FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. (NASDAQ:FSNN) Files An 8-K Completion of Acquisition or Disposition of Assets

Item 2.01

On November 14, 2016, Fusion NBS Acquisition Corp. (the
Buyer or FNAC), a subsidiary of Fusion
Telecommunications International, Inc. (Fusion), and
Fusion (solely for limited enumerated purposes) entered into a
Stock Purchase and Sale Agreement (the Apptix Purchase
Agreement) with Apptix, ASA (the Seller), to which
FNAC acquired all of the issued and outstanding capital stock of
Apptix, Inc., a wholly-owned subsidiary of the Seller
(Apptix). Apptix provides managed and hosted business
communication, collaboration, compliance and security, and
infrastructure solutions to mid-market and enterprise customers
and blue-chip channel partners.

The purchase price paid by FNAC for Apptix was $28.0 million,
subject to adjustments for closing date cash on hand, unpaid
indebtedness and unpaid transaction costs. The purchase price was
paid (i) $22,963,484.32 in cash, and (ii) the balance in
2,997,926 shares of Fusions common stock (the Seller
Shares), based upon a $1.68 per share volume weighted average
price of Fusions common stock over the 180-day period preceding
the closing. The cash portion of the purchase price was funded
through a new senior secured facility entered into simultaneous
with the Apptix acquisition (see Item 2.03 below).

Fusion has agreed, on or prior to August 14, 2017, at its expense
(i) to file a registration statement under the Securities Act of
1933, as amended (the Securities Act) to register resale
of the Seller Shares on behalf of the Seller (and, if applicable,
distribution of the Seller Shares to the shareholders of the
Seller), (ii) to cause the registration statement to become
effective no more than 90 days following the date it is filed
(120 days under certain circumstances), and (iii) to maintain the
effectiveness of the registration statement for up to two years.
Notwithstanding the foregoing, the Seller has agreed to use its
reasonable efforts to obtain an agreement from certain of its
shareholders, not to sell any such Seller Shares, including under
the registration statement, prior to November 14, 2017.

The foregoing description of the Apptix Purchase Agreement does
not purport to be complete and is qualified in its entirety by
reference to the Apptix Purchase Agreement which is attached
hereto as Exhibit 10.3.1 and is incorporated by reference
herein. The Apptix Purchase Agreement has been included as an
exhibit hereto solely to provide investors and security holders
with information regarding its terms. It is not intended to be a
source of financial, business or operational information about
Fusion, FNAC or any other subsidiary of Fusion. The
representations, warranties and covenants contained in the Apptix
Purchase Agreement are made only for purposes of the specific
agreement and are made as of specific dates; are solely for the
benefit of the parties to that agreement; may be subject to
qualifications and limitations agreed upon by the parties in
connection with negotiating the terms of the Apptix Purchase
Agreement, including being qualified by confidential disclosures
made for the purpose of allocating contractual risk between the
parties rather than establishing matters as facts; and may be
subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors or
security holders. Investors and security holders should not rely
on the representations, warranties and covenants or any
description thereof as characterizations of the actual state of
facts or condition of Fusion or any subsidiary of Fusion.
Moreover, information concerning the subject matter of the
representations, warranties and covenants may change after the
date of the agreement, which subsequent information may or may
not be fully reflected in public disclosures.

On November 14, 2016 (i) FNAC entered into a Credit Agreement
(the East West Credit Agreement) with East West Bank, as
Administrative Agent, Swingline Lender, an Issuing Bank and a
Lender (East West Bank) and other lenders (collectively
with East West Bank, the East West Lenders) and (ii) FNAC,
Fusion and Fusions subsidiaries other than FNAC (the
Subsidiaries and together with Fusion and FNAC, the
Company) entered into the Fifth Amended and Restated
Securities Purchase Agreement (the Restated Purchase
Agreement) with Praesidian Capital Opportunity Fund III,
L.P., Praesidian Capital Opportunity Fund III-A, LP and United
Insurance Company of America (collectively, the Praesidian
Lenders). The Restated Purchase Agreement amends and restates
the terms of the Fourth Amended and Restated Securities Purchase
Agreement and Security Agreement, dated December 8, 2015 (the
Fourth Amendment), to which FNAC previously sold its
Series A, Series B, Series C, Series D, Series E and Series F
senior notes in an aggregate principal amount of $33.6 million
(the SPA Notes).

