INTEREST AND LOAN PURCHASE AGREEMENT
Exhibit
10.1
Execution
Version
This
Interest and Loan Purchase Agreement (the “Agreement”), dated as of
November 14, 2008 (the “Effective Date”), by and among Vanco plc (in
administration), a company incorporated under the laws of England and Wales
with
registered company number 3470117 (“Seller”), Simon ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇, each an insolvency practitioner of FTI Consulting Limited, a company
incorporated under the laws of England and Wales with registered company
number
04805205, in their respective capacities as joint administrators of Seller
(collectively, “Administrators”), and Capital Growth Acquisition, Inc., a
corporation organized under the laws of Delaware (“Buyer”).
WHEREAS,
Administrators were appointed to act as joint administrators of Seller on
May
25, 2008 by Lloyds TSB Bank plc in accordance with paragraph 14 to Schedule
B1
to the (English) Insolvency ▇▇▇ ▇▇▇▇;
WHEREAS,
Buyer desires to purchase from Seller and Seller desires to sell to Buyer
all
issued and outstanding limited liability company interests of Vanco Direct
USA,
LLC, a Delaware limited liability company (the “Company” or “VDUL”) on the terms
and subject to the conditions set forth herein;
WHEREAS,
in connection with Buyer’s acquisition of the Units (as defined below), Buyer
desires to purchase from Seller and Seller desires to sell to Buyer all of
Seller’s rights, title and interest in that certain Intercompany Loan Agreement,
dated May 25, 2008, by and between VDUL as borrower and Seller as Lender
(the
“Loan”), and pursuant to which Seller agreed to loan VDUL up to £5,000,000, with
$3,851,176 outstanding as of the Effective Date (the purchase and sale of
the
Units and Loan shall hereinafter be referred to as the “Acquisition”);
and
WHEREAS,
the parties also wish to provide for the treatment of certain rights,
liabilities and obligations of VDUL in connection with the Acquisition.
NOW,
THEREFORE, the parties agree as follows:
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1.
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Purchase
and Sale of Units and the
Loan
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1.1. Acquisition.
(a) At
the
Initial Closing (as defined below), Buyer shall purchase from Seller,
and
Seller shall sell to Buyer, such right, title and interest as Seller may
have in
(i) 1000 units (the “Units”) of limited liability company interests of VDUL
presently owned by Seller, which, to the awareness of the Administrators,
represent 100% of the limited liability company interests of VDUL owned by
Seller, and (ii) the Loan; provided,
however,
that
legal title to the Units shall not transfer to Buyer until the Regulatory
Approvals (as defined below) are addressed, as required hereunder, and certain
other conditions set forth herein are satisfied.
(b) The
aggregate purchase price payable by Buyer for the Units and the Loan (the
"Purchase Price") is $15,233,452. The Purchase Price shall be adjusted in
accordance with Section 1.1(c) below and shall be allocated between the Units
and the Loan as follows: (A) $11,382,276 is allocable to the Units; and (B)
$3,851,176 (representing the outstanding principal and interest of all amounts
owed by VDUL to Seller under the Loan as of the Effective Date) is allocable
to
the Loan.
(c) The
Purchase Price shall be (i) increased
by any
additional payments made by Seller to VDUL under the Loan from the Effective
Date through the Initial Closing Date (as defined below)(each, an “Additional
Loan Payment”), and (ii) decreased
by any
distributions made by VDUL to Seller (such distributions being limited to
dividends or the payment of any management charges to Seller or any of its
affiliates) from the Effective Date through the Initial Closing Date. Buyer
and
Seller hereby acknowledge that delivery from Seller to Buyer of a copy of
a
receipt of funds or bank statement evidencing any such Additional Loan Payment
shall constitute sufficient evidence of the same. The allocation of Purchase
Price to the Loan, as set forth in Section 1.1(b) above, shall be increased
in
an amount equal to all such Additional Loan Payment(s). The Purchase Price
as
adjusted through the Initial Closing Date shall hereinafter be referred to
as
the “Final Purchase Price.”
1.2. Management
Services Agreement.
(a) The
Company holds
domestic and international Section 214 authorizations from the U.S. Federal
Communications Commission (“FCC”) and certificates of public convenience and
necessity or the equivalent from various state telecommunications regulatory
commissions (the “State Commissions” and, collectively with the FCC, the
“Commissions”)(such authorizations and certificates collectively referred to as
the “Licenses”).
(b) Immediately
following the execution of this Agreement, Buyer shall:
(i) initiate
the delivery of the FCC (a) applications to transfer control of the Licenses
to
Buyer (individually, an “FCC Transfer Application” and collectively, the “FCC
Transfer Applications”) and (b) requests for special temporary authority from
the FCC pursuant to which control of VDUL will be transferred to Buyer until
the
FCC Transfer Applications have been approved (“STA Requests”), such that the FCC
Transfer Applications and STA Requests are duly filed with the FCC no later
than
the business day following the Effective Date; provided,
however,
that
Buyer shall use its best efforts to file the FCC Transfer Applications and
STA
Requests on the Effective Date; and
(ii) enter
into a management services agreement (the “MSA”) in the form attached hereto as
Exhibit A, which MSA shall become effective as of the Initial Closing
Date.
(c) As
soon as practicable, but in any event no later than five business days after
the
Effective Date, Buyer shall use
its
best efforts to file with the State Commissions all required notices,
applications, petitions or other requests for approval to transfer control
of
the Company or Licenses to Buyer (“State Transfer Applications” and together
with the FCC Transfer Applications, “Transfer Applications”); provided,
however,
the
State Transfer Application(s) required by the state of New York shall be
filed
within one (1) business day after the Effective Date via overnight delivery
service. For purposes of this Agreement, the term “business day” shall mean any
day other than (1) a Saturday or Sunday, or (2) a day on which banking and
savings and loan institutions are authorized or required by law to be closed
in
the State of Illinois or the District of Columbia.
