Document:

fsnn_ex10733.htm

EXHIBIT 10.733

 

Fusion Telecommunications International, Inc.

Fusion NBS Acquisition Corp.

420 Lexington Avenue Suite 1718

New York, New York 10170

 

October 29, 2012

 

Plexus Fund II LP

4601 Six Forks Road

Suite 528

Raleigh, North Carolina 27609

Attn: Jason D. Drattell/Michael S. Becker

Re:  Management Rights

 

Ladies and Gentlemen:

 

You have requested that each of Fusion NBS Acquisition Corp., a Delaware corporation (“Borrower”), and Fusion Telecommunications International, Inc., a Delaware corporation (“Parent”),  (together with Borrower, the “Credit Parties”), grant certain management rights to Plexus Fund II LP (the “Investor”) so that the purchase by the Investor of (i) certain promissory notes of Borrower (the “Notes”) and (ii) certain warrants from Parent to purchase capital stock of Parent (collectively, the “Warrants”), each pursuant to the Securities Purchase Agreement and Security Agreement, dated as of the date hereof, among the Credit Parties, the Investor and the other persons, from time to time, parties thereto, as such agreement may be amended, supplemented or otherwise modified from time to time (the “Purchase Agreement”), each may qualify as a “venture capital investment” as described in clause (d)(3)(i) of the U.S. Department of Labor Regulations § 2510.3-101 (the “DOL Regulation”).  This letter will confirm our agreement that the Investor will be entitled to the contractual management, information and other rights enumerated below:

 

(1) Each of the Credit Parties and their subsidiaries shall provide to the Investor true and correct copies of all documents, reports, financial data and other information as the Investor may reasonably request.  Additionally, each of the Credit Parties shall permit any authorized representatives designated by the Investor to visit and inspect any of the properties of the Credit Parties and their subsidiaries, including its and their books of account, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice to Parent’s Chief Executive Officer, at such times during normal business hours as the Investor may reasonably request. Discussions by Investors with officers of the Credit Parties pursuant to this paragraph shall be initiated by a request made to Parent’s Chief Executive Officer who shall be responsible for coordinating compliance with this provision.

 

  

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(2) With respect to each Credit Party, at any time during which the Investor does not have the direct contractual right to designate a representative to serve on the Board of Directors of such Credit Party (in each case, a “Credit Party Board”), the Investor shall have the right to designate one (1) person to attend as observers, all meetings of such Credit Party Board and all executive and other committee meetings thereof and shall provide to the Investor the same information concerning such Credit Party and its Subsidiaries (as defined in the Purchase Agreement), and access thereto, provided to members of the Credit Party Board and such committees, as applicable.  The reasonable travel expenses incurred by any such designee of the Investor in attending any board or committee meetings shall be reimbursed by such Credit Party, to the extent consistent with such Credit Party’s then existing policy of reimbursing directors generally for such expenses; provided, that no Credit Party will be required to permit a person designated by the Investor to attend, as an observer, any committee meeting of such Credit Party Board or provide information to the Investor as provided to such committees, unless the Investor has executed a confidentiality agreement satisfactory to the Credit Party in its reasonable determination, or in the event such Credit Party Board reasonably determines that a conflict of interest may exist between the Investor and such Credit Party Board.  Notwithstanding any provision herein to the contrary, including, without limitation, the last paragraph hereof, only one observer may be designated collectively by Investor and any persons to whom Investor may have transferred any of its Notes.

(3) The Investor (or any authorized representative designated by the Investor) shall have the right to consult with and advise the management of each of the Credit Parties and their subsidiaries, upon reasonable notice at reasonable times from time to time, on all matters relating to the operation of the Credit Parties and their subsidiaries. The Investor shall contact Parent’s Chief Executive Officer with any Investor request pursuant to this paragraph who shall be responsible for coordinating compliance with this provision.

 

(4) The Credit Parties shall provide the Investor with all financial information and inspection rights provided to “Lenders” (as defined in the Purchase Agreement) under the Purchase Agreement.  The rights of Investor set forth in this letter are in addition to, and not in limitation, of the rights of the Investor under the Purchase Agreement.

 

This letter may not be amended except by a written instrument signed by the Investor and each of the Credit Parties.

