Item 1.01. Entry into a Material Definitive
Agreement.
Asset Purchase Agreement
On January 26, 2022, American
Virtual Cloud Technologies Inc. (“AVCT”), along with its direct and indirect subsidiaries Computex, Inc., Stratos Management
Systems, Inc., First Byte Computers, Inc. and eNetSolutions, LLC (collectively, the “Companies”), entered into an Asset Purchase
Agreement (the “Asset Purchase Agreement”) with Calian Corp. (“Buyer”), pursuant to which the Companies have agreed
to sell substantially all of their assets, collectively comprising AVCT’s Computex business (the “Purchased Assets”),
to Buyer, and Buyer has agreed to assume certain liabilities relating to the Purchased Assets (collectively, the “Asset Sale”).
As consideration for the Purchased Assets, Buyer has agreed to pay to the Companies $30 million in cash, subject to (i) reduction for
any indebtedness of the Computex business that is outstanding as of the closing of the Asset Sale (the “Closing”) and (ii)
certain other adjustments, including based on any shortfall or surplus in working capital of the Computex business as of the Closing,
based on a target level of working capital set forth in the Asset Purchase Agreement.
Under the terms of the
Asset Purchase Agreement, the Companies will retain certain specified assets, including, among other things, cash.
The Asset Purchase Agreement
also contains representations, warranties and indemnification obligations of the parties customary for transactions similar to those contemplated
by the Asset Purchase Agreement. Such representations and warranties are made solely for purposes of the Asset Purchase Agreement and,
in some cases, may be subject to qualifications and limitations agreed to by the parties in connection with the negotiated terms of the
Asset Purchase Agreement and may have been qualified by disclosures that were made in connection with the parties’ entry into the
Asset Purchase Agreement.
The Asset Purchase Agreement,
the Asset Sale and other transactions contemplated by the Asset Purchase Agreement must be approved by the affirmative vote of a majority
of the voting power of the issued and outstanding shares of AVCT’s common stock (“Stockholder Approval”) (see “Voting Agreements” below).
In addition to the receipt
of Stockholder Approval, each party’s obligation to consummate the Asset Sale is conditioned upon certain other customary closing
conditions, including the accuracy of the other party’s representations and warranties as of Closing, subject, in certain instances,
to certain materiality and other thresholds, the performance by the other party of its obligations and covenants under the Asset Purchase
Agreement, the delivery of certain documentation by the other party and the absence of any injunction or other legal prohibitions preventing
consummation of the Asset Sale.
The Asset Purchase Agreement
contains certain customary termination rights for each of AVCT (and the Companies) and Buyer, including, among other things, that either
party may terminate the Asset Purchase Agreement if the Closing has not occurred by February 28, 2022 (provided, however, that if the
SEC reviews the proxy statement to be submitted to the stockholders of AVCT, such date shall automatically be extended to the date (if
later) that is thirty (30) days following AVCT’s receipt of oral or written notification of the completion of the review by the
SEC) (the “Termination Date”). AVCT has the right to terminate the Asset Purchase Agreement if AVCT’s board of directors
approves an alternative transaction that constitutes a superior proposal, provided that AVCT complies with certain notice requirements
set forth in the Asset Purchase Agreement and pays a termination fee of $1.0 million (the “Termination Fee”). The Buyer has the right to terminate the Asset Purchase Agreement if AVCT’s board of directors (i) fails to publicly recommend (or
has withdrawn), or changes in a manger adverse to the Buyer, its recommendation to AVCT stockholders to approve the Asset Sale, or (ii)
make any public announcement or takes any other action inconsistent with the recommendation of the board to its stockholders to approve
the Asset Sale and the transactions contemplated in the Asset Purchase Agreement. AVCT is also
required to pay the Termination Fee if Buyer terminates the Asset Purchase Agreement as a result of the actions described in the preceding sentence.
In addition, pursuant to
a Restrictive Covenant Agreement to be entered into at the Closing, the Companies will agree not to engage in their current lines of business,
including (a) developing, marketing, reselling and licensing data centers solutions, enterprise networking and integration services, and
(b) cloud and managed services and cybersecurity services, for a period of four years following the Closing. The Companies have also agreed
to certain other customary employee and customer non-solicitation covenants.
The foregoing description
of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
Asset Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
The Asset Purchase
Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide
any other factual information about AVCT, Buyer or any of their respective subsidiaries or affiliates. The representations, warranties
and covenants contained in the Asset Purchase Agreement were made by the parties thereto only for purposes of that agreement and as of
specific dates; were solely for the benefit of the parties to the Asset Purchase Agreement; may be subject to limitations agreed
upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the Asset Purchase Agreement instead of establishing these matters as facts (such disclosures include information
that has been included in AVCT’s public disclosures, as well as additional non-public information); and may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries
under the Asset Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of AVCT or Buyer or any of their respective subsidiaries or affiliates. Additionally,
the representations, warranties, covenants, conditions and other terms of the Asset Purchase Agreement may be subject to subsequent waiver
or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after
the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in AVCT’s public disclosures.
Voting Agreements
Simultaneously with the
execution of the Asset Purchase Agreement, the Buyer entered into voting agreements (the “Voting Agreements”) with
certain stockholders of AVCT (the “Significant Stockholders”), including Pensare Sponsor Group, LLC, Stratos Management
Systems Holdings, LLC and Ribbon Communications Inc., each of which is a greater than 5% stockholder of AVCT. The Significant
Stockholders hold in the aggregate a majority of AVCT’s outstanding shares of common stock.
Pursuant to the Voting Agreements,
each Stockholder has agreed, with respect to all of the voting securities of AVCT that such Significant Stockholder beneficially
owns as of the date thereof or thereafter (the “Covered Stock”), to, among other things, (i) vote in favor of the Stockholder Approval; and (ii) not transfer any such Covered Stock during the term of the Voting Agreements. The Voting Agreements will
terminate upon AVCT obtaining the Stockholder Approval.
The foregoing description
of the Voting Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of
Voting Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.