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(d) From
and
after the Initial Closing Date until the termination of the MSA, Buyer shall
operate the business of the Company pursuant to the MSA until (i) all notice
waiting periods have expired or been waived by the corresponding State
Commissions, and (ii) all Transfer Application approvals have been issued
(collectively,
“Regulatory Approvals”). A list of the required Regulatory Approvals
is set
forth in Schedule 1 attached hereto.
1.3. Payment
of Purchase Price.
(a) Prior
to
the execution of this Agreement, Buyer made a non-refundable payment of $500,000
to Seller (the “Deposit”) for the sole benefit of Seller. Notwithstanding
anything to the contrary herein, the Deposit shall not be returned to Buyer
for
any reason, including, without limitation, the failure of any Closing (as
defined below) to have occurred.
(b) Immediately
upon Buyer’s receipt of the Instruction Letter (as defined below), but in any
case no later than the next business day after Buyer’s receipt of the same,
Buyer shall pay, or cause to be paid, the Final Purchase Price as follows:
(i) Buyer
shall deliver to Seller a fully executed debenture, in the form attached
hereto
as Appendix 1 (the “Debenture”), in the principal amount of $3,000,000 (the
“Debenture Amount”).
(ii) To
the
extent that such payment has not already been made, £735,365 (the “Hitachi
Funds”) shall be paid by wire transfer of immediately available funds to an
account designated by Hitachi Capital UK plc (“Hitachi”), representing the full
and final settlement of VDUL’s payment obligation to Hitachi under that certain
Software Assignment Agreement, dated May 24, 2008.
(iii) An
amount
equal to the Final Purchase Price less
the
Deposit, the Debenture Amount and the Hitachi Funds (as applicable), shall
be
paid by wire transfer of immediately available funds to the Seller.
(c) Notwithstanding
anything herein to the contrary, in addition to the payment by Buyer to Seller
of the Purchase Price in accordance with the terms of this Agreement, Buyer
shall also fully and irrevocably assign, transfer and deliver, or cause to
be
delivered, to Seller, the Options (as defined below) concurrently with the
payment of the Final Purchase Price.
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(d) (i)
As
used herein, “Instruction Letter” shall mean a letter from Seller (which may be
delivered by means of documented overnight delivery service, facsimile,
electronic mail or other electronic transmission) informing Buyer that the
STA
Requests have been approved, or otherwise confirming the same, and thereby
instructing the Buyer to pay, or cause to be paid, no later than one business
day following delivery of such notification to Buyer, the Final Purchase
Price
in accordance with the provisions of this Agreement. The Instruction Letter
shall be in a form agreed to by the parties prior to the Effective
Date.
(ii)
As
used herein, “Options” shall mean, collectively, those certain options to
purchase an aggregate of 5,750,001 shares of Common Stock pursuant to each
Capital Growth Systems, Inc. Fixed Stock Option Grant Agreement attached
hereto
as Appendix 2.
1.4. Closings.
(a) The
payments set forth in Section 1.3(b) above and the deliverables set forth
in
Section 1.5 below shall each be made, and the initial closing of the Acquisition
(“Initial Closing”) shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Ltd., ▇▇▇ ▇. ▇▇▇▇▇▇ #▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Closing Offices”),
immediately following Buyer’s receipt of the Instruction Letter, but in no event
later than the next business day thereafter; provided,
however,
if the
Initial Closing has not occurred by the seventh (7th) business day following
the
Effective Date, then either party may terminate this Agreement by delivery
of
five (5) business days notice (such date as of the end of the notice period
being the “Outside Date” and such notice being the “Termination Notice”), in
which event this Agreement shall be terminated. Notwithstanding the foregoing,
the parties may elect to close at such other time, date and place as they
may
mutually agree. The Seller shall deliver the Instruction Letter to the Buyer
(with a copy delivered to Buyer’s counsel) immediately upon any party’s receipt
of written, or other, notice from the FCC that the STA Requests have been
approved. The date on which the Initial Closing is actually held hereunder
is
referred to herein as the “Initial Closing Date”. In the event of termination of
this Agreement pursuant to delivery of the Termination Notice, neither party
shall have any liability to the other party for failure to close the
transactions contemplated herein, except that a party may be liable if such
termination is a direct result of such party’s breach of its obligations under
Section 1.2(b)(i) or (ii) above.
(b) The
final
closing (“Final Closing”, together with the Initial Closing, the “Closings” and
each, a “Closing”) shall take place at the Closing Offices as soon as
practicable after all remaining Regulatory Approvals have been received (or
jointly waived to the extent agreed between the parties that any Regulatory
Approval is no longer required), but in any event no later than three (3)
business days thereafter; provided
that
Buyer may elect to waive any such remaining Regulatory Approval(s) after
ninety
one (91) days following the Effective Date; provided,
further,
that in
the event that Regulatory Approval for the State Commission for the State
of New
York is approved prior to ninety one (91) days after the Effective Date,
then
the Final Closing shall be held on the date of such approval, but in no event
earlier than forty five (45) days following the date of the Initial Closing.
At
the Final Closing, legal title to the Units shall automatically be transferred
to Buyer pursuant to the terms of the Escrow Agreement referenced in Section
1.5(a)(ix) without any further action required by any party. The date on
which
the Final Closing is actually held hereunder is referred to herein as the
“Final
Closing Date”.
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1.5. Deliveries
at Closings.
