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EXHIBIT 2
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is entered into as of
March 31, 1999 by and among Redwood Broadcasting, Inc., a Colorado corporation
("Redwood"), and certain shareholders of Interactive Radio Group, Inc., a
Delaware corporation ("INRG"), listed on the signature pages hereto (each,
individually, an "INRG Shareholder" and, collectively, the "INRG Shareholders").
R E C I T A L S
WHEREAS, the INRG Shareholders own the number of shares of common
stock, $.0001 par value per share ("Common Stock"), of INRG set forth on Exhibit
A hereto;
WHEREAS, the parties hereto desire that the INRG Shareholders
contribute all of their shares of Common Stock in exchange for shares of common
stock, par value $0.004 per share ("Redwood Common Stock"), of Redwood;
WHEREAS, it is intended that after such exchange the INRG Shareholders
will own at least 80% of the outstanding shares of Redwood Common Stock;
WHEREAS, it is intended that the transactions contemplated by this
Agreement shall qualify for the treatment described in Section 351 of the
Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Contribution of Securities. Upon the terms and subject to the
conditions of this Agreement, the parties hereto agree that, on the date of this
Agreement (i) each of the INRG Shareholders shall contribute to Redwood all of
the shares of Common Stock set forth on Exhibit A hereto and (ii) in exchange
for such contribution, Redwood shall issue to each INRG Shareholder 1.25 shares
of Redwood Common Stock for each share of Common Stock contributed.
2. Representations and Warranties of the INRG Shareholders.
Each INRG Shareholder hereby represents and warrants to Redwood,
severally and not jointly, that:
a. Investment Representations.
i) Financial Resources. Such INRG Shareholder's
financial situation is such that such INRG Shareholder can afford to bear the
economic risk of holding the Redwood Common Stock for an indefinite period of
time, has no need for liquidity with respect to his investment therein, has
adequate means to provide for his current needs and
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personal contingencies, and can afford to suffer the complete loss of his
investment in the Redwood Common Stock.
ii) Acquisition for Investment. Such INRG Shareholder
is acquiring the Redwood Common Stock solely for investment, for such INRG
Shareholder's account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof, except for such distributions and
dispositions that are effected in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), the rules and regulations of the Securities and
Exchange Commission promulgated thereunder and all applicable state securities
and blue sky laws.
iii) Stock Unregistered. Such INRG Shareholder has
been advised that the shares of Redwood Common Stock have not been registered
under the Securities Act, and the following restrictive legend (or similar
legend) will be placed on the certificates representing the Redwood Common Stock
issued to such INRG Shareholder:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state, and may not be sold or otherwise disposed
of except pursuant to an effective registration statement under such
Act and applicable state securities laws or an applicable exemption to
the registration requirements of such Act and of such laws."
b. Authority; Approval. Such INRG Shareholder has all
requisite power and authority to execute and deliver this Agreement, to perform
his, her or its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by such INRG
Shareholder, if not a natural person, and the consummation by such INRG
Shareholder of the transactions contemplated hereby has been duly authorized by
all necessary corporate, partnership or trust action and no other proceedings on
the part of such INRG Shareholder are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by such INRG Shareholder and, assuming the
due authorization, execution and delivery thereof by Redwood, constitutes the
legal, valid and binding obligations of such INRG Shareholder, enforceable
against such INRG Shareholder in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally.
c. No Conflict. The execution and delivery of this Agreement by
such INRG Shareholder do not, and the performance of this Agreement by such INRG
Shareholder will not, (i) conflict with or violate the Articles of Incorporation
or Bylaws, or the equivalent organizational documents, in each case as amended
or restated, of such INRG Shareholder, if not a natural person, (ii) conflict
with or violate any Laws applicable to such INRG Shareholder or by which any of
its properties are bound or affected, (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
encumbrance on any of the properties or assets of such INRG Shareholder pursuant
to any contract, agreement or other instrument to which
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such INRG Shareholder is a party or by which such INRG Shareholder is bound or
affected, except for any such conflicts or violations described in clause (ii)
and except for any such breach, default or event described in clause (iii) that
does not affect such INRG Shareholder's ability to perform its obligations
hereunder.
d. No Approvals. The execution and delivery of this Agreement
by such INRG Shareholder does not, and the performance of this Agreement by such
INRG Shareholder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, either domestic or foreign, other than any such consents, approvals,
authorizations or permits that have been obtained or such filings or
notifications that have been made.
e. Title. Such INRG Shareholder has good and marketable title
to the Common Stock proposed to be contributed by such INRG Shareholder
hereunder and full right, power and authority to contribute such Common Stock
hereunder, free and clear of all encumbrances (other than those imposed by the
Securities Act and the securities or blue sky laws of certain jurisdictions);
and upon delivery and exchange of such Common Stock hereunder, Redwood will
acquire good and marketable title thereto, free and clear of all encumbrances.
