EXHIBIT 1
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STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
effective as of the 24th day of March, 2005, by and among Xxxxx Holdings, LLC
("Purchaser") and those individual Shareholders who have executed counterparts
of this Agreement (each individually referred to herein as a "Shareholder" and
collectively the "Shareholders").
W I T N E S S E T H:
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WHEREAS, the Shareholders collectively own 1,572,363 shares of the common
stock (the "Common Stock") of Redwood Microcap Fund, Inc. (the "Company" or
"RWMC"), which shares constitute 62.9% of the issued and outstanding shares of
capital stock of the Company (the "Shares"); and
WHEREAS, RWMC owns greater than a 50% equity interest in various entities
(the Affiliated Entities"); and
WHEREAS, Purchaser desires to purchase the Shares and Shareholders desire
to sell the Shares to Purchaser (the "Acquisition").
In consideration of the foregoing and of the mutual agreements contained in
this Agreement, the parties agree as follows:
ARTICLE I
THE ACQUISITION
1.01 The Acquisition. Purchaser shall purchase the Shares and Shareholders
shall sell and deliver the Shares to Purchaser, free and clear of all liens,
security interests, pledges, encumbrances, adverse claims and demands of every
kind, character and description whatsoever.
1.02 Purchase Price. The purchase price that Purchaser shall pay to
Shareholders for the Shares shall be $1.60 per share or a total of Two Million
Five Hundred Fifteen Thousand Seven Hundred Eighty-One and no/100 Dollars
($2,515,781) payable $375,000 in cash to the Shareholders, pro rata, and the
balance of $2,140,781 by promissory notes in the form attached as Exhibit A
payable to the individual Shareholders in the amounts as set forth in Exhibit B.
The promissory notes shall be personally guaranteed by Xxxx Xxxxx, the owner of
Purchaser, using the form of guaranty attached as Exhibit C.
1.03 Closings and Closing Dates. The sale and purchase of the Shares shall
be consummated in two separate closings. In the first closing ("First Closing")
which will occur simultaneously with the execution of this Agreement or in
installments as Shares are delivered, Purchaser shall purchase an aggregate of
901,632 of the Shares from the Shareholders, pro rata, which will result in
Purchaser's owning 49% of the outstanding Company common stock (including shares
of Common Stock owned by TriPower Resources, Inc.("TriPower")). In the First
Closing, each Shareholder shall sell the number of shares owned by such
Shareholder set forth on Exhibit B hereto. At the First Closing, upon receipt of
certificates for Shares, Purchaser
shall first deliver the cash and then the promissory notes in the amount set out
on Exhibit B to each of the Shareholders. The second closing ("Second Closing")
shall not be later than two (2) business days after the date Purchaser receives
the initial approval of the Federal Communications Commission necessary for the
purchase of the remainder of the Shares (as required by Section 2.02 of this
Agreement). The parties acknowledge and agree that "final" approval, i.e.,
approval no longer subject to Federal Communications Commission or judicial
appeal or reconsideration, shall not be required prior to the Second Closing. At
the Second Closing, Purchaser shall purchase the balance of the Shares and
deliver promissory notes to the Shareholders as set forth on Exhibit B. The
First and Second Closings are collectively referred to as the "Closings." The
Closings shall take place at the specific time and place as Purchaser and
Shareholders may agree.
1.04 Actions to be Taken at the Closings by the Purchaser and Shareholders.
At the Closings, Shareholders and Purchaser shall each execute and deliver to
each other such documents and certificates as either may reasonably request,
including the Shareholders' delivery of the stock certificates for the Shares
being sold duly endorsed and ready for transfer, free and clear of all claims
and encumbrances of any kind whatsoever.
1.05 Further Assurances. At any time and from time to time after the
Closings, at the request of any party to this Agreement and without further
consideration, any party so requested will execute and delivery such other
instruments and take such other action as the requesting party may reasonably
deem necessary or desirable in order to effectuate the transactions contemplated
hereby.
ARTICLE II
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
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All obligations of Purchaser under this Agreement are subject to the
fulfillment, prior to or at the Closings, of each of the following conditions
(except for those only applicable to one of the Closings), any or all of which
may be waived in whole or in part by Purchaser.
2.01 Compliance with Representations, Warranties and Agreements. All
representations and warranties made by the Shareholders in Article IV of this
Agreement (at the First Closing) and in Sections 4.01, 4.02 and 4.03 of this
Agreement (at the Second Closing) shall have been true and correct when made and
shall be true and correct as of the Closings with the same force and effect as
if such representations and warranties were made at and as of the Closings. The
Shareholders shall have performed or complied in all material respects with all
agreements, terms, covenants and conditions required by this Agreement to be
performed or complied with by the Shareholders prior to or at the Closings.
2.02 Governmental and Regulatory Approvals. With respect to the Second
Closing, Purchaser shall have received initial approval on terms and conditions
acceptable to Purchaser in its sole discretion, of the transactions contemplated
by this Agreement to occur at the Second Closing from the Federal Communications
Commission.
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2.03 No Material Adverse Change. As of the First Closing, since September
30, 2004, there shall not have occurred any material adverse change in the
financial condition, assets, properties, liabilities, business or results of
operations of the Company ("Material Adverse Change") and Purchaser shall be
satisfied, in his sole discretion, with the condition of the Company.