At the
Initial Closing, and subject to the simultaneous payment of funds and delivery
of the Debenture and the Options described in Sections 1.3(b) and (c) above,
the
following deliveries shall be made:
(a)
Seller
shall deliver, or cause to be delivered, to Buyer or its designees as follows:
(i)
a
counterpart executed copy of that certain Term Loan and Security Agreement,
as
executed by VDUL in favor of ACF CGS as agent (“Agent”) for the lenders named
therein, substantially in the form attached hereto as Exhibit B (the “Loan and
Security Agreement”), whereby VDUL pledges to Agent a security interest as of
Initial Closing in all of its assets except those telecom related assets
where
prior approval of the State Commissions is required for such approval; a
counterpart executed copy of that certain Security Agreement, as executed
by
VDUL in favor of the subordinated lenders named therein in the form attached
hereto as Exhibit C (the “Subordinated Security Agreement”); and a counterpart
executed copy of that certain Intercreditor and Subordination Agreement,
as
executed by VDUL in the form attached hereto as Exhibit D (the “Sub-Debt
Intercreditor Agreement”). By execution of this Agreement, Seller and Buyer
acknowledge that:
(A)
Agent
shall as of the Initial Closing, hold a security interest in the assets of
VDUL
and be entitled to the rights and remedies set forth in the Loan and Security
Agreement, including the right to enforce the rights and remedies of Buyer
under
this Agreement to receive delivery of the Units upon the Final Closing;
(B)
the
execution of the Loan and Security Agreement and the ancillary documents
thereto, including, but not limited to, UCC Filing Authorization Letter,
a
United Kingdom Deed of Priority, Intellectual Property Security Agreement,
a
Membership Interest Transfer Power (endorsed in blank), an officer’s certificate
regarding absence of defaults, and a secretary’s certificate, shall be made on
behalf of VDUL by Buyer in its capacity as Manager of VDUL, to which execution
and delivery Seller consents; and
(C)
the
execution of the Subordinated Security Agreement and the Sub-Debt Intercreditor
Agreement shall be made on behalf of VDUL by Buyer in its capacity as Manager
of
VDUL, to which execution and delivery Seller consents.
(ii)
the
Loan, along with a fully executed Assignment and Assumption Agreement in
the
form attached hereto as Exhibit E (the “Assignment and Assumption Agreement”),
whereby Seller irrevocably assigns, and Buyer irrevocably assumes, any and
all
of Seller’s rights and obligations under the Loan;
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(iii)
release documentation, in the agreed form, duly executed by all required
parties
thereto unconditionally and irrevocably releasing the Units and the assets
of
the Company from all collateral liens and security interests in favor of
Lloyds
TSB Bank plc;
(iv)
release
documentation, in the agreed form duly executed by Macquarie unconditionally
and
irrevocably releasing the assets of the Company from all collateral liens
and
security interests in favor of such parties (together with proof of payment
or
settlement, as applicable) and release of all equipment (except equipment
located at customer interconnect sites) subject to capital leases with
Macquarie;
(v)
a
copy of the Limited Liability Company Agreement (“LLC Agreement”) for VDUL,
together with a duly executed amendment to the LLC Agreement changing the
manager(s) or the members responsible for the management of VDUL to
Buyer;
(vi)
possession of all of the Hewlett Packard servers in the possession or control
of
Seller which support the USX, Lattis and Oracle software applications of
VDUL;
provided,
that
for purposes of this Section 1.5(a)(vi), all such servers that are in the
possession or control of VDUL as of the Initial Closing Date, shall be deemed
delivered to Buyer;
(vii)
possession of all books and records of VDUL that have been customarily
maintained at VDUL’s offices or which would otherwise be required for Buyer to
be able to complete its audit of VDUL’s operations for the calendar years ended
December 31, 2006 and 2007 (including balance sheets if any exist for VDUL
as of
December 31 of each of 2005, 2006 and 2007, as well as for all of 2008 through
the Initial Closing Date); provided,
that
for purposes of this Section 1.5(a)(vii), all such books and records on the
premises of VDUL located at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ as of
the
Initial Closing Date, shall be deemed delivered to Buyer;
(viii)
passwords to all computers, computer systems and computer programs of VDUL
necessary for operation of VDUL’s business in the possession or control of
Seller, to the extent that the same is not in the possession and control
of VDUL
as of the Initial Closing date; and
(ix)
(A)
a duly executed escrow agreement, in the form attached hereto as Appendix
3, (B)
the certificate for the Units, and (C) a duly executed assignment separate
from
such certificate assigning the Units to Buyer. The deliverables set forth
in
this Section 1.5(a)(ix) shall be delivered to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd. as
escrow agent to hold for the benefit of the parties, and legal title shall
be
transferred to Buyer as of the Final Closing.
(b) Buyer
shall deliver, or cause to be delivered, to Seller or its designees as follows:
(i)
a
counterpart fully executed copy of the Sub-Debt Intercreditor
Agreement;
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(ii)
the
fully executed Debenture;
(iii)
the
fully executed Assignment and Assumption Agreement;
(iv)
the
fully executed Subsidiary Guaranty in favor of Seller, in the form attached
hereto as Exhibit F; and
(v)
the
Options, fully and irrevocably assigned and transferred to the
Seller.
1.6. United
States Tax Treatment.
The
parties acknowledge that the Acquisition shall be considered a sale by Seller
and acquisition of assets of VDUL by Buyer for United States income tax
purposes, and the Buyer and Seller agree to file with their respective United
States federal income tax returns consistent Forms 8594-Asset Acquisition
Statements Under Section 1060, including any required amendments thereto.
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2.
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Representations
and Warranties of
Seller
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NEITHER
SELLER NOR THE ADMINISTRATORS, NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
MEMBERS, PARTNERS, AGENTS, REPRESENTATIVES, ATTORNEYS OR ACCOUNTANTS, MAKE
ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, OF
ANY
KIND TO BUYER, INCLUDING WITHOUT LIMITATION, WITH RESPECT TO (I) THE COMPANY
OR
THE COMPANY’S BUSINESS, ASSETS, LIABILITIES OR OPERATIONS AND (II) THE ACCURACY
AND COMPLETENESS OF ANY INFORMATION PROVIDED TO BUYER AND ITS REPRESENTATIVES,
AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED.