Under both the East West Credit Agreement and the Restated
Purchase Agreement:

The foregoing and following descriptions of the East West Credit
Agreement and the Restated Purchase Agreement do not purport to
be complete and are qualified in their entirety by reference to
the East West Credit Agreement, which is attached hereto as
Exhibit 10.1.1, and the Restated Purchase Agreement, which
is attached hereto as Exhibit 10.2, each of which is
incorporated by reference herein. The East West Credit Agreement
and the Restated Purchase Agreement have been included as
exhibits hereto solely to provide investors and security holders
with information regarding their respective terms. They are not
intended to be a source of financial, business or operational
information about Fusion, FNAC or any other subsidiary of Fusion.
The representations, warranties and covenants contained in the
East West Credit Agreement and the Restated Purchase Agreement
are made only for purposes of the specific agreement and are made
as of specific dates; are solely for the benefit of the parties;
may be subject to qualifications and limitations agreed upon by
the parties in connection with negotiating the terms of each such
agreement, including being qualified by confidential disclosures
made for the purpose of allocating contractual risk between the
parties rather than establishing matters as facts; and may be
subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors or
security holders. Investors and security holders should not rely
on the representations, warranties and covenants or any
description thereof as characterizations of the actual state of
facts or condition of Fusion, FNAC or any other subsidiary of
Fusion. Moreover, information concerning the subject matter of
the representations, warranties and covenants may change after
the date of the respective agreement, which subsequent
information may or may not be fully reflected in public
disclosures.

East West Credit Facility

Contemporaneously with the completion of the Apptix transaction,
FNAC entered into, and consummated the transactions contemplated
by, the East West Credit Agreement. Under the East West Credit
Agreement, the East West Lenders extended the Company (i) a $65
million term loan and (ii) a $5 million revolving credit facility
(which includes up to $4,000,000 in swingline loans that may be
accessed on a short-term basis). The proceeds of the term loan
were used, in part, to retire FNACs obligations under a $40
million credit Facility with Opus Bank and, in part, to fund
FNACs acquisition of Apptix (see Item 2.01 above).

Borrowings under the East West Credit Agreement are evidenced by
promissory notes bearing interest at rates to be computed based
upon either the then current prime rate of interest or LIBOR rate
of interest, as selected by FNAC at the time of its borrowings.
Interest on borrowings that FNAC designates as base rate loans
bear interest at the greater of the prime rate published by the
Wall Street Journal or 3.25% per annum, in each case plus 2% per
annum. Interest on borrowings that FNAC designates as LIBOR rate
loans bear interest at the LIBOR rate of interest published by
the Wall Street Journal, plus 5% per annum.

The Company is required to repay the term loan in equal monthly
payments of $270,833.33 commencing January 1, 2017 and continuing
until January 1, 2018, when monthly payments increase to
$541,666.67 until the maturity date of the term loan on November
12, 2021. Borrowings under the revolving credit facility are also
payable on the November 12, 2021 maturity date of the facility.

In conjunction with the execution of the East West Credit
Agreement, the Company and the East West Lenders also entered
into (i) an IP Security Agreement under which the Company has
pledged intellectual property to the East West Lenders to secure
payment of the East West Credit Agreement, (ii) Subordination
Agreements under which certain creditors of the Company and the
East West Lenders have established priorities among them and
reached certain agreements as to enforcing their respective
rights against the Company, and (iii) a Pledge and Security
Agreement under which Fusion and FNAC have each pledged its
equity interest in its subsidiaries to the East West Lenders.

Restated Purchase Agreement

The Restated Purchase Agreement amends the Fourth Amendment by
(i) providing the Praesidian Lenders consent to the acquisition
of Apptix, (ii) joining Apptix as a guarantor and credit party
under the Restated Purchase Agreement, (iii) modifying certain
financial covenants contained in the Fourth Amendment, and (iv)
extending the maturity date of the SPA Notes to May 12, 2022. The
Praesidian Lenders have also entered into a Subordination
Agreement with the East West Lenders to which the Praesidian
Lenders have subordinated their right to payment under the
Restated Purchase Agreement to repayment of the Companys
obligations under the East West Credit Agreement.

Except as described in the preceding paragraph, the Restated
Purchase Agreement contains substantially the same terms and
conditions as the Fourth Amendment. Those terms are described in
Fusions Current Report on Form 8-K which, along with a copy of
the Fourth Amendment, was filed with the Securities and Exchange
Commission on December 14, 2015.

(a)As discussed under Item 2.01, above, on November 16, 2016,
Fusion issued an aggregate of 2,997,926 Seller Shares to the
Seller, an accredited investor, under the Apptix Purchase
Agreement, in connection with FNACs acquisition of Apptix. The
information provided under Item 2.01, above, is incorporated in
this section by this reference. The investor is a non-US person
and the certificates evidencing the Seller Shares bear a legend
restricting their transferability absent registration under the
Securities Act or the availability of an applicable exemption
therefrom. The issuance of the Seller Shares is exempt from the
registration requirements of the Securities Act by reason of
Regulation S thereunder.

(b)On November 16, 2016, Fusion sold an aggregate of 2,431,091
shares of its common stock (the SPA Shares) for an
aggregate purchase price of $2,795,754, or $1.15 per share. The
SPA Shares were sold to the terms of a Common Stock Purchase
Agreement (the Stock Purchase Agreement), dated November
14, 2016, with 22 several investors, each of whom is an
accredited investor as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.