2.04 No Litigation. No action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted, entered, enforced or
deemed applicable to this Agreement or the transactions contemplated hereby by
any governmental authority or by any court, including the entry of a preliminary
or permanent injunction, that would (a) make this Agreement or the transactions
contemplated hereby illegal, invalid or unenforceable, (b) require the
divestiture of a material portion of the assets of the Company or any Affiliated
Entity, (c) impose material limits on the ability of any party to this Agreement
to consummate the Agreement or the transactions contemplated hereby, (d)
otherwise result in a Material Adverse Change, or (e) if this Agreement or the
transactions contemplated hereby are consummated, subject Purchaser or its
officers or directors to criminal or civil liability. No action or proceeding
before any court or governmental authority shall be threatened, instituted or
pending that would reasonably be expected to result in any of the consequences
referred to in clauses (a) through (e) above.
2.05 Resignations. On or before the First Closing, (i) Xxxx Xxxxx shall
have resigned as a director and officer of the Company and shall have delivered
to the Company a release of any claims in form satisfactory to Purchaser (other
than compensation in the ordinary course of business); (ii) the Board of the
Company shall have elected Xxxx Xxxxx as the President of the Company; and (iii)
the remaining independent directors of the Board shall have agreed to remain on
the Board until the completion of the tender offer described in Article VII.
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS
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All obligations of the Shareholders under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part by the Shareholders.
3.01 Compliance with Representations, Warranties and Agreements. All
representations and warranties made by Purchaser in Article V of this Agreement
shall have been true and correct when made and shall be true and correct as of
the Closings with the same force and effect as if such representations and
warranties were made at and as of the Closings. Purchaser shall have performed
or complied in all material respects with all agreements, terms, covenants and
conditions required by this Agreement to be performed or complied with by
Purchaser prior to or at the Closings.
3.02 Regulatory Approvals. Any and all governmental or regulatory approvals
or consents required by law for the Acquisition shall have been obtained.
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3.03 No Litigation. No action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Acquisition by any federal, state or foreign government
or governmental authority or by any court, domestic or foreign, including the
entry of a preliminary or permanent injunction, that would (a) make the
Agreement or any other agreement contemplated hereby, or the transactions
contemplated hereby or thereby illegal, invalid or unenforceable, (b) impose
material limits in the ability of any party to this Agreement to consummate the
Agreement or any other agreement contemplated hereby, or the transactions
contemplated hereby or thereby, or (c) if the Agreement or any other agreement
contemplated hereby, or the transactions contemplated hereby or thereby are
consummated, subject the Company or any Affiliated Entity or subject any
officer, director, shareholder or employee of the Company or any Affiliated
Entity to criminal or civil liability. No action or proceeding before any court
or governmental authority, domestic or foreign, by any government or
governmental authority or by any other person, domestic or foreign, shall be
threatened, instituted or pending that would reasonably be expected to result in
any of the consequences referred to in clauses (a) through (c) above.
3.04 Indemnification. The Company and Xxxx Xxxxx shall have entered into an
indemnification agreement in the form attached as Exhibit D.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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Each of the Shareholders, individually, and not jointly and severally,
hereby makes the following representations, warranties and covenants in Sections
4.01, 4.02 and 4.03 to Purchaser as of the date of this Agreement.
4.01 Ownership of Stock. Each of the Shareholders individually or jointly
with his or her spouse is the sole record and beneficial owner of not less than
the number of shares of Common Stock listed beside his or her name on the
signature page to this Agreement. Each of the Shareholders has good and
marketable title to such shares and the absolute right to sell, assign and
transfer such shares free and clear of all liens, pledges, security interests,
encumbrances, buy-sell agreements, preemptive rights or adverse claims of any
kind or character.
4.02 Authority and Enforceability; No Default; Each Shareholder has full
legal capacity and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been, and
the other agreements and documents contemplated hereby have been or at Closing
will be, duly executed by such Shareholder and will constitute the legal, valid
and binding obligation of such Shareholder, enforceable against such Shareholder
in accordance with its respective terms and conditions, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws and
judicial decisions affecting the rights of creditors generally and by general
principles of equity (whether applied in a proceeding at law or in equity). The
execution, delivery and (provided required regulatory approvals are obtained)
performance of this agreement will not conflict with or result by itself or with
giving of notice or passage of time any mortgage indenture, lease, contract,
agreement or other instrument applicable to such Shareholder.
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4.03 Shareholders' Claims. Each Shareholder does not have any claims
against the Company or any Affiliated Entity except, if applicable, for
compensation in the ordinary course of business.
Xxxx Xxxxx, individually, hereby makes all of the following
representations, warranties and covenants to Purchaser to the best of his
knowledge.
4.04 Organization and Qualification. The Company is a Colorado corporation
and a closed end investment company under the Investment Company Act of 1940, as
amended, and is duly organized, validly existing and in good standing under the
laws of the State of Colorado. The Company has all requisite corporate power and
authority (including all licenses, franchises, permits and other governmental
authorizations as are legally required) to carry on its business as now being
conducted, to own, lease and operate its properties and assets as now owned,
leased or operated, and to carry out its obligations under this Agreement. The
Company does not own or control any Affiliated Entitles other than those listed
in its most recent reports filed with the Securities and Exchange Commission
("SEC"). The Company has no equity interest, direct or indirect, in any other
corporation or in any partnership, joint venture or other business enterprise or
entity, other than those listed in its most recent reports filed with the SEC.