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3.
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Representations
and Warranties of
Buyer
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3.1. Investment
Representations.
Buyer
represents and warrants as follows:
(a) Buyer
understands that the Units have not been registered under the Securities
Act of
1933 (the "1933 Act") or the laws of any state, and the transactions
contemplated hereby are being undertaken in reliance upon an exemption from
the
registration requirements of the 1933 Act, and reliance upon such exemption
is
based upon Buyer's representations, warranties and agreements contained in
this
Agreement.
(b) Buyer
has
received and carefully reviewed all information necessary to enable Buyer
to
evaluate the Acquisition. Buyer has been given the opportunity to ask questions
of and to receive answers from Seller, the Administrators and the Company
concerning the Company’s business, the Units and the Loan, and to obtain such
additional written information necessary to verify the accuracy
thereof.
(c) Buyer
is
aware the purchase of the Units and the Loan is speculative and involves
a high
degree of risk. Buyer is aware that there is no guarantee that Buyer will
realize any gain from the Acquisition. Buyer further understands that Buyer
could lose the entire amount of the Purchase Price and any additional sums
invested into the Company by Buyer after the Effective Date.
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(d) Buyer
understands that no federal or state agency or other authority has made any
finding or determination regarding the fairness of the Acquisition or has
made
any recommendation or endorsement thereof or has passed in any way upon this
Agreement.
(e) Buyer,
subject to the proviso set forth below: (i) is acquiring the Units solely
for
Buyer's own account for investment purposes only and not with a view toward
resale or distribution thereof, in whole or in part, (ii) has no undertaking,
agreement or arrangement, in existence or contemplated, to sell, pledge,
assign
or otherwise transfer the Units to any other person; and (iii) agrees not
to
sell or otherwise transfer the Units unless and until it is subsequently
registered under the 1933 Act and any applicable state securities laws, or
unless an exemption from any such requirement is available
(f) Buyer
is
financially able to bear the economic risk of the Acquisition, including
the
ability to hold the Units indefinitely and to afford a complete loss of the
Purchase Price and any additional sums invested into the Company by Buyer
after
the Effective Date. Buyer has such knowledge and experience in financial
and
business matters as to be capable of evaluating the merits and risks of the
Acquisition.
3.2. Access
to Data.
Buyer
has received and reviewed information about the Company and has had an
opportunity to discuss the Company's business, management and financial affairs
with its management and to review the Company's facilities. Buyer understands
that such discussions, as well as any written information provided by Seller,
Administrators or the Company, were intended to describe the aspects of the
Company’s business and prospects which Seller, Administrators or the Company
believes to be material, but were not necessarily a thorough or exhaustive
description, and Seller and Administrators make no representation or warranty
with respect to the completeness of such information and makes no representation
or warranty of any kind with respect to any information provided by any entity.
Some of such information includes projections as to the future performance
of
the Company, which projections may not be realized, are based on assumptions
which may not be correct and are subject to numerous factors beyond Seller’s and
Administrators’ control.
3.3. Authorization.
As of
the Effective Date, all action on the part of Buyer and its officers, directors
and partners necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of Buyer hereunder shall
have
been taken, and this Agreement, assuming due execution by the parties hereto,
constitutes valid and legally binding obligations of Buyer, enforceable in
accordance with its terms, subject to: (i) judicial principles limiting the
availability of specific performance, injunctive relief, and other equitable
remedies and (ii) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect generally relating to or affecting
creditors' rights.
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3.4. Compliance
with Other Instruments.
Buyer
is not in violation or default of any provision of its certificate of
incorporation or other organizational documents, as applicable, each as in
effect immediately prior to the applicable Closing, except for such failures
as
would not be reasonably expected to materially adversely effect the ability
of
Buyer to perform its obligations under this Agreement (a "Buyer Material
Adverse
Effect"). Buyer is not in violation or default of any provision of any material
instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any
of its
properties or assets are bound which would reasonably be expected to have
a
Buyer Material Adverse Effect. To the best of its knowledge, Buyer is not
in
violation or default of any provision of any federal, state or local statute,
rule or governmental regulation which would reasonably be expected to have
a
Buyer Material Adverse Effect. The execution, delivery and performance of
and
compliance with this Agreement will not result in any such violation, be
in
conflict with or constitute, with or without the passage of time or giving
of
notice, a default under any such provision, require any consent or waiver
under
any such provision (other than any consents or waivers that have been obtained),
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of Buyer pursuant to any such provision.
3.5. “As
Is/Where Is”.
Buyer
acknowledges and agrees that it is entering into this Agreement: (i) having
made
such inspection and investigation of the Units, the Loan and the Company
as it
thinks fit; (ii) on the basis that it is acquiring the Units, the Loan and
the
Company "as is" and "where is"; (iii) knowing that the Purchase Price to
be paid
for the Units and the Company has been calculated on the basis that the risk
of
good title to all or any of the Units and the Company not passing under this
Agreement is at Buyer's risk; (iv) having taken such professional advice
as it
considers appropriate; and (v) in the belief that since it is contracting
with a
company in administration the terms and conditions of this Agreement are
reasonable.
3.6. Duty
to Inform.
Buyer
shall keep Seller fully apprised of the status of Buyer’s efforts to obtain the
Regulatory Approvals (including when any Regulatory Approvals are obtained)
and
shall fulfill any other conditions and obligations imposed upon Buyer hereunder
or under the MSA.
3.7. Commission
Qualifications.
To the
Buyer’s Knowledge, there is no reason for the Commissions to find that Buyer is
not qualified to control VDUL or the Licenses, including reasons based on
foreign ownership, and no unresolved regulatory compliance issues regarding
Buyer or its affiliates that could delay the regulatory approval process
or
cause the Commission’s to deny the requested approvals.
