Asset
Purchase and Sale Agreement
THIS ASSET
PURCHASE AND SALE AGREEMENT (the “ Agreement ”)
is entered into as of December 11, 2006 by and between
Brantley Capital Corporation, a Maryland corporation (the “
Seller ”), and Venture Capital Fund of America III,
Inc., on behalf of its affiliated funds
(“Buyer”).
WHEREAS, Buyer
would like to purchase from Seller certain assets, and Seller would
like to sell such assets to Buyer.
NOW, THEREFORE,
in consideration of the mutual promises and agreements herein made
and intending to be legally bound and to reflect the foregoing, the
parties hereto hereby agree as follows:
1. Buyer
hereby agrees to purchase and transfer from Seller, and Seller
hereby agrees to sell and transfer to Buyer, the debt and equity
interests (the “Interests”) in certain companies (the
“Companies”), as detailed on Exhibit A
hereto, for US $10,000,000 in cash (the “Offer Price”),
subject to the terms and conditions of this Agreement. The
Interests shall include any dividends, interest, principal
repayments, distributions, share split, conversion, redemption or
other proceeds in respect of the Interests received by Seller
subsequent to the execution of this letter and prior to the closing
date of the purchase of the Interests. Purchase of the Interests
shall not include the assumption of any liabilities or obligations
by Buyer, except to the extent (i) of any existing transfer or
other restrictions encumbering the Interests contained in any
existing stockholder or similar agreement to which Seller is a
party or otherwise bound or contained in the articles of
incorporation, bylaws or other charter documents of the Companies
(collectively, the “Existing Restrictions”) or
(ii) otherwise agreed to in writing by Buyer. If a right of
first refusal or co-sale right applies to any of the Interests and
Seller and Buyer cannot obtain waivers of such rights within
20 days of the later of (1) the signing and delivery of
this Agreement by Seller to Buyer and (2) provision by Seller
to Buyer of copies of all of the contracts containing such first
refusal and co-sale rights, Buyer shall specify the portion of the
Offer Price that applies to such Interests. If any of the Interests
are pre-empted from transfer to Buyer by way of the exercise of a
right of first refusal or a co-sale right by a third party then the
Offer Price shall be reduced by the corresponding price amount for
such Interests, but the terms of this Agreement shall remain in
effect for the remaining Interests.
2. With
respect to the Interests in Fitness Holdings, Inc., closing of the
purchase of all Interests shall be subject to waiver of the
transfer restrictions of the Shareholders Agreement, dated as of
October 20, 2004, by and among Fitness Holdings, Inc. and
certain shareholders thereof, applicable to the transfer from
Seller to the Buyer. Seller and Buyer shall use commercially
reasonable good faith efforts to obtain the waiver specified in the
foregoing sentence. For those Interests subject to any rights of
first refusal or co-sale, closing of the purchase of such Interests
is subject to expiration, satisfaction or waiver of any rights of
first refusal and co-sale applicable to them. Seller and Buyer
shall use commercially reasonable good faith efforts to obtain
waivers of any rights of first refusal applicable to the transfer
of the Interests from the respective Companies and from the other
investors in the Companies. To the extent that such right of first
refusal and co-sale waivers cannot be obtained within 20 days
of the later of (1) the signing and delivery of this Agreement by
Seller to Buyer and (2) provision by Seller to Buyer of copies
of all of the contracts containing such first refusal and co-sale
rights, the Seller shall comply with the applicable rights of first
refusal and co-sale processes. Closing of the sale of the Interests
by the Seller shall be subject to the approval of the shareholders
of Seller, to the extent required by law, applicable stock exchange
rules or the bylaws and articles of incorporation of Seller as they
exist on the date of this letter. If such Seller shareholder
approval is so required, then Seller agrees to promptly seek such
approval (except as set forth in the next paragraph), and
Seller’s board of directors agrees to recommend to the
shareholders of Seller that they vote in favor of approval of
closing of the sale of the Interests by Seller to Buyer on the
terms herein (except as set forth in the next paragraph). Seller
agrees to use good faith efforts to file with the U.S. Securities
and Exchange Commission (“SEC”) as soon as reasonably
practicable, a preliminary proxy statement (the
“Proxy”) that solicits shareholder approval of the
transactions contemplated hereby. Seller agrees that it shall hold
the shareholder meeting as soon as practical following
submission of
the Proxy and completion of any subsequent revisions to the Proxy,
which shall be made in the sole reasonable discretion of Seller, in
response to any comments or questions relating to the Proxy
provided by the staff of the SEC. Seller agrees to use reasonable
good faith efforts to solicit proxies in favor of the transactions
contemplated hereby from each of Seller’s
stockholders.