4.05 Company Capitalization. The entire authorized capital stock of the
Company consists solely of 500,000,000 shares of common stock, par value $0.001
per share, of which 2,499,544 shares are issued and outstanding (the "Common
Stock"). Other than shares of Common Stock issuable for interest or on
conversion of a convertible note in the amount of $1,230,000 issued to Xxxx
Xxxxx (the "Convertible Note"), there are no (i) other outstanding equity
securities of any kind or character, (ii) outstanding subscriptions, options,
convertible securities, rights, warrants, calls or other agreements or
commitments of any kind issued or granted by, or binding upon, the Company to
(a) purchase or otherwise acquire any security of or equity interest in the
Company or (b) issue any shares of, restricting the transfer of or otherwise
relating to shares of its capital stock. All of the issued and outstanding
shares of common stock have been duly authorized, validly issued and are fully
paid and nonassessable, and have not been issued in violation of the securities
laws of the United States or any other applicable jurisdiction or in violation
of the preemptive rights of any person.
4.06 No Default. The execution, delivery and (provided the required
regulatory approvals are obtained) performance of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby will not conflict with, or result, by itself or
with the giving of notice or the passage of time, or both, in any violation of
or default or loss of a benefit under, (i) any provision of the Certificates of
Incorporation or Bylaws of the Company or any subsidiary, (ii) any material
mortgage, indenture, lease, contract, agreement or other instrument applicable
to the Company or any Affiliated Entity or their respective assets, operations,
properties or businesses, or (iii) any permit, concession, grant, franchise,
license, authorization, judgment, writ, injunction, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any Affiliated Entity
or their respective assets, operations, properties or businesses.
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4.07 Consents and Approvals. Except for such consents and approvals as
Purchaser shall attempt to obtain as described in Section 2.02 of this
Agreement, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental or administrative authority or
other third party is required on the part of the Company or any Affiliated
Entity in connection with the execution, delivery and performance of this
Agreement or the agreements contemplated hereby or the consummation by the
Shareholders of the transactions contemplated hereby.
4.08 SEC Reports. The reports filed by the Company with the Securities and
Exchange Commission since January 1, 2004 comply as to form with all
requirements under the Investment Company Act and are true, accurate and
complete in all material respects and do not contain any material omissions
required to make the statements made therein not misleading. The financial
statements included in such reports fairly present the financial position of the
Company as of the dates thereof and the results of operations and changes in
financial position of the Company for the periods then ended (collectively, the
"Financial Statements"). The Financial Statements are presented in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis, subject, in case of unaudited financial statements, to year-end
adjustments (which, in the aggregate, are not material).
4.09 Litigation. Except for the litigation pending against Primrose
Drilling Ventures, Ltd., there are no actions, claims, suits, investigations,
reviews or other legal, quasi-judicial or administrative proceedings of any kind
or nature now pending or threatened against or affecting the Company or any
Affiliated Entity at law or in equity, or by or before any federal, state or
municipal court or other governmental or administrative department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that in any
manner involve the Company or any of its respective properties or capital stock
that, if determined adversely to the Company, would result in a Material Adverse
Change or materially and adversely affect the transactions contemplated by this
Agreement.
4.10 Books and Records. The minute books, stock certificate books and stock
transfer ledgers of the Company (i) have been kept accurately in the ordinary
course of business, (ii) are complete and correct in all material respects,
(iii) the transactions entered therein represent bona fide transactions and (iv)
there have been no transactions involving the business of the Company that were
required to have been set forth therein and that have not been accurately so set
forth.
4.11 No Adverse Change. There has not been any Material Adverse Change
since September 30, 2004, nor has any event or condition occurred that has
resulted in, or has a reasonable possibility of resulting in the future in a
Material Adverse Change.
4.12 Approval by Board of Company. The independent directors of the Company
have reviewed this Agreement and have agreed to recommend to the Shareholders of
the Company that they accept the tender offer as described in Section VII,
subject to any material change in circumstances.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby makes the representations and warranties set forth in this
Article V to the Shareholders.
5.01 Execution and Delivery. This Agreement has been, and the other
agreements and documents contemplated hereby have been or at Closing will be,
duly executed by Purchaser and each constitutes the valid and binding obligation
of Purchaser, enforceable in accordance with its respective terms and
conditions, except as enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization, receivership or similar
laws and judicial decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
5.02 Compliance with Laws, Permits and Instruments. The execution, delivery
and (provided the required regulatory approvals are obtained) performance of
this Agreement and the other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with, or result, by itself or with the giving of notice or the passage
of time, or both, in any violation of or default or loss of a benefit under, (i)
any material provision of any mortgage, indenture, lease, contract, agreement or
other instrument applicable to Purchaser or its assets, operations, properties
or businesses now conducted or heretofore conducted or (ii) any permit,
concession, grant, franchise, license, authorization, judgment, writ,
injunction, order, decree, award, statute, federal state or local law,
ordinance, rule or regulation of any court, arbitrator or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality applicable to Purchaser.
5.03 No Litigation. No legal action, suit or proceeding or judicial,
administrative or governmental investigation is pending or threatened against
Purchaser that questions or might question the validity of this Agreement or the
agreements contemplated hereby, or any actions taken or to be taken by Purchaser
pursuant hereto or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
5.04 Consents and Approvals. Except for regulatory approvals contemplated
by Section 2.02, no approval, consent, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
third party is required on the party of Purchaser in connection with the
execution, delivery or performance of this Agreement or the agreements
contemplated hereby or the consummation by Purchaser of the transactions
contemplated hereby or thereby.
5.05 Financing. Purchaser has separate funds or financing available to fund
the cash payments to Shareholders and payments to other shareholders in the
tender offer and will not use the assets of the Company or any of its Affiliated
Entities to provide or guaranty such financing so long as the Company is
registered as an investment company.