3.8. Options.
The
Options (i) are fully transferable and assignable to Seller; (ii) are not
subject to any restrictions, other than those expressly stated therein; and
(iii) have not been exercised (in whole or in part), amended, modified,
supplemented, cancelled, rescinded or terminated.
3.9. Solvency.
Buyer
represents and warrants that it is, and after the Effective Date will remain,
solvent, and has not, and shall not, commence any bankruptcy, liquidation,
reorganization or insolvency cases or proceedings. Buyer further represents
and
warrants that it, as the manager of the Company, shall not commence any
bankruptcy, liquidation, reorganization or similar insolvency proceedings
with
respect to the Company.
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4.
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Covenants
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4.1. Confidentiality.
Administrators, Seller and Buyer, and their respective officers, directors,
partners and affiliates, agree to keep the terms and conditions of this
Agreement and the transactions contemplated hereby confidential, and each
agree
not to disclose to any party not a party to this Agreement any of the terms
hereof, except where such disclosure is: (i) to its professional advisers,
(ii)
current and prospective financing sources, or (iii) is required by applicable
law or the rules or standards of the U. S. Securities and Exchange Commission
(the “SEC”), London Stock Exchange or the Listing Rules of the UK Listing
Authority or the rules and requirements of any other competent regulatory
body,
which determination may be made in the good faith opinion of counsel to the
party that is subject to the regulatory body in question. Buyer expressly
acknowledges that it has received, and will receive in the future, Confidential
Materials (as hereinafter defined), and that disclosure of such Confidential
Materials to parties not a party to this Agreement would cause irreparable
harm
to Seller or Administrators. Except with the prior written consent of Seller
or
Administrators or as required by law, neither Buyer nor its officers, directors,
partners or affiliates, shall (i) disclose any Confidential Materials to
any
party not a party to this Agreement or otherwise permitted hereunder, or
(ii)
use any Confidential Materials for any purpose except in connection with
their
efforts on behalf of Seller or Administrators, or as necessary to assist
in the
operation of VDUL pursuant to the MSA. Buyer and its officers, directors,
partners and affiliates shall use their best efforts to preserve the
confidentiality of all Confidential Materials, subject to the requirement
for
dissemination as may be required in the good faith opinion of its counsel
as it
relates to disclosure to meet regulatory body approval or with respect to
the
exceptions enumerated above. In the event that a party concludes that it
is
legally obligated to disclose any provision of this Agreement or any
Confidential Materials, such party shall provide the other party with prompt
written notice, and shall seek to limit the dissemination of such Confidential
Materials. In the case of legal proceedings in which such disclosure is
required, the parties shall cooperate to obtain an appropriate protective
order
or comply with such other procedural requirements limiting the disclosure
of
such material. The parties acknowledge that they may be required to disclose
certain terms of this Agreement, or the entirety hereof, to the FCC and/or
certain State Commissions in connection with applying for the Regulatory
Approvals. Notwithstanding the foregoing, Administrators may disclose details
of
this Agreement to their appointors, advisers and any liquidator of Seller
and
also for the purpose of enforcing its terms, or if required to do so by any
court. They may also include appropriate details in their administration
records, accounts and returns.
Notwithstanding
the foregoing,: (i) Seller or Administrators may disclose the amount of the
Purchase Price, Final Purchase Price, Debenture and Options to any third
party
if, in the sole and absolute discretion of Seller or Administrators, such
disclosure is necessary to enable Seller and/or Administrators to fulfill
its/their obligations under the terms of any contract or arrangement with
such
third party (subject to Seller or Administrators’ undertaking to notify Buyer to
the extent any such disclosure shall be made); and (ii) Buyer may disclose
the
terms of this Agreement at such time as its securities counsel is of the
opinion
that Buyer is required to file a Form 8-K with the U.S. Securities &
Exchange Commission disclosing the material terms of this
Agreement.
10
"Confidential
Materials" means any information or materials, whether written or oral, tangible
or intangible, (i) concerning the Company, its subsidiaries, businesses,
markets, products, prospects, finances and member(s), and (ii) which Buyer
develops, or with respect to which Buyer gains access or knowledge, as a
direct
result of Seller’s, Administrators' or VDUL’s provision to Buyer of information
and/or materials. Notwithstanding the foregoing, the Confidential Material
shall
not include (A) information that was known to, and material that was in the
possession of, Buyer prior to the commencement of any negotiations with Seller
and Administrators, (B) information that is or becomes generally known to,
and
materials possessed by, the public at large or entities involved in the business
of VDUL (other than as a result of a breach of this agreement by Buyer or
by
disclosure of any other party which Buyer knows, or has reason to know, is
under
an obligation of confidentiality to Seller and Administrators), (C) information
or material acquired by Buyer independently from a third party (other than
a
third party which Buyer knows, or has reason to know, is under an obligation
of
confidentiality to Seller and Administrators), and (D) information or material
independently developed by Buyer and not as a result of the disclosure of
information or provision of materials by Seller or Administrators. The
Confidential Materials may include, but are not necessarily limited to, the
following: concepts; techniques; data; documentation; research and development;
customer lists; advertising plans; distribution networks; new product concepts;
designs; patterns; sketches; planned introduction dates; processes; marketing
procedures; "know-how"; marketing techniques and materials; development plans;
names and other information related to strategic partners, suppliers, or
vendors; pricing policies and strategic, business or financial information,
including business plans and financial pro formas.
4.2. Reasonable
Assistance.