3. Representations and Warranties of Redwood. Redwood represents and
warrants to the INRG Shareholders that:
a. Organization and Qualification. Redwood is a corporation
duly organized, validly existing and in good standing under the laws of
Colorado, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as is now being conducted.
b. Capitalization. As of the date hereof, the authorized
capital stock of Redwood consists of two million five hundred thousand
(2,500,000) shares of preferred stock, par value $.04 per share, of which none
are issued and outstanding, and twelve million five hundred thousand
(12,500,000) shares of Redwood Common Stock, of which six hundred forty nine
thousand five hundred forty seven (649,547) shares of Redwood Common Stock are
issued and outstanding. Following the completion of the transactions
contemplated hereby, each of the outstanding shares of capital stock of Redwood
will be duly authorized, validly issued, fully paid, nonassessable and not
subject to preemptive rights created by statute, Redwood's charter documents or
any agreement to which Redwood is a party or is bound.
c. Authority; Approval. Redwood has all requisite corporate
power and authority to consummate the transactions contemplated by this
Agreement. The consummation by Redwood of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of Redwood are necessary to consummate
the transactions contemplated by this Agreement.
d. No Conflict. The execution and delivery of this Agreement
by Redwood does not, and the performance of this Agreement by Redwood will not,
(i) conflict with or violate the Articles of Incorporation or Bylaws of Redwood,
(ii) conflict with or violate any Laws applicable to Redwood or by which any of
its properties are bound or affected, (iii)
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result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any encumbrance on any of the properties or assets of Redwood
pursuant to any contract, agreement or other instrument to which Redwood is a
party or by which Redwood is bound or affected, except for any such conflicts or
violations described in clause (ii) and except for any such breach, default or
event described in clause (iii) that does not affect Redwood's ability to
perform its obligations hereunder.
4. Amendment of INRG Charter Provisions. As soon as practicable
following the date hereof (but in no event more than 10 days following the date
hereof), the INRG Shareholders shall take all action (and shall cause INRG to
take all action) necessary to amend the provisions of the Articles of
Incorporation of INRG relating to the Series A Preferred Stock as set forth on
Exhibit B hereto to provide that so long as more than 80% of the issued and
outstanding Common Stock of INRG is owned by another corporation, such Series A
Preferred Stock shall be convertible, at the option of the holder, into either
(i) Common Stock of INRG, or (ii) common stock of such other corporation.
5. Board of Directors of Redwood. The parties hereto agree to use their
reasonable best efforts to cause Xxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxxxx, Xxxx
Xxxxxxxxxx and an individual designated by CBS/Infinity to be elected as
directors of Redwood.
6. Merger with Delaware Corporation; Registration Statement. As soon as
practicable following the consummation of the transactions contemplated by this
Agreement, Redwood shall use commercially reasonable efforts to (i) enter into a
merger agreement with a Delaware corporation pursuant to which Redwood would be
merged with and into such Delaware corporation, with the Delaware corporation as
the surviving corporation, and (ii) to cause a registration statement to be
filed and become effective with respect to the stock to be issued in connection
with such merger.
7. Additional Documents. Each party agrees to execute and deliver any
and all further documents and writings, and to perform such other actions, as
may be or become reasonably necessary or expedient to effect and carry out the
terms of this Agreement.
8. Governing Law. This Agreement is governed by and shall be construed
in accordance with the law of the State of Delaware, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this Agreement to the law of another jurisdiction. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other persons or
circumstances is not affected thereby, and that provision shall be enforced to
the greater extent permitted by law.
9. Number, Gender and Connection of Persons. Throughout this Agreement,
as the context may require, the masculine gender includes the feminine and the
neuter gender includes the masculine and the feminine; the singular tense and
number includes the plural, and the plural tense and number includes the
singular; the past tense includes the present, and the present tense includes
the past; references to parties, sections, paragraphs and exhibits
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mean the parties, sections, paragraphs and exhibits of and to this Agreement;
and periods of days, weeks or months mean calendar days, weeks or months.
10. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties' respective successors, assigns, executors and
administrators.
11. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and both of which shall
constitute one and the same document.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first set above.
REDWOOD BROADCASTING, INC.
By: \s\ Xxx Xxxxxxxx
-------------------------------------------
Name: Xxx Xxxxxxxx
Its: CEO
THE INRG SHAREHOLDERS
\s\ Xxx Xxxxxxxx
-------------------------------------------
Xxx Xxxxxxxx
\s\ Xxxx Xxxxxxxxxx
-------------------------------------------
Xxxx Xxxxxxxxxx
\s\ Xxxx Xxxxxxx
-------------------------------------------
Xxxx Xxxxxxx
\s\ Xxx Xxxxxx
-------------------------------------------
Xxx Xxxxxx
\s\ Farid Suelman
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CBS Radio/Infinity
\s\ Xxxxxx Xxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxx
\s\ Xxxx Xxxxx
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Andaman Investments, Inc.
\s\ Xxxxxx Xxxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxxx
\s\ Xxxxxx Xxxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxxx
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\s\ Xxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
\s\ Xxxxxx Xxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxx
\s\ Xxxxxx Xxxxxxx
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Southward Investments, LLC
\s\ Xxxxxxx Xxxxxxx
-------------------------------------------
Tramdot Development Corp.
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EXHIBIT A
INRG Shareholder Number of Shares
---------------- ----------------
CBS Infinity 1,200,000
Xxxxxx Xxxxxx 525,000
Xxxxxxx Xxxxxxx 525,000
Xxxxxx Xxxxxxxxx 200,000
Xxxxxx Xxxxxxxx 200,000
Xxxx Xxxxxxxxxx 524,248
Andaman Investments, Inc. 524,248
Xxxxxx Xxxxxxxxxx 150,000
Xxxxxx Xxxxxxxxxx 150,000
Xxxx Xxxxxx 95,000
Xxxxxx Xxxxxxx 80,000
Southward Investments, Inc. 172,324
Tramdot Development Corp. 70,000
Total 4,415,820
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