5.06 Investment Intent. Purchaser is acquiring the Shares for investment
and is not acquiring the Shares with a view to or for sale in connection with
any distribution thereof within
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the meaning of the Securities Act of 1933, as amended, and the rules and
regulations thereunder. Purchaser will not sell or otherwise transfer the Shares
without compliance with the registration requirements of applicable federal or
state securities laws or an exemption therefrom.
ARTICLE VI
OBLIGATIONS AND COVENANTS OF THE SHAREHOLDERS
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Each of the Shareholders hereby individually make the covenants set forth
in this Article VI to Purchaser, except for Section 6.02 which is only made by
Power.
6.01 Best Efforts; Ordinary Course. Each of the Shareholders will use his,
her or its best efforts to cause consummation of the transactions contemplated
hereby in accordance with the terms and conditions of this Agreement.
Shareholders shall each execute any application for governmental approvals
required to be executed by each of them.
6.02 Information for Applications and Statements. Power will use his best
efforts to cause the Company and any Affiliated Entity to cooperate with
Purchaser and to execute any application or filing to be made by Purchaser,
Shareholders, Company and/or any Affiliated Entity with any governmental body in
connection with the transactions contemplated by this Agreement and to provide
any additional information that may be requested in such applications or any
appeal or request for reconsideration. Application to the Federal Communications
Commission for approval of the transactions contemplated by the Second Closing
and, if necessary, the tender offer shall be filed by the parties as soon as
practicable after the First Closing. The filing fee shall be paid by the
Purchaser.
6.03 Exclusivity. Each of the Shareholders will not solicit, negotiate or
enter into any other transaction relating to the sale of the Shares or any other
transaction relating to the acquisition of the Shares or Company, or any of the
assets of the Company or any affiliate by any other person. If any person makes
an offer to any of the Shareholders relating to any of the foregoing, or to the
Company of which any Shareholder is aware, such Shareholder shall promptly
notify Purchaser of the receipt thereof and the identity of the offer or and the
terms thereof.
ARTICLE VII
OBLIGATIONS AND COVENANTS OF PURCHASER
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Purchaser hereby makes the covenants set forth in this Article VII to the
Shareholders.
7.01 Best Efforts. Purchaser shall promptly file jointly with the
Shareholders and any Affilaited Entity if required all necessary applications to
obtain any necessary governmental or regulatory approvals for the transactions
described in this Agreement, shall promptly respond to all requests for
additional information requested in connection with such applications, shall use
its best efforts to obtain such approvals in a timely manner, and shall perform
or cause to be satisfied each covenant or condition specified in this Agreement
to be performed or satisfied by Purchaser.
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7.02 Confidentiality. Purchaser shall maintain in confidence any
confidential information about the Company which it receives, except as
disclosure of confidential information may be necessary to obtain governmental
or regulatory approvals of the transactions described in this Agreement. In the
event that this Agreement is terminated, any and all copies of the books and
records of the Company in the possession of Purchaser shall be returned to the
Company.
7.03 Consulting. After the First Closing, Purchaser will use his best
efforts to cause the Company to retain Xxxx Xxxxx as a consultant to the Company
for a period as long as requested by Purchaser at a consulting fee of $10,500
per month. Power will provide assistance in management or sale of the Affiliated
Entities on a substantially full time basis, but will not have any authority to
bind the Company or any of such entities.
7.04 Tender Offer. Within 30 days after the First Closing (or as soon
thereafter as practicable), the Purchaser shall commence a cash tender offer for
all of the remaining shares of Common Stock not owned by the Shareholders (other
than shares of Common Stock owned by Purchaser, Xxxx Xxxxx or any Affiliated
Entity) at a price of at least $1.60 per share, net to the seller in cash,
subject to customary terms and conditions including regulatory approval.
Purchaser shall accept and pay for all shares properly tendered. Following
completion of the tender offer, subject to prior approval of the Federal
Communications Commission, if required, Purchaser will acquire the balance of
the shares of Common Stock outstanding by means of a short form or long form
merger in the manner provided by Colorado law for a price of $1.60 per share or
such greater price as Purchaser pays in the tender offer.
ARTICLE VIII
TERMINATION AND ABANDONMENT
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8.01 Right of Termination. The transactions contemplated for the Second
Closing may be terminated and abandoned at any time prior to or at the Second
Closing as follows, and in no other manner:
1. By the mutual consent of Purchaser and the
Shareholders.
2. By either the Shareholders or Purchaser at any
time after August 31, 2005; provided that (i) the conditions
precedent to such parties' obligations to close specified in
Articles II and III, respectively, hereof have not been met or
waived in writing and (ii) the Second Closing shall have not been
consummated.
3. By either Purchaser or the Shareholders if any
of the transactions contemplated by the Second Closing are
disapproved by any regulatory authority whose approval is
required to consummate such transactions, which disapproval is
final and nonappealable, or if any court of competent
jurisdiction or other governmental body shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining, invalidating or otherwise prohibiting the Agreement or
the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable.
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4. By Purchaser if it reasonably determines, in
good faith and after consulting with counsel, there is
substantial likelihood that any necessary regulatory approval
will not be obtained or will be obtained only upon a condition or
conditions that make it inadvisable to proceed with the
transactions contemplated by this Agreement.
5. By Purchaser if the Shareholders shall fail to
comply in any material respect with any of their respective
covenants or agreements contained in this Agreement or in any
other agreement contemplated hereby and such failure shall not
have been cured within a period of five (5) calendar days after
notice from Purchaser, or if any of the representations or
warranties of the Shareholders contained herein or therein shall
be inaccurate in any material respect.
