 
 
 

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8. Release.  In consideration of the agreements of Agent and Lenders contained
herein, each Credit Party on behalf of itself and its successors, assigns, and
other legal representatives, hereby, jointly and severally, absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and each Lender, and their present and former shareholders, affiliates,
subsidiaries, divisions, predecessors, directors, officers, attorneys,
employees, agents and other representatives and their respective successors and
assigns (Agent, each Lender and all such other parties being hereinafter
referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities whatsoever (individually, a “Claim” and
collectively, “Claims”) of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, whether liquidated or unliquidated,
matured or unmatured, asserted or unasserted, fixed or contingent, foreseen or
unforeseen and anticipated or unanticipated, which such Credit Party, or any of
its successors, assigns, or other legal representatives and its successors and
assigns may now or hereafter own, hold, have or claim to have against the
Releasees or any of them for, upon, or by reason of any nature, cause or thing
whatsoever which arises at any time on or prior to the day and date of this
Amendment, in relation to, or in any way in connection with the Loan Agreement,
as amended and supplemented through the date hereof, this Amendment and the
Transaction Documents.
 
9. Headings.  Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
 
10. Counterparts; Facsimile.  This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement.  Any signature delivered by a party by facsimile transmission or
electronic transmission of a “pdf” or similar file shall be deemed to be an
original signature hereto.
 

[Signature Pages Follows]
 
 
 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first written above.
 
Borrower:
FUSION NBS ACQUISITION CORP.

                                                               
By: /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.     
Title:    President     

Guarantors:
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

By:  /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.
Title:    President     

NETWORK BILLING SYSTEMS, LLC

By: /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.       
Title:    President

FUSION BVX LLC

By: /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.
Title:    President

FUSION PTC ACQUISITION, INC.

By: /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.
Title:    President

PINGTONE COMMUNICATIONS, INC.

By: /s/ Gordon Hutchins, Jr.
Name:  Gordon Hutchins, Jr.
Title:    President    

[signature page to second amendment to second amended and restated securities
purchase
agreement and security agreement]
 
 
 

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Lenders:

 
PRAESIDIAN CAPITAL OPPORTUNITY FUND III, L.P.
         
 
By:
Capital Opportunity GP III, LLC,
its General Partner
            By: /s/ Jason D. Drattell     Name: Jason D. Drattell     Title:
Manager          

 
PRAESIDIAN CAPITAL OPPORTUNITY FUND III-A, L.P.
         
 
By:
Praesidian Capital Opportunity GP III-A, LLC,
its General Partner
            By: /s/ Jason D. Drattell     Name: Jason D. Drattell     Title:
Manager        

  PLEXUS FUND II, LP          
 
By:
Plexus Fund II GP,
its General Partner
            By: /s/ Bob Anders     Name: Bob Anders     Title: Manager        

  PLEXUS FUND III, L.P.          
 
By:
Plexus Fund III GP, LLC
its General Partner
            By: /s/ Bob Anders     Name: Bob Anders     Title: Manager        

 
[signature page to second amendment to second amended and restated securities
purchase
agreement and security agreement]
 
 
 

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PLEXUS FUND QP III, L.P.
         
 
By:
Plexus Fund III GP, LLC
its General Partner
            By: /s/ Bob Anders     Name: Bob Anders     Title: Manager        

 
UNITED INSURANCE COMPANY
OF AMERICA
            By: /s/ John Boschelli     Name: John Boschelli     Title: Assistant
Treasurer        

Agent
PRAESIDIAN CAPITAL OPPORTUNITY FUND III, L.P.
         
 
By:
Praesidian Capital Opportunity GP III, LLC,
its General Partner
            By: /s/ Jason D. Drattell     Name: Jason D. Drattell     Title:
Manager        

 
[signature page to second amendment to second amended and restated securities
purchase
agreement and security agreement]
 
 
 

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