If
requested by Seller or Administrators, Buyer shall give all reasonable
assistance to Seller and/or Administrators in connection with any claim or
loss
actions, proceedings, claims and demands brought or made by or against Seller
and/or Administrators which relate to the Units or the Company. Similarly,
if
requested by Buyer, Seller, to the extent that it is reasonably able and
it is
commercially reasonable for it to do so, will provide Buyer, at Buyer’s expense,
reasonable access to inspect and copy any of Seller’s books and records that
Buyer or its auditors may reasonably require in order to enable them to complete
an audit or financial review of VDUL’s financial condition for calendar years
2006 and 2007 and with respect to operations through the Initial Closing
Date in
2008.
4.3. Indemnification
by Buyer.
Buyer
hereby agrees to defend, indemnify and hold harmless Seller, Administrators
and
their respective officers, managers, members, employees, agents, attorneys
and
affiliates from and against, and to promptly pay, all damages asserted against
or incurred by reason of or resulting from:
11
(a) a
breach
or misrepresentation, nonfulfillment of, or any failure to perform by Buyer
of
any representation, warranty or covenant contained herein or in any agreement
executed pursuant hereto, including without limitation the Assignment and
Assumption Agreement; or
(b) the
failure of Buyer to pay, perform and discharge when due the Purchase Price
or
Final Purchase Price; or
(c) all
liabilities incurred as a result of Buyer's operation of the Company from
and
after the Effective Date, including, without limitation, any liabilities
or
damages to Seller or Administrators resulting from Buyer’s failure to obtain all
Regulatory Approvals prior to any Closing.
4.4. Name
Change.
Buyer
hereby agrees to file all applications, notices, documents and instruments
that
are required to effect a legal change of the Company’s name to another name
which does not contain the word “Vanco” with all applicable governmental and
regulatory authorities (including but not limited to the Delaware Secretary
of
State, all other applicable Secretaries of State or the equivalent, the FCC,
all
applicable State Commissions and all applicable agencies having jurisdiction
over tax or regulatory assessments of any kind). Immediately following the
Initial Closing, Buyer shall use its best efforts, and shall initiate all
necessary actions, including without limitation, making all filings and
obtaining all required regulatory approvals, to effect the foregoing name
change
no later than one business day following the Final Closing Date, with the
exception of states that require pre-approval of the Acquisition. For states
that require pre-approval of the Acquisition, Buyer shall may such name change
filings within two (2) business days of the receipt of each such state’s
approval of the Acquisition. Seller agrees to cooperate with Buyer in effecting
such name change. Buyer also agrees to notify all customers of VDUL of the
name
change at Buyer’s own expense.
4.5. Regulatory
Approvals.
(a) It
is
Buyer's responsibility (at its own expense) to apply for and obtain any
necessary or appropriate licenses, consents, approvals, permits, registrations
or rights to use (including Regulatory
Approvals)
or have
the benefit of any of the Units or the Company as soon as reasonably practicable
consistent with Section 1.2 above. Buyer shall use its best efforts to obtain
all such licenses, consents, approvals, permits, registrations, rights and
Regulatory Approvals as soon as possible following the Effective Date. Failure
to obtain any requisite license, consent, approval, permit, registration,
right
or Regulatory Approval or any failure to consummate the Closings shall not
prejudice this Agreement or, in particular, the
Purchase Price or Final Purchase Price payable under it (which shall not
be
repayable under any circumstances).
To the
extent that any of such approvals reasonably require the execution of documents
or other assistance of Seller or the Company prior to or following the
applicable Closing, Seller agrees to use its best efforts (to the extent
it is
able to) to cooperate with Buyer to obtain such approvals and to cause the
Company to cooperate with Buyer as well. Buyer also agrees to cooperate fully
with Seller and to pay all costs, fees and expenses with respect to any ongoing
regulatory reporting obligations Seller may have with respect to licenses
issued
to VDUL following the Initial Closing and Final Closing ( as applicable).
12
(b) (i)
Notwithstanding anything to the contrary herein, Buyer hereby acknowledges
and
agrees that once paid, the Purchase Price and any other amounts paid, or
to be
paid, by the Buyer (or any of its subsidiaries or affiliates) in connection
with
the Acquisition, shall be non-refundable under any circumstance (including,
without limitation, the failure of the Final Closing to occur), absent fraud
by
Seller; and (ii) in furtherance of clause (i) above, neither the Buyer nor
any
of its subsidiaries or affiliates shall have any right to, nor shall any
such
person assert any claim or otherwise take any action to, recoup, clawback,
recover or otherwise obtain any refund of all or any portion of the Purchase
Price or any other amounts paid, or to be paid, by the Buyer (or any of its
subsidiaries or affiliates) in connection with the Acquisition, absent fraud
by
Seller.
4.6. Resignations.
Prior
to the Effective Date, each of the managers and officers of VDUL have given
Buyer notice of their intent to resign from all such positions. The parties
hereby agree to accept each such resignation as of the Initial Closing Date.
The
Administrators shall appoint Buyer as replacement manager and appoint ▇▇▇▇▇▇▇
▇.
▇▇▇▇▇ as CEO, ▇▇▇▇▇▇ ▇▇▇▇ as President, Secretary, ▇▇▇▇▇▇ ▇▇▇▇▇▇ as COO and
▇▇▇
▇▇▇▇▇▇▇▇ as COO, Treasurer of VDUL.
4.7. Transition
Services Agreement.
(a) Buyer expressly acknowledges the existence and effect of that certain
Transition Services Agreement between the Company and Vanco US LLC (“VUS”) dated
May 23, 2008 (the “TSA”). The parties acknowledge that a dispute has arisen
under the TSA between Seller and VDUL on one hand and VUS on the other with
respect to a certain lease relating to commercial office space in Chicago,
Illinois (the “▇. ▇▇▇▇▇▇ Lease”). The terms of the TSA purportedly include an
obligation of VUS to assume the ▇. ▇▇▇▇▇▇ Lease. The parties hereby agree
that
they will use commercially reasonable efforts, and Buyer shall cause VDUL
to use
commercially reasonable efforts, to cause VUS to take full assignment of
the ▇.