6. By the Shareholders if Purchaser shall fail to
comply in any material respect with any of its covenants or
agreements contained in this Agreement or in any other agreement
contemplated hereby and such failure shall not have been cured
within a period of five (5) calendar days after notice from the
Shareholders, or if any of the representations or warranties of
Purchaser contained herein or therein shall be inaccurate in any
material respect.
8.02 Notice of Termination. The power of termination provided for by
Section 8.01 hereof may be exercised only by a notice given in writing, as
provided in Section 9.01 of this Agreement.
8.03 Effect of Termination. Any termination of this Agreement shall not
limit any other relief to which either party may be entitled for breach of this
Agreement but shall not affect the obligations of the parties relating to the
First Closing, which shall not be affected if the Second Closing does not occur.
ARTICLE IX
MISCELLANEOUS
9.01 Notices. Any and all payments (other than payments at the Closing),
notices, requests, instructions and other communications required or permitted
to be given under this Agreement after the date hereof by any party hereto to
any other party may be delivered personally or by nationally recognized
overnight courier service or sent by mail or (except in the case of payments) by
facsimile transmission, at the respective addresses or transmission numbers set
forth below and shall be effective (1) in the case of personal delivery,
facsimile transmission or overnight delivery, when received; and (b) in the case
of mail, upon the actual receipt after deposit in the United States Postal
Service, first class certified or registered mail, postage prepaid, return
receipt requested. The parties may change their respective addresses and
transmission numbers by written notice to all other parties, sent as provided in
this Section 9.01. All communications must be in writing and addressed as
follows:
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IF TO THE SHAREHOLDERS:
At the addresses set forth on the signature page.
IF TO PURCHASER:
Xxxxx Holdings, LLC
000 Xxxx x Xxxxx
Xxxxxxx, Xxxxxxxx 00000
9.02 Survival of Representations and Warranties; Indemnity. All
representations and warranties contained in this Agreement shall survive the
Closings. Shareholders shall indemnify and hold harmless the Purchaser for any
loss, damage, diminution in value or expense (including reasonable attorneys
fees) (collectively, "Adverse Consequences") arising from any breach of their
respective representations, warranties or agreements contained in this
Agreement.
9.03 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the transaction contemplated hereby. This
Agreement may be amended, modified or supplemented only by an instrument in
writing executed by the party against which enforcement of the amendment,
modification or supplement is sought.
9.04 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA (INCLUDING THOSE LAWS RELATING
TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO BE PERFORMED WITHIN
THE STATE OF OKLAHOMA, WITHOUT REGARD FOR THE PROVISIONS THEREOF REGARDING
CHOICE OF LAW.
9.05 Severability. In the event that any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, then
(a) such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
were not a part hereof; (b) the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by such illegal,
invalid or unenforceable provision or by its severance from this Agreement; and
(c) there shall be added automatically as a part of this Agreement a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and still be legal, valid and enforceable.
9.06 Attorneys' Fees and Costs. In the event attorneys' fees or other costs
are incurred to secure performance of any of the obligations herein provided
for, or to establish damages for the breach thereof, or to obtain any other
appropriate relief, whether by way of prosecution or defense, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs incurred
therein.
9.07 Multiple Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all counterparts hereof so executed by the parties
hereto, whether or not such counterpart shall bear
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the execution of each of the parties hereto, shall be deemed to be, and shall be
construed as, one and the same Agreement. A telecopy or facsimile transmission
of a signed counterpart of this Agreement shall be sufficient to bind the party
or parties whose signature(s) appear thereon.
9.08 Articles, Sections and Exhibits. All articles and sections referred to
herein are articles and sections, respectively, of this Agreement and all
exhibits referred to herein are exhibits attached to this Agreement. Descriptive
headings as to the contents of particular sections are for convenience only and
shall not control or affect the meaning, construction or interpretation of any
provision of this Agreement. Any and all exhibits or other documents or
instruments referred to herein or attached hereto are and shall be incorporated
herein by reference hereto as though fully set forth herein verbatim.
9.09 Rules of Construction. The descriptive headings in this Agreement are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Each use herein of
the masculine, neuter or feminine gender shall be deemed to include the other
genders. Each use herein of the plural shall include the singular and vice
versa, in each case as the context requires or as it is otherwise appropriate.
9.10 Commissions. The Shareholders and Purchaser agree and represent to
each other that there are no commissions due to any broker or any other person
relating to the transactions that are the subject of this Agreement, and each
party hereto agrees to indemnify and hold harmless the other party hereto from
any commission due as a result of its actions with respect to this transaction.
9.11 Binding Agreement; No Assignment. This Agreement shall be binding upon
and inure to the benefit of each corporate party hereto, its successors and
assigns, and each individual party hereto and his heirs, personal
representatives, successors and assigns, provided, however, neither Shareholders
nor Purchaser may assign their rights and obligations under this Agreement
without the consent of the other.
9.12 Public Disclosure. Neither Purchaser nor the Shareholders will make,
and Shareholders will cause the Company to refrain from making, any
announcement, statement, press release, acknowledgment or other public
disclosure concerning the Acquisition without the prior written consent of the
other parties to this Agreement; provided, however, that notwithstanding the
foregoing, Purchaser and the Shareholders and Company will be permitted to make
any public disclosures or governmental filings as legal counsel may deem
necessary to maintain compliance with or to prevent violations of applicable
federal or state laws or regulations or which may be necessary to obtain
regulatory approval for the transactions contemplated hereby.
9.13 Effective Date. This Agreement shall not be effective until signed by
all the parties whose names appear on the signature page hereto.