3. If,
prior to obtaining approval by its shareholders of the transactions
contemplated hereby, the Seller receives a binding offer (with no
due diligence condition and no financing condition) from a single
buyer or group of related buyers (an “Alternative
Buyer”) for the purchase of the Interests in cash, cash
equivalents, or marketable securities for an amount that exceeds
the Offer Price by an amount greater than the Threshold Amount (in
the amount as hereinafter specified) and if the Seller pays to
Buyer a cash break-up fee in the amount of US$250,000 upon the
closing of such sale to the Alternative Buyer, then Seller and the
board of directors of Seller shall be free to agree to sell the
Interests on those terms to the Alternative Buyer and to seek
Seller shareholder approval of such sale. The Threshold Amount
shall be an amount equal to (1) US$1,250,000 plus (2) the
product of (A) US$500,000 and (B) the numbers of months
(or part thereof) after February 8, 2007 that such binding
offer is received by Seller. If the Seller seeks to sell the
Interests to an Alternative Buyer but fails to close the sale of
the Interests to such Alternative Buyer, Seller and the board of
directors of Seller shall remain bound by this Agreement to sell
the Interests to Buyer pursuant to the terms hereof and to seek
Seller shareholder approval of such sale. The break-up fee will
only be paid where Buyer does not become the owner of all of the
Interests (other than those Interests eliminated by the result of
right of first refusal).
4. Seller
and Buyer agree to use commercially reasonable good faith efforts
to satisfy the transfer conditions set forth above and close the
purchase of the Interests as soon as reasonably
practicable.
5. At the
closing, Seller will deliver to Buyer original stock certificates
and other instruments representing the Interests along with
assignment instruments executed by the Seller to effect the
transfer to Buyer and Buyer will pay the Offer Price to Seller by
wire transfer of immediately available funds in U.S. dollars to an
account designated by Seller. In addition, at the closing Buyer
will execute any stockholder or similar agreements required to be
executed by the terms of the Existing Restrictions with respect to
the applicable Interest being purchased by Buyer. The closing shall
take place at the offices of Buyer in New York, New York no later
than fifteen business days following the date of the satisfaction
of the following closing conditions: (i) the closing
conditions specified in paragraph 2 hereof, (ii) the closing,
along with the sale of Interests pursuant to rights of refusal,
shall provide $10,000,000 in cash to the Seller (where only Seller
is the beneficiary of this (ii) as a closing condition),
(iii) lack of any preliminary or permanent injunction or other
order issued by any state or federal court which prevents the
consummation of the transactions contemplated hereby, and
(vi) the representations and warranties of the parties hereto
remain true and correct. Each of the parties hereto shall be deemed
to have made all representations and warranties herein as of the
time of the closing, in addition to as of the date of this
Agreement. Either party may terminate this Agreement and abandon
the transactions contemplated hereby upon written notice to the
other party at any time following June 30, 2007 if the closing
has not occurred by such date, provided that such party has used
commercially reasonable good faith efforts to satisfy the transfer
conditions herein and to meet all of its obligations hereunder. In
the event of termination of this Agreement, no party hereto shall
have any liability or further obligations to the other party hereto
except for the obligations of the parties in paragraph 13 and the
second sentence of paragraph 14 and except for such legal and
equitable rights and remedies that any party may have by reason of
any willful breach of this Agreement by any other party.
6. Seller
represents to Buyer that: it has full corporate power and authority
to enter into this Agreement and the transactions contemplated
hereby; the board of directors of Seller has authorized the
execution and delivery of this Agreement, the performance of
Seller’s obligations hereunder and the consummation of the
transactions contemplated hereby; this Agreement has been duly
executed and delivered by Seller and is a binding obligation of
Seller, enforceable against Seller in accordance with its terms.
The board of directors of Seller has, by resolutions duly adopted
by unanimous vote at a meeting of all of it directors duly called
and held and not subsequently rescinded or modified in any way has
duly (i) determined that the transactions contemplated hereby
are fair to, and in the best interests of, Seller and its
stockholders and declared such transactions to be advisable,
(ii) approved this Agreement and (iii) agreed to
recommend that the stockholders of Seller approve the transactions
contemplated hereby and directed that such matter be submitted to
Seller’s stockholders at a special stockholders meeting to
be
held as soon as
practicable. Seller represents to Buyer that Seller owns (and will
own, immediately prior to the closing) the Interests (other than
Interests excluded from the closing by operation of a right of
first refusal or co-sale) free and clear of any liens or
encumbrances (other than as will be satisfied or waived before or
at the closing and other than the Existing Restrictions); that this
Agreement and the transactions contemplated hereby do not conflict
with any agreements, court orders, laws or government regulations
by which Seller is bound; that the signatory below is authorized to
sign this Agreement on behalf of Seller and to bind Seller to
perform its obligations under this Agreement. Seller represents to
Buyer that, to the best of Seller’s knowledge, no Existing
Restrictions entered into or consented to by Seller prior to
September 28, 2005 exist other than those contained in the
documents contained in Exhibit B hereto and that it has
provided copies of all such documents to Buyer. Seller represents
to Buyer that no Existin
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