FIRST AMENDMENT, WAIVER, EXTENSION AND CONSENT
EXHIBIT
10.1
THIS
FIRST AMENDMENT, WAIVER, EXTENSION AND CONSENT, dated as of April __, 2009 (this
“Amendment”),
is entered into by and among CAPITAL GROWTH SYSTEMS, INC.,
d/b/a Global Capacity, a Florida corporation (“Parent”), GLOBAL CAPACITY GROUP, INC., a
Texas corporation (“GCG”), CENTREPATH, INC., a Delaware
corporation (“Centrepath”), 20/20 TECHNOLOGIES, INC., a
Delaware corporation (“20/20 Inc.”), 20/20 TECHNOLOGIES I, LLC, a
Delaware limited liability company (“20/20 LLC”), NEXVU TECHNOLOGIES, LLC, a
Delaware limited liability company (“Nexvu”), CAPITAL GROWTH ACQUISITION,
INC., a Delaware corporation (“CG Acquisition”),
FNS 2007, INC., a
Delaware corporation (“FNS”), VANCO DIRECT USA, LLC, a
Delaware limited liability company to be known as GLOBAL CAPACITY DIRECT, LLC
(“VDUL”), and MAGENTA NETLOGIC LIMITED, a
company incorporated under the laws of England and Wales (“Magenta”; Parent,
GCG, Centrepath, 20/20 Inc., 20/20 LLC, Nexvu, CG Acquisition, FNS, VDUL and
Magenta are each referred to herein individually as a “Borrower” and
collectively as the “Borrowers”), in favor
of ACF CGS, L.L.C., a
Delaware limited liability company (“Agent”), as
administrative agent under that certain Term Loan and Security Agreement dated
as of November 19, 2008, by and among the Borrowers, the Agent and the lenders
party thereto (as amended, modified and/or restated from time to time, the
“Loan
Agreement”).
WITNESSETH:
WHEREAS,
the Borrowers have requested that the Agent amend certain terms and conditions
of the Loan Agreement; and
WHEREAS,
the office space occupied by VDUL at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “South ▇▇▇▇▇▇
Premises”) is subleased (the “Sublease”) by VDUL
from Orbitz, LLC (the “Sublessor”); and the
consummation of the Final Closing and completion of the Acquisition could
constitute a “change in control” of VDUL under and as used in the Sublease
requiring the consent of the Sublessor; and
WHEREAS,
the Sublessor has advised that it will consent to either: (i) the change in
control which may occur upon the consummation of the Final Closing based upon
the posting of a letter of credit by VDUL having terms comparable to the letter
of credit that was provided by the prior parent of VDUL, or (ii) the assignment
(the “Assignment”) of the
Sublease by VDUL to Vanco US, LLC, subject to a guarantee of the Sublease by
Reliance Globalcom, with a subsequent sublease of a portion of the Sublease
premises by VDUL from Vanco US, LLC; and
WHEREAS,
the Borrowers have failed to deliver annual financial statements required under
Section 9(a) of the Loan Agreement by April 15, 2009, which failure caused a
Default under the Loan Agreement (the “Section 9(a)
Default”); and
WHEREAS,
pursuant to that certain Waiver and Notification dated February 18, 2009, by and
among Borrowers and Agent (the “First Waiver”), the
Agent agreed to waive any Default caused by the failure of the Parent to
increase its authorized shares by 12,000,000 on or before the 75th day
following the Agreement Date; provided, however, Agent’s
agreement to waive such Default would continue until the earliest of (i) the
175th day
following the Agreement Date, (ii) the date the Parent takes the necessary
corporate action to increase its authorized shares by 12,000,000, and (iii) the
occurrence of any Default under the Loan Agreement; and
WHEREAS,
pursuant to that certain Waiver and Notification dated April 13, 2009, by and
among Borrowers and Agent (the “Second Waiver”), the
Agent agreed to waive (A) any Default caused by VDUL effecting the change in
control of VDUL (by closing of the Acquisition) prior to Borrowers
obtaining the consent of the Sublessor to the change of control or
the Assignment; provided, however, Agent’s
agreement to waive such condition would continue until the earlier of (i) April
30, 2009, and (ii) the occurrence of any other Default under the Loan Agreement;
and (B) any Default caused by the failure of Parent to deliver a landlord
waiver, in form and substance reasonably satisfactory to Agent, duly executed by
Vanco US, LLC, Orbitz, LLC Sublessor, Neustar, Inc. and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Property, LLC, as applicable (the “Landlord Waiver”);
provided, however, Agent’s
agreement to waive such notification requirement would continue until the
earlier of (i) the date the Parent delivers the Landlord Waiver, (ii) April 30,
2009, and (ii) the occurrence of any Default under the Loan Agreement;
and
WHEREAS,
the occurrence of the Section 9(a) Default reinstated those certain Defaults
previously waived under the First Waiver and Second Waiver; and
WHEREAS,
the Borrowers have requested that Agent and the Required Lenders agree to waive
(i) the Section 9(a) Default; (ii) the Default caused by the failure of the
Parent to increase its authorized shares by 12,000,000 on or before the 75th day
following the Agreement Date; (iii) any Default which could be caused directly
or indirectly by VDUL effecting the change in control of VDUL (by closing of the
Acquisition) prior to Borrowers obtaining the consent of the
Sublessor to the change of control or the Assignment, and (iv) the Default
caused by the failure of Parent to deliver the Landlord Waiver (collectively,
the “Designated
Defaults”), and subject to satisfaction of certain conditions, Agent and
Required Lenders are willing to do so; and
WHEREAS,
the required number of Debenture Purchasers wish to amend the Debenture Purchase
Agreements and certain Debenture Documents, which action requires Agent’s prior
written consent pursuant to Section 8(i) of the Loan Agreement.