12
Purchaser and the Shareholders have caused this Agreement to be executed as
of the date first above written.
"PURCHASER" XXXXX HOLDINGC, LLC
/s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx, Manager
Number of Shares
"SHAREHOLDERS" Name of Common Stock
---- ---------------
/s/Xxxx Xxxxx
------------------------------------------------------------
Xxxx Xxxxx 1,025,331 shares
X.X. Xxx 00
Xxx Xxxxx XX 00000
/s/ Xxxxx Xxxxxxxx
------------------------------------------------------------
Xxxxx Xxxxxxxx 303,079 shares
00000 00xx Xxxxxx
Xxxxxx, Xxxxxxx Xxxxxxx
Xxxxxx X0X 0X0
/s/ Xxxxx Xxxxxxxx
------------------------------------------------------------
Xxxxx Xxxxxxxx 244,953 shares
X/x Xxxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxxx XX 00000
13
Exhibit A
PROMISSORY NOTE
$________________ Ardmore, Oklahoma
___________, 2005
For value received, Xxxxx Holdings, LLC ("Maker") promises to pay to the
order of ________________________ ("Payee") the principal sum of
_______________________ ($_________). Maker promises to pay interest on the
unpaid principal balance outstanding hereunder from the date of this Note at a
rate of the Wall Street Journal prime rate in effect from time to time plus
0.5%. Interest shall be computed for the actual number of days elapsed on the
basis of the year consisting of 365 days. Principal and accrued interest shall
be due and payable quarterly with the first quarterly payment due on the earlier
of (i) the date that Maker acquires 100% of the outstanding stock of Redwood
Microcap Fund, Inc. ("RWMC"), or (ii) twelve months from the date of the First
Closing as defined in the Stock Purchase Agreement dated _________________, 2005
between Maker, Xxxx Xxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx ("Purchase
Agreement"). Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings set forth in the Purchase Agreement. Quarterly payments
shall be in the amount of $__________ [$150,000 pro rated for number of total
shares] plus accrued interest. In any event, the total outstanding balance of
principal and accrued and unpaid interest due hereunder shall be due and payable
no later than March 31, 2010.
Payment of both principal and interest are to be made in lawful money of
the United States of America. Any amount not paid when due shall bear interest
at the rate of five percent (5%) per annum greater than the stated rate of this
note accrued from the date of such default to the date on which such default is
cured to the satisfaction of the Payee or other holder hereof.
The Maker agrees that if and as often as this Note is placed in the hands
of an attorney for collection or to enforce the holder's rights hereunder, Maker
will pay to the holder hereof its reasonable attorneys fees, together with all
court costs and other expenses incurred by such holder.
Repayment of this Note is secured by certain collateral described in that
certain Security Agreement dated the date hereof between Maker and Payee.
Maker and all endorsers, sureties, guarantors and all other persons who may
become liable for all or any part of this obligation severally waive presentment
for payment, protest and notice of nonpayment. Said parties consent to an
extension of time (whether one or more) of payment hereof, any renewal (whether
one or more) hereof, and any release of any party liable for payment of this
obligation. Any such extension, renewal or release may be made without notice to
any such party and without discharging such party's liability hereunder.
Maker shall be entitled to set off any claims he has for indemnification
from Payee under the terms of the Purchase Agreement against his obligations
under this Note.
In the event any payment of principal or interest is not paid within 5 days
of the due date, at the option of the holder hereof, the entire indebtedness
hereby evidenced shall become due, payable and collectible then or thereafter as
the holder may elect, regardless of the date of maturity hereof. Notice of the
exercise of such option is hereby expressly waived.
[For Power Note Only] Following the Second Closing, Maker shall have the
right to withhold payments of principal and interest hereunder ("Withheld
Payment"), and to pay such Withheld Payment to RWMC or an Affiliated Entity if
in the judgment of Maker such funds are needed by RWMC or the Affiliated Entity
to meet its obligations; provided that the making of such advance can be made in
conformity with all applicable legal requirements; and provided further,
however, that the Withheld Payments may not exceed 50% of any quarterly payment
or $200,000 in the aggregate unless the holder shall have first reviewed and
approved the amount of Withheld Payment and its proposed use by the Affiliated
Entity or Entities. The amount of any such Withheld Payment shall be deemed and
treated as a loan by holder to the Affiliated Entity or Entities receiving same
and shall be repaid, with interest as provided for in this Note, to holder as a
priority and prior to any payment of principal and accrued interest due and
owing by such Affiliated Entity or Entities to either RWMC or any other
Affiliated Entity or Entities.
This Note contains no prepayment penalty and may be paid at any time prior
to maturity. Maker will use commercially reasonable efforts to prepay this Note
if permitted by its lending institution and if Maker has sufficient resources.
Any prepayments shall be paid prorata to all holders of notes issued in
connection with Purchase Agreement.
This Note will be interpreted according to the laws of the State of
Oklahoma.
MAKER
Xxxxx Holdings, LLC
------------------------
By: Xxxx Xxxxx, Manager
REDWOOD MICROCAP FUND, INC.