▇▇▇▇▇▇ Lease, and, until such assignment is consummated, to otherwise cause
VUS
to continue making at least fifty percent (50%) of the remaining lease payments
to VDUL through the term of the ▇. ▇▇▇▇▇▇ Lease. Further, the parties hereby
agree that, after the Effective Date, (i) any lease payments or other such
consideration received by VDUL from VUS or its affiliates in connection with
the
▇. ▇▇▇▇▇▇ Lease shall constitute “Vanco US Payments” (as such term is defined in
the Debenture) and (ii) immediately upon receipt of any and all Vanco US
Payments, Buyer shall deliver, or cause VDUL to deliver, evidence of such
payments to Seller.
(b)
Without prejudice to the express exclusion of representations, warranties
and
liability of Seller and the Administrators set forth in Sections 2 and 7
hereof,
the parties further acknowledge that the “USX Portal” and associated
“Intellectual Property” that has been used by VDUL for purposes of its historic
operations is the portal that has been retained by VDUL, as acknowledged
in the
TSA, as distinguished from the “Net Direct Portal” that has been used by VUS
with respect to its business; for the avoidance of doubt, to the extent that
the
USX Portal has been marketed under the name “net direct portal,” this has no
bearing on the fact that the USX Portal is the property of VDUL and ownership
and part of the assets underlying VDUL to be enjoyed by Buyer in connection
with
this Agreement.
13
|
5.
|
Provision
of Assistance for Seller and
Administrators
|
Buyer
will permit Seller and Administrators and their authorized representatives
to
inspect the books and records of the Company at any time following the Effective
Date for the purpose of completing the administration and will preserve and
keep
safe such records and not destroy them. The Buyer will also permit Seller,
Administrators and any other person to inspect and copy its books and records
and produce originals of such books and records and will preserve and keep
safe
such books and records and not destroy them. Seller and the Administrators
agree
to maintain the confidentiality of the books and records of the Company,
subject
to the Confidential Information standards set forth above.
|
6.
|
Exclusion
of Personal Liability
|
6.1. Administrators
are agents of Seller and have been acting in that capacity in the negotiation,
preparation and implementation of this Agreement.
6.2. Neither
Administrators nor their firm, staff, employees, advisers and agents shall
incur
personal liability under this Agreement or any other deed, instrument or
document entered into pursuant to it and any liability to which Administrators
or their staff, employees, advisers and agents would otherwise be subject
(whether in contract, tort or otherwise) is expressly excluded.
6.3. Any
right
under this Agreement which is for the benefit of Administrators (and in
particular, without prejudice to the generality of the foregoing, any right
to
be indemnified by Buyer and the rights granted hereunder and all rights to
receive any payment from Buyer) shall also be for the benefit of, and shall
be
exercisable by, any subsequent administrator, liquidator or other insolvency
practitioner (a "Subsequent Appointee") appointed in respect of Seller and
so
that, as regards such Subsequent Appointee, the relevant clause shall apply
mutatis
mutandis
so that
references to Administrators shall be treated as references to such Subsequent
Appointee.
|
7.
|
Exclusion
of Liability
|
7.1. All
conditions, representations (including pre-contractual negligent and innocent
misrepresentations) and warranties express or implied, and whether statutory
or
otherwise, relating to all or any of the Units and the Company are expressly
excluded, unless specified in this Agreement. In particular, but without
limitation, all representations and warranties as to title, quiet possession,
enjoyment, quality, condition, state or description of the Units and the
Company
or their fitness or suitability for any purpose whatsoever or whether any
necessary consents for the assignment or transfer of the Units and the Company
or any of them will be forthcoming are expressly excluded, unless specified
in
this Agreement.
14
7.2. Any
claim
of Buyer, or of any person claiming through it, against Seller shall take
effect
as an unsecured claim and not as an administration expense.
7.3. The
exclusions of liability in this Agreement shall:
(a) arise
and
continue notwithstanding the termination of Administrators' agency before
or
after the signing of this Agreement and shall operate as waivers of any claims
in tort as well as under the law of contract;
(b) be
in
addition to and not in substitution for and notwithstanding any right of
indemnity or relief otherwise available; and
(c) continue
after each of the Closings.
7.4. Nothing
in this Agreement shall operate to restrict or affect in any way any right
of
Administrators to be indemnified, or to exercise a lien howsoever.
7.5. In
the
absence of an express provision to the contrary, nothing in this Agreement
shall
require Seller or Administrators to carry out or continue to carry out any
arrangement or contract, whether single or of continuing effect, with third
parties and whether in relation to the Units, the Loan, Company or
otherwise.
7.6. Any
claim
against Seller and/or against Administrators (or their firm, partners,
employees, agents, advisers or representatives) shall in any event and in
addition to the exclusions of liability contained in this Agreement, be
irrevocably waived by Buyer unless made in writing by notice to Administrators
within sixty (60) days after the Initial Closing Date.
7.7. Without
prejudice to each and every provision of this Agreement, any claim of Buyer,
or
of any person claiming through, under or in relation to Buyer shall not in
any
circumstances exceed the lower of the Purchase Price and the net realizable
value of the Units available to Administrators in the administration of
Seller.
7.8. The
exclusions and limitations contained in this Agreement shall not apply in
the
case of any fraudulent misrepresentation made by Seller or Administrators
or
their respective agents or insofar as any action against any of them is based
upon the fraud of Seller or Administrators or their respective
agents.
7.9. Administrators
are party to this Agreement solely to obtain the benefit of the exclusions
and
limitations on liability and undertakings in their favor.
|
8.
|
Miscellaneous
|
15
8.1. Governing
Law.
This
Agreement shall be governed in all respects by the laws of the State of
Delaware, without regard to any provisions thereof relating to conflicts
of laws
among different jurisdictions.