Fusion has agreed that, not later than December 29, 2016 it will
file a registration statement under the Securities Act to
register resale of the SPA Shares on behalf of the registered
owners. The Stock Purchase Agreement requires Fusion to pay
liquidated damages to the registered owners, in an amount not to
exceed 12% of the purchase price of the SPA Shares, in the event
the registration statement is not timely filed, or if it is not
declared effective by the Securities and Exchange Commission
within the prescribed time, or if Fusion fails to maintain the
effectiveness of the registration statement during the prescribed
period, or if there ceases to be current public information about
Fusion, within the meaning of Rule 144 under the Securities Act,
during the prescribed time provided. Fusion has also agreed to
certain limitations on issuing shares of its common stock, or
securities convertible or exchangeable into common stock, during
the period from the date of the Stock Purchase Agreement until 45
days following the effective date of the registration statement.

Fusion paid a placement agent fee equal to 7% of the proceeds
from the sale of the SPA Shares to Craig-Hallum Capital Group
LLC, a licensed broker-dealer. Each of the purchasers represented
that it was an accredited investor, purchasing the SPA Shares for
its own account, for investment purposes and not with a view
towards distribution; and the certificates evidencing the SPA
Shares bear a legend restricting their transferability absent
registration under the Securities Act or the availability of an
applicable exemption therefrom. The issuance of the SPA Shares is
exempt from the registration requirements of the Securities Act
by reason of Section 4(2) of the Securities Act and Regulation D
thereunder.

The foregoing description of the Stock Purchase Agreement does
not purport to be complete and is qualified in its entirety by
reference to the Stock Purchase Agreement which is attached
hereto as Exhibit 10.4 and is incorporated by reference
herein. The Stock Purchase Agreement has been included as an
exhibit hereto solely to provide investors and security holders
with information regarding its terms. It is not intended to be a
source of financial, business or operational information about
Fusion or any subsidiary of Fusion. The representations,
warranties and covenants contained in the Stock Purchase
Agreement are made only for purposes of the specific agreement
and are made as of specific dates; are solely for the benefit of
the parties thereto; may be subject to qualifications and
limitations agreed upon by the parties in connection with
negotiating the terms of each such agreement, including being
qualified by confidential disclosures made for the purpose of
allocating contractual risk between the parties rather than
establishing matters as facts; and may be subject to standards of
materiality applicable to the contracting parties that differ
from those applicable to investors or security holders. Investors
and security holders should not rely on the representations,
warranties and covenants or any description thereof as
characterizations of the actual state of facts or condition of
Fusion or any subsidiary of Fusion. Moreover, information
concerning the subject matter of the representations, warranties
and covenants may change after the date of the respective
agreement, which subsequent information may or may not be fully
reflected in public disclosures.

As discussed under Items 2.01 and 3.02(a), above, on November 14,
2016 FNAC and Fusion entered into the Apptix Purchase Agreement.
The information provided under Items 2.01 and 3.02(a) above, is
incorporated in this section by this reference.

As discussed under Item 2.03 above, on November 14, 2016 FNAC
entered into (i) the East West Credit Agreement and (ii) the
Restated Purchase Agreement. The information provided under Item
2.03 above, is incorporated in this section by this reference.

As discussed under Item 3.02(b) above, on November 14, 2016,
Fusion entered into the Stock Purchase Agreement. The information
provided under Item 3.02(b), above, is incorporated in this
section by this reference.

The financial statements of the business acquired required by
Item 9.01(a)(1) of Form 8-K and Rule 8-04(b) of Regulation S-X
will be filed within the time specified in 9.01(a)(4) of Form
8-K.

The pro-forma financial information required by Item 9.01(b)(1)
of Form 8-K and Rule 8-05 of Regulation S-X will be filed within
the time specified in 9.01(b)(2) of Form 8-K.

Not Applicable.

About FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. (NASDAQ:FSNN)

Fusion Telecommunications International, Inc. is a United States-based provider of integrated cloud solutions, including cloud voice, cloud connectivity, cloud infrastructure, cloud computing, and managed cloud-based applications to businesses, and voice over Internet Protocol (VoIP)-based voice services to carriers. The Company operates through two segments: Business Services and Carrier Services. Through Business Services segment, it provides cloud voice, cloud connectivity, cloud infrastructure, cloud computing and managed cloud-based applications to businesses of all sizes. Its suite of business services includes unified communications as a service, session initiation protocol trunking solution and file sharing solution. The Carrier Services segment includes termination of domestic and international carrier traffic utilizing VoIP technology. It offers solutions to small, medium and large businesses. It offers domestic and international VoIP services to carriers around the world.

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. (NASDAQ:FSNN) Recent Trading Information

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. (NASDAQ:FSNN) closed its last trading session down -0.05 at 1.61 with 5,964 shares trading hands.