NOW,
THEREFORE, in consideration of the premises and the representations, warranties
and covenants set forth herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. Existing
Definitions. All capitalized terms used and not otherwise
defined herein shall have their respective meanings as set forth in the Loan
Agreement.
2. Amendments.
(a) The
definition of “BT Receivable Payment” contained in Section 1 of the Loan
Agreement is hereby amended by deleting the existing definition in its entirety
and replacing it with the following:
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““BT Receivable
Payment” means any cash received by a Borrower with respect to the BT
Receivable, including but not limited to any cash, proceeds or other amount
received in connection with any litigation or settlement with respect to the BT
Receivable, and further including, without limitation, all rights of the
Borrowers in any judgment or award obtained in connection with litigation
relative to the BT Receivable.”
(b) As
of the date of this Amendment, Section 9(e) of the Loan Agreement is hereby
amended by deleting such section in its entirety and replacing it with the
following:
“(e) BT
Receivable. Borrowers will deliver to Agent, (A) promptly, and
in any case not later than (i) one (1) day following each receipt of a BT
Receivable Payment, and (ii) two (2) Business Days after the end of each month,
a reconciliation and report showing any amounts collected with respect to the BT
Receivable, the amount left uncollected and any issues, disputes and offsets
with respect to collection of the BT Receivable, (B) promptly, and in any case
not later than one (1) day after receipt or filing of the same, copies of all
pleadings filed in any litigation or other proceeding relative to the BT
Receivable by any party, and (C) upon request by the Agent, periodic updates on
the progress of any such litigation or proceeding (so long as such updates do
not violate any attorney-client privilege or any orders of the applicable
court), and such additional information with respect to the foregoing as
requested by Agent.”
(c) As
of the date of this Amendment, Section 2(c)(iv) of the Loan Agreement is
hereby amended by deleting “sixty-six percent (66%)” and substituting
therefor “seventy-five percent (75%)”.
3. Waiver and
Extension.
(a) The
Required Lenders hereby agree to waive the Section 9(a) Default; provided, however, Required
Lender’s agreement to waive such Default shall expire on the earlier of (i) May
15, 2009, and (ii) the occurrence of any other Default under the Loan
Agreement.
(b) Agent
hereby agrees to waive any Default caused by the failure of the Parent to
increase its authorized shares by 12,000,000 on or before the 175th day
following the Agreement Date; provided, however, Agent’s
agreement to waive such Default shall expire on the earliest of (i) July 15,
2009, (ii) the date the Parent takes the necessary corporate action to increase
its authorized shares by 12,000,000, and (iii) the occurrence of any other
Default under the Loan Agreement.
(c) Agent
hereby agrees to waive any Default directly or indirectly caused by VDUL
effecting the change in control of VDUL (by closing of the Acquisition) prior to
Borrowers obtaining the consent of the Sublessor to the change of
control or the Assignment; provided, however, Agent’s
agreement to waive such condition shall expire on the earlier of (i) April 30,
2009, and (ii) the occurrence of any other Default under the Loan
Agreement.
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(d) Agent
hereby agrees to waive any Default caused by the failure of Parent to deliver
the Landlord Waiver; provided, however, Agent’s
agreement to waive such Default shall continue until the earliest of (i) the
date the Parent delivers the Landlord Waiver, (ii) April 30, 2009, and (ii) the
occurrence of any other Default under the Loan Agreement.
4. Consent. Pursuant
to Section 8(i) of the Loan Agreement, Agent hereby consents to Borrowers’
execution and delivery of (i) the Second Amendment and Waiver to the Securities
Purchase Agreement, and (ii) an Amendment and Waiver to the March Securities
Purchase Agreement, in the forms attached hereto as Exhibit A and Exhibit B,
respectively.