8.2. Survival.
The
representations and warranties made by Buyer herein shall survive the Initial
Closing for a period of one year, whereupon they shall cease and be of no
further force and effect.
8.3. Successors
and Assigns.
This
Agreement shall not be assignable by Buyer without the express prior written
consent of Seller and Administrators. This Agreement may be assigned by:
(i)
Seller or Administrators to an affiliate of Seller; and (ii) by Buyer to
an
affiliate of Buyer. This Agreement shall not be construed so as to confer
any
right or benefit on any party not a party hereto.
8.4. Entire
Agreement; Amendment.
This
Agreement and the other documents delivered pursuant hereto constitute the
full
and entire understanding and agreement among the parties with regard to the
subjects hereof and thereof and supersedes all prior agreements and
understandings relating thereto. Neither this Agreement nor any term hereof
may
be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
8.5. No
Set
Off.
Without
prejudice to the other provisions of this Agreement, Buyer shall not be entitled
to set off any claims it may have against Seller or Administrators or any
of
them or exercise any lien whatsoever against or make any deduction from any
money (including cheques or other negotiable instruments) payable to Seller
or
Administrators or any of them pursuant to this Agreement and such money shall
be
paid forthwith in full as it becomes due in accordance with the terms of
this
Agreement.
8.6. Notices,
Etc.
All
notices under this Agreement shall be sufficiently given for all purposes
if
made in writing and delivered personally, sent by documented overnight delivery
service or, to the extent receipt is confirmed, facsimile or other electronic
transmission, to following addresses and numbers. Notices to Seller shall
be
addressed to:
Vanco
plc (in administration)
▇▇▇▇▇▇▇
▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Fax:
▇▇▇(▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attn:
The Administrators
16
Notices
to Administrators shall be addressed to:
The
Administrators (in administration)
▇▇▇▇▇▇▇
▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Fax:
▇▇▇(▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attn:
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇
Each
with a copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
or
at such other address and to the attention to such other person as Seller
and/or
Administrators may designate by written notice to Buyer. Notices to Buyer
shall
be addressed to:
c/o
Capital Growth Systems, Inc.
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
with
a copy to:
▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ Ltd.
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
or
at such other address and to the attention of such other person as Buyer
may
designate by written notice to Seller and Administrators.
8.7. Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any
party
upon any breach or default of the other party under this Agreement shall
impair
any such right, power or remedy of such first party, nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein,
or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent
or
approval of any kind or character on the part of any holder of any breach
or
default under this Agreement, or any waiver on the part of any holder of
any
provisions or conditions of this Agreement, must be in writing and shall
be
effective only to the extent specifically set forth in such writing or as
provided in this Agreement.
17
8.8. Successors.
For the
purposes of interpreting this Agreement, Administrators shall be construed
as
being to Administrators and any person who is appointed as an Administrator
in
substitution for any Administrator or as an additional Administrator in
conjunction with the Administrators.
8.9. Expenses.
Except
as set forth in Section 4.5, Seller, Administrators and Buyer shall each
bear
the expenses and legal fees incurred on their own behalf with respect to
this
Agreement and the transactions contemplated hereby. Seller (not the Company)
shall be responsible for all brokerage commissions to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ et.
al. and
with respect to all legal and closing costs associated with Seller with respect
to the transactions contemplated herein. Buyer shall be responsible and liable
for the fees of any counsel retained by Buyer to prepare and prosecute the
applications, notifications and other filings required to obtain the Regulatory
Approvals or the waiver thereof.
8.10. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which may
be
executed by only one party, which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall constitute
one instrument and shall be binding whether in the form of original, photocopy,
facsimile or email pdf.
8.11. Severability;
Enforcement.
In the
event that any provision of this Agreement becomes or is declared by a court
of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without such provision; provided
that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party. The parties hereto agree that
irreparable damage for which money damages would not be an adequate remedy
would
occur in the event that any of the provision of this Agreement were not
performed in accordance with its specific terms or was otherwise breached.
It is
accordingly agreed that, in addition to any other remedies a party may have
at
law or equity, the parties shall be entitled to seek an injunction of
injunctions to prevent such breached of this Agreement and to enforce
specifically the terms hereof.
8.12. Interpretation.
Article
titles and headings to sections herein are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. The Exhibits referred to herein shall be
construed with and as an integral part of this Agreement to the same extent
as
if they were set forth verbatim herein. No party shall benefit from any rule
construing this Agreement against that party as drafter, and it is acknowledged
that the document is jointly drafted.
8.13. Termination.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement may be terminated at any time prior to the Initial Closing
Date:
18
(a) by
the
mutual consent of Buyer, Administrators and Seller;
(b) by
Seller
or Administrators, in their sole and absolute discretion, in the event of
any
material breach by Buyer of any of Buyer’s agreements, representations or
warranties contained herein and Buyer’s failure to cure the same within ten (10)
days of notice of breach if such breach is susceptible of a cure;
or
(c) by
Seller
or Administrators, in their sole and absolute discretion, if a Buyer Material
Adverse Effect occurs and Buyer fails to remedy the events causing the same
within two (2) days following delivery of notice from Seller.
8.14. Control.
Nothing
in this Agreement permits, or will be deemed to permit, Buyer to exercise
de
facto
or
de
jure
control
over the Company prior to Initial Closing.
[signatures
appear on the following page]
19
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first
above written.
“Seller”
Vanco
plc
(in administration) represented by ________________ one of its
Administrators
(without personal liability)
By:
_________________________
Name:
______________________
Title:
________________________
"Administrators"
On
behalf
of the Administrators (without personal liability)
By:
_________________________
Name:
______________________
Title:
________________________
“Buyer”
Capital
Growth Acquisition, Inc.
By:
_________________________
Name:________________________
Title:
________________________