 

Each of the Credit Parties hereby further agrees that if legal counsel for the Investor reasonably concludes that the rights granted hereby should be altered to preserve the qualification of the Investor as a “venture capital operating company” or the Investor’s investment in the Credit Parties as a “venture capital investment”, in each case, as defined in the DOL Regulation or otherwise to ensure that the assets of the Investor are not considered “plan assets” for purposes of the Employee Retirement Income Security Act of 1974, as amended, each of the Credit Parties will agree to amendments to this letter to effect such alterations; provided that no such alteration would result in a material adverse effect on the operation or business of the Credit Parties.

 

  

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The rights of Investor described herein with respect to any Credit Party shall terminate and be of no further force or effect upon, subject to the other terms hereof, the Investor no longer holding any Notes of such Credit Party.

 

If any Credit Party engages in a restructuring or similar transaction, any resulting entity or entities shall be subject to this Agreement in the same manner as the Credit Parties, as applicable.

 

The Credit Parties hereby further agrees that they will provide to any person or entity to which the Investor transfers at least 50% of the principal amount of Notes then held by the Investor with the same rights granted to the Investor hereunder.

 

 [Signature Pages to Follow]

 

  

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Very truly yours,

 

FUSION NBS ACQUISITION CORP.

By:_______________________________

Name:

Title:

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

By:_______________________________

Name:

Title:

 

 

[Signature Page to Management Rights Agreement Plexus]

 

  

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ACKNOWLEDGED AND ACCEPTED:

 

PLEXUS FUND II, LP

 

By:   Plexus Fund II GP, its General Partner

By:  __________________________________

Name:  Michael Becker

Title:    Manager

 

 

[Signature Page to Management Rights Agreement Plexus]

 

 

5Unassociated Document

EXHIBIT 10.74

 

Small Business Side Letter

 

October 29, 2012

 

Reference is made to that certain Securities Purchase Agreement and Security Agreement (the “Purchase Agreement”), dated as of the date hereof, and as may be amended and in effect from time to time, by and between, among others, FUSION NBS ACQUISITION CORP., a Delaware corporation (“Borrower”), with its principal place of business at 155 Willowbrook Boulevard, Wayne, New Jersey 07470, FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation with its principal place of business at 420 Lexington Avenue, Suite 1718, New York, New York 10170, (“Parent”) each subsidiary from time to time party thereto, PRAESIDIAN CAPITAL OPPORTUNITY FUND III-A, LP, a Delaware limited partnership with its principal place of business at 419 Park Avenue South, New York, New York, PRAESIDIAN CAPITAL OPPORTUNITY FUND III, LP, a Delaware limited partnership with its principal place of business at 419 Park Avenue South, New York, New York, as a lender and as agent thereunder, and PLEXUS FUND II, LP, a Delaware limited partnership with its principal place of business at 4601 Six Forks Road, Suite 528, Raleigh, North Carolina (“Plexus”), pursuant to which, among other things, Plexus has agreed (i) to provide necessary financing to Borrower by making a term loan to Borrower on the terms set forth in the Purchase Agreement and (ii) to purchase from Borrower warrants to purchase capital stock of Borrower (the “Warrants”), on the terms and conditions set forth in the Purchase Agreement.

 

Plexus is a Small Business Investment Company (“SBIC”) licensed by the United States Small Business Administration (“SBA”).  In order for the Plexus to lend to Borrower and purchase the Warrants, it must obtain from Borrower certain representations and rights as set forth below. As a material inducement to Plexus to enter into the Purchase Agreement, Borrower hereby makes the following representations and warranties and agrees to comply with the following covenants:

 

1.  Small Business Matters.

 

(a) Borrower, together with Borrower’s Affiliates, is a “small business concern” within the meaning of the Small Business Investment Act of 1958, as amended (“SBIA”), and the regulations thereunder, including Title 13, Code of Federal Regulations. § 121.30l(c) because, as of the date hereof, it either:

 

Check One

 

	
þ  

	
(i)

	
including its affiliates, has a tangible net worth not in excess of $18 million and average net income after Federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years not in excess of $6 million; or

 

	
o  

	
(ii)

	
does not exceed the size standard in number of employees or millions of dollars in revenue under the SIC (Standard Industrial Classification) System for the industry in which it, combined with its affiliate, is primarily engaged; and in which it alone is primarily engaged.

 

  

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(b) The information set forth in the Small Business Administration Forms 480, 652 and Parts A and B of Form 1031 regarding Borrower and its Affiliates, when delivered to Plexus, will be accurate and complete and will be in form and substance acceptable to Plexus.  Copies of Forms 480 and 652 shall be completed and executed by Borrower and delivered to Plexus at the Purchase Agreement closing (the “Closing”), and Parts A and B of Form 1031 shall be completed and executed by Borrower and delivered to Plexus within 15 days of the Closing.