5. Amendment
Fee. In consideration of the agreements of the Required
Lenders hereunder, Borrowers agree to pay to Agent (for the account of the
Lenders executing this Amendment) an amendment fee (the “Amendment Fee”) in
the amount of 0.5% of the Total Commitment ($42,500). The Amendment Fee shall be
payable in full in cash on the effective date of this Amendment.
6. Conditions Precedent to
Effectiveness. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent (all documents to be in form
and substance satisfactory to Agent and Agent’s counsel):
(a) Agent
shall have received this Amendment properly executed by the
Borrowers;
(b) Borrowers
shall have paid to Agent the Amendment Fee referred to in Section 5 above and
any and all expenses, including reasonable counsel fees and disbursements,
incurred by Agent in connection with the preparation and execution of this
Amendment and all documents, instruments and agreements contemplated
hereby;
(c) Borrowers
shall have executed and delivered copies of (i) the Second Amendment and Waiver
to the Securities Purchase Agreement, and (ii) the Amendment and Waiver to the
March Securities Purchase Agreement, in the forms attached hereto as Exhibit A and Exhibit B,
respectively; and
(d) Agent
shall have received all other documents, information and reports required or
requested to be executed and/or delivered by Borrowers under any provision of
this Agreement or any of the Loan Documents.
7. Representations and
Warranties.
(a) As
of the date of this Amendment, each of the representations and warranties
contained herein and in each of the Loan Documents is true, correct and complete
in all material respects to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material respects on and as of
such earlier date.
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(b) Each
Borrower represents and warrants to Agent and each Lender, that after giving
effect to this Amendment, (i) no event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute a Default, (ii) no consent or approval of, or exemption by
any Person is required to authorize, or is otherwise required in connection with
the execution and delivery of this Amendment which has not been obtained and
which remains in full force and effect, and (iii) no material adverse change in
the financial condition of the Borrowers has occurred since the date of the most
recent financial statements of the Borrowers submitted to Agent.
8. Security
Interests. Borrowers hereby confirm the security interests and
liens granted by Borrowers to Agent for the benefit of Lenders in and to the
Collateral in accordance with the Loan Agreement and other Loan Documents as
security for the Obligations.
9. Fees and
Expenses. Borrowers agree to pay any and all expenses,
including reasonable counsel fees and disbursements, incurred by Agent in
connection with the preparation and execution of this Amendment and all
documents, instruments and agreements contemplated hereby.
10. Effect. Except
as expressly provided for herein, no other amendments, waivers or modifications
to the Loan Agreement are intended or implied and all terms and conditions of
the Loan Agreement, and any and all Exhibits and Addendums annexed thereto and
all other writings submitted by the Borrowers to the Agent pursuant thereto,
shall remain unchanged and in full force and effect
11. Governing
Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the internal laws of the State of New York (without giving effect to
principles of conflicts of laws).
12. Binding
Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
13. Counterparts. This
Amendment may be executed in any number of counterparts, but all of such
counterparts when executed shall together constitute but one and the same
agreement. In making proof of this Amendment , it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
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14. RELEASE. EACH
BORROWER, ON BEHALF OF ITSELF AND ON BEHALF OF ALL THOSE ENTITIES CLAIMING BY,
THROUGH, OR UNDER IT, TOGETHER WITH ITS SUCCESSORS AND ASSIGNS, HEREBY
ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT,
CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE
OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR
LENDERS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND
FOREVER DISCHARGES AGENT AND LENDERS, THEIR PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED,
FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR
IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH BORROWER
MAY NOW OR HEREAFTER (WHETHER OR NOT PRESENTLY SUSPECTED, CONTEMPLATED OR
ANTICIPATED) HAVE AGAINST AGENT OR ANY LENDER, THEIR PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY TERM LOANS, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR LOAN DOCUMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
[SIGNATURE
PAGES FOLLOW]
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as
of the day and year first above written.
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BORROWERS:
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CAPITAL
GROWTH SYSTEMS, INC.
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By:
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Name:
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Title:
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GLOBAL
CAPACITY GROUP, INC.
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By:
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Name:
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Title:
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CENTREPATH,
INC.
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By:
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Name:
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Title:
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20/20
TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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20/20
TECHNOLOGIES I, LLC
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By:
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Name:
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Title:
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NEXVU
TECHNOLOGIES, LLC
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By:
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Name:
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Title:
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CAPITAL
GROWTH ACQUISITION, INC.
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By:
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Name:
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Title:
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FNS
2007, INC.
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By:
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Name:
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Title:
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VANCO
DIRECT USA, LLC, t/b/k/a GLOBAL
CAPACITY
DIRECT, LLC
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By:
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Name:
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Title:
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MAGENTA
NETLOGIC LIMITED
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By:
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Name:
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Title:
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AGENT
and REQUIRED LENDER:
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ACF
CGS, L.L.C.
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By:
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Name:
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Title:
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