EXHIBIT B TO STOCK PURCHASE AGREEMENT
ALLOCATION OF CONSIDERATION
NAME FIRST CLOSING SECOND CLOSING TOTALS
-------------------------------------- ------------------------------- ---------------------------------------
QTRLY QTRLY TOTAL
PRINCIPAL PRINCIPAL CASH
SHARES CASH NOTE PAYMENT SHARES CASH NOTE PAYMENY SHARES CASH NOTE & NOTE
------ ---- ---- ------- ------ ---- ---- ------- ------ ---- ---- ------
Xxxx Xxxxx 587,950 244,536 696,184 48,780 437,381 0 699,810 49,034 1,025,331 244,536 1,395,994 1,640,530
Xxxxx Xxxxxxxx 173,220 72,044 205,107 14,371 128,859 0 206,175 14,446 302,079 72,044 411,282 483,326
Xxxxx Xxxxxxxx 140,462 58,420 166,320 11,654 104,491 0 167,185 11,714 244,953 58,420 333,505 391,925
0
TOTALS 901,632 375,000 1,067,611 74,805 670,731 0 1,073,170 75,195 1,572,363 375,000 2,140,781 2,515,781
Xxxxx Ownership(1) 323,144
Total Xxxxx after
First Closing 1,224,776
Percent 49.00%
(1) Includes 206,400 shares ownd by Tripower but excludes 74,364 interest shares
and 719,300 principal shares under convertible note
CONVERTIBLE NOTE PLEDGED
Xxxx Xxxxx 399,997 402,081
Xxxxx Xxxxxxxx 117,846 118,459
Xxxxx Xxxxxxxx 95,560 96,057
613,403 616,597 1,230,000
Redwood Microcap Fund, Inc.
Exhibit B to Stock Purchase Agreement
Allocation of Consideration
First Closing Second Closing Totals
Name Shares Sold Cash Note Shares Sold Cash Note Shares Sold Cash Note
----------- ---- ---- ----------- ---- ---- ----------- ---- ----
Xxxx Xxxxx 587,950 244,536 696,184 437,381 0 699,809 1,025,331 244,536 1,395,994
Xxxxx Xxxxxxxx 173,220 72,044 205,107 128,859 0 206,175 302,079 72,044 411,282
Xxxxx Xxxxxxxx 140,462 58,420 166,319 104,491 0 167,185 244,953 58,420 333,505
0
Totals 901,632 375,000 1,067,611 670,731 0 1,073,170 1,572,363 375,000 2,140,781
Xxxxx Ownership(1) 323,144
Total Xxxxx after
First Closing 1,224,776
Percent 49.00%
(1) Includes 206,400 shares owned by Tripower but excludes 74,364 interest
shares and 719,300 principal shares under convertible note
Convertible Note Pledged
Xxxx Xxxxx 396,420 398,484
Xxxxx Xxxxxxxx 116,792 117,400
Xxxxx Xxxxxxxx 94,705 95,198
607,917 611,083 1219000
Exhibit C
GUARANTY
THIS GUARANTY, dated __________, 2005, is from Xxxx Xxxxx, an individual,
whose address is 000 Xxxx x Xxxxx, Xxxxxxx, Xxxxxxxx, 00000 (the "GUARANTOR") to
______________, an individual ("Payee").
WHEREAS, Payee and Xxxxx Holdings, LLC, an Oklahoma limited liability
company ("DEBTOR"), entered into that certain Stock Purchase Agreement dated
effective March 24, 2005 pursuant to which Payee agreed to sell a total of
______ shares of common stock of Redwood Microcap Fund, Inc. ("COMPANY") to
Debtor for a purchase price of $1.60 per share payable $_________ in cash and
$___________ by promissory note(s) ("NOTE"); and
WHEREAS, Guarantor is the sole member of Debtor and will derive substantial
benefit from the Stock Purchase Agreement; and
WHEREAS, Guarantor and Payee have entered into that certain Pledge and
Security Agreement pursuant to which the Note will be secured by the Convertible
Note between Guarantor and the Company, on the terms and conditions set forth
therein; and
WHEREAS, Payee requires that Guarantor guarantees payment and performance
of the Note.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. The parties hereby incorporate the foregoing recitals in this Guaranty
as though fully set forth herein, agreeing that such recitals are material, true
and correct. The terms "Event of Default", "Obligation" and "Collateral" shall
have the meanings set forth in the Pledge and Security Agreement.
2. Guarantor hereby guarantees to Payee that Debtor will fully and promptly
pay and discharge any and all liabilities, obligations or indebtedness of Debtor
arising out of or relating to the Note.
3. This is an individual, absolute, unconditional and continuing guaranty
that shall continue until all obligations of the Debtor to Payee under the Note
have been satisfied in full.
4. Guarantor agrees that upon the occurrence of an Event of Default and
written demand by Payee, Guarantor shall pay to Payee the full amount of
Guarantor's obligations hereunder, as if the Obligation constituted the direct
and primary obligations of Guarantor.
Payee shall be entitled to proceed directly against Guarantor for payment of the
amount owing hereunder without first pursuing or exhausting any remedy which
Payee then may have against Debtor or any other guarantor or the Collateral
securing the Note.
5. Guarantor agrees that Payee's rights and remedies against Debtor,
Guarantor and all other obligations in connection with the Note shall be
cumulative and may be exercised excessively or concurrently.
6. Guarantor hereby consents that a release of any other guaranty of the
Note shall not diminish or release the obligations of Guarantor hereunder.