 

(c) The proceeds will be used by Borrower (1) for the purposes described in the Purchase Agreement, and (2) to pay expenses related to the transactions contemplated by the Purchase Agreement.  No portion of such proceeds will be used to provide capital to business ineligible for financing as described in 13 C.F.R. § 107.720.

 

(d) At Closing or within one year thereafter, no more than 49 percent of the employees or tangible assets of Borrower and its Subsidiaries will be located outside the United States (unless Borrower can show, to SBA’s satisfaction, that the proceeds will be used for a specific domestic purpose).  This subsection (e) does not prohibit such proceeds from being used to acquire foreign materials and equipment or foreign property rights for use or sale in the United States.

 

(e) Neither Borrower, nor any officer, director, employee or equity owner of the business was or is an Associate (as such term is defined in 13 C.F.R. § 107.50) of Plexus.

 

2. Regulatory Compliance.

 

(a) Information Rights and Related Covenants.

 

(i) Borrower shall provide to Plexus or any of its Affiliates and the SBA at such times as Plexus or the SBA may request access to its books and records for the purpose of confirming the use of the proceeds of such financing and for all other purposes required by the SBA.

 

(ii) Borrower shall provide to Plexus or any of its Affiliates such financial and other information as Plexus or any of its Affiliates may from time to time reasonably request to enable it to comply with the provisions of 13 C.F.R. Section 107.620(b)(1), and such information shall be certified by such Borrower’s President, Chief Executive Officer, Treasurer or Chief Financial Officer as required by 13 C.F.R. Section 107.620(b)(2).

 

(iii) Prior to the Closing, Borrower shall provide to Plexus or any of its Affiliates and the SBA a certificate of its Chief Financial Officer (1) certifying the use of such proceeds and (2) certifying compliance by such Borrower with the provisions of this letter (provided that such certificate may be truthfully given).

 

(iv) Within 45 days after the end of each fiscal year of Borrower, Borrower shall provide to Plexus or any of its Affiliates a written assessment, in form and substance reasonably satisfactory to Plexus, of the economic impact of Plexus's financing hereunder, specifying the full-time equivalent jobs created or retained, the impact of the financing on the consolidated revenues and profits of the Business and on taxes paid by the Business and its employees (See 13 CFR § 107.630(e)).

 

  

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(v) Upon the request of Plexus or any of its Affiliates, Borrower will (A) provide to such Person such financial statements and other information as such Person may from time to time reasonably request for the purpose of assessing such Borrower's financial condition and (B) furnish to such Person all information reasonably requested by it in order for it to prepare and file SBA Form 468 and any other information reasonably requested or required by any governmental agency asserting jurisdiction over such Person.

 

(vi) For a period of one year following the date hereof, neither Borrower nor any of its Subsidiaries will change its business activity if such change would render Borrower ineligible to receive financial assistance from an SBIC under the SBIA and the regulations thereunder (within the meanings of 13 CFR §§ 107.720 and 107.760(b)).

 

(vii) Borrower shall at all times comply with the non-discrimination requirements of 13 CFR Parts 112, 113 and 117.

 

3. Definitions.

 

(a) “Affiliate” shall have the meaning set forth in Title 13, Code of Federal Regulations. § 121.103.

 

(b) “Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

(c) “Person” shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).

 

(d) “Subsidiary” means, with respect to any Person, any other Person of which the securities having a majority of the ordinary voting power in electing the board of directors (or other governing body), at the time as of which any determination is being made, are owned by such first Person either directly or through one or more of its Subsidiaries.

 

4. Miscellaneous.

 

(a) This letter may be executed in counterparts, each of which shall be an original and both of which taken together shall constitute one and the same instrument.

 

(b) This letter shall be governed by the laws of the State of New York (without giving effect to the conflicts of laws principles thereof).

 

 

[SIGNATURE PAGES FOLLOW]

 

  

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 IN WITNESS WHEREOF, the parties have caused this letter to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

 

	

FUSION NBS ACQUISITION CORP.

	 
	 	 	 
	
By: 

	 	 
	Name:	 	 
	Title:	 	 

[Signature Page to Plexus Fund II, LP SBA Letter]

 

  

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PLEXUS FUND II, LP

	 
	 	 	 
	By:	Plexus Fund II GP, its General Partner	 
	 	 	 
	
By:

	 	 
	 	Name:	 
	 	Title:	 

 

 

[Signature Page to Plexus Fund II, LP SBA Letter]

 

 

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