Guarantor further agrees that Payee may from time to time take, permit or suffer
to occur any Permitted Action, as defined herein, all without modifying,
reducing, waiving, releasing, impairing or otherwise affecting the obligations
of Guarantor, or Guarantor's respective heirs, successors or assigns, hereunder,
without giving notice to or obtaining the consent of Guarantor, or Guarantor's
respective heirs, successors or assigns, so long as any of such events do not
increase the amount due under the Note. As used herein the following shall
constitute "Permitted Actions": (a) any renewal, extension, acceleration,
substitution, consolidation, restatement or other modification of the Note; (b)
any taking or release of any additional collateral or a guaranty for payment of
the Obligation; (c) any delay or failure for any reason to exercise any right or
remedy Payee may have under the Note or Pledge and Security Agreement; (d) any
waiver of any Events of Default under the Note or Pledge and Security Agreement;
and (e) the granting of any other leniencies, waivers, extensions, and
indulgences under the Note or Pledge and Security Agreement as Payee may in good
xxxxx xxxx appropriate or desirable, or as may occur through inadvertence,
estoppel, in action or by operation of law. Guarantor further agrees that
Guarantor's liability hereunder will not be modified, reduced, waived, released,
impaired or otherwise affected by the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Debtor, or upon or as a result of the
appointment of a receiver, intervenor or conservator or trustee or similar
office for Debtor.
7. Any notice, demand or request by Payee to Guarantor shall be in writing,
and shall be deemed to have been duly given or made if (i) delivered personally
to Guarantor, (ii) mailed by certified mail or registered mail, postage prepaid,
return receipt requested and addressed to Guarantor's addresses above or to such
other address as Guarantor may substitute by written notice to Payee, or (iii)
by facsimile transmission, provided however, the receipt by any party other than
Guarantor shall not be deemed necessary in any event, for the effectiveness of
any notice or other communication. All notices shall be deemed to be given on
the date of actual receipt.
8. This instrument shall inure to the benefit of Payee and Payee's
successors and assigns, and shall bind Guarantor, and Guarantor's respective
heirs, executors, administrators, legal representatives, successors and assigns.
9. Guarantor agrees to pay reasonable attorneys' fees and expenses incurred
(prior to payment in full of this Guaranty) by Payee in enforcement of the Note
or the Pledge and Security Agreement, including this Guaranty.
10. This Guaranty shall be governed by, and construed and enforced in
accordance with, the laws of the State of Oklahoma, and shall not be subject to
any right of Guarantor to setoff the fair market value of the Collateral for the
Note against the Obligation of Guarantor.
11. The parties intend this writing to be a final expression of this
agreement of guaranty and a complete and exclusive statement of the terms of
this agreement of guaranty. No course of prior dealings between the parties, no
usage of the trade, and no parol or extrinsic evidence of any nature, shall be
used or be relevant to supplement or explain or modify any term used in this
agreement of guaranty.
Guarantor has executed this Guaranty as of the date first above written.
______________________________
XXXX XXXXX, An Individual
Exhibit D
INDEMNITY AGREEMENT
This Agreement is made as of the 24th day of March, 2005, between Xxxx
Xxxxx, an individual, ("Indemnitee") and Redwood Microcap Fund, Inc., a Colorado
corporation ("Company") with reference to the following circumstances:
A. The Indemnitee is an existing or former officer and/or member of the
Board of Directors of the Company;
B. The Company desires to indemnify or reimburse the Indemnitee with
respect to certain matters.
Now therefore, for good and valuable consideration, the receipt and
sufficiency whereof is acknowledged, the parties agree as follows:
1. Indemnification. The Company shall indemnify the Indemnitee to the
maximum extent permitted by Colorado law, the Company's Certificate of
Incorporation and Bylaws, it being the intention of the Company to afford the
Indemnitee the maximum protection legally possible at all times.
2. Advancement of Expenses. Upon written request of the Indemnitee, the
Company shall advance such monies for expenses of any action for which
Indemnitee may be entitled to indemnification as the Indemnitee may reasonably
request to enable the Indemnitee to protect reasonably his or her interests upon
receipt of an undertaking by Indemnitee, in form and substance satisfactory to
the Company to reimburse the Company for all monies so advanced in the event a
final determination is made by a competent court of law that the Indemnitee was
not, under the applicable law, entitled to recover any such expenses from the
Company.
3. Notice of Claim(s). The Indemnitee agrees to give the Company prompt
notice of each and every claim which might result in indemnification hereunder
and to cooperate fully with the Company in the defense of any such claim. The
Company shall be entitled to appoint counsel reasonable satisfactory to the
Indemnitee, to assume the defense of Indemnitee in any such action, and
Indemnitee agrees to cooperate fully in defending against each such claim. The
Indemnitee agrees not to enter into any settlement or other compromise
arrangement without the prior written consent of the Company as to any such
claim that may arise out of an indemnifiable event for which the Company is
obliged to bear the expenses thereof.
4. Subrogation. As to any expenses or payment incurred by the Company, the
Company shall be subrogated to the Indemnitee's rights against any third party
with respect to same.
5. Severability. If any section of this Agreement, or any part thereof, is
found to be of no legal effect by a final decision of a court of competent
jurisdiction, the remaining sections and any part or parts thereof, shall remain
in full force and effect.
6. Binding Effect. This Agreement shall be binding on the parties hereto,
their legal representatives, successors and assigns and shall supercede any
prior agreement covering the same subject matter.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with applicable federal law and the laws of the State of Colorado and
applicable federal law.
8. Notices. Any notices required or allowed to be given hereunder shall be
in writing and shall be effective upon receipt by the other party hereto.
9. Attorneys Fees. Indemnitee shall be entitled to recover from Company his
or her attorneys fees and expenses incurred in connection with any action to
enforce Indemnitee's rights under this Agreement, if Indemnitee is successful,
in whole or in part, in any such action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first shown above.
INDEMNITEE:
------------------------------
Xxxx Xxxxx
REDWOOD MICROCAP FUND, INC.
By:
--------------------------
