EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 25th day of September,
1997, by and among Children's Broadcasting Corporation, a Minnesota corporation
("Purchaser"), and Xxxxx X. Xxxxx, a resident of the State of Illinois
("Laken"), Xxxxxx X. Xxxxxx, a resident of the state of Illinois ("Xxxxxx"),
Xxxxxx Xxxxxx, a resident of the State of Illinois ("Xxxxxx"), and the
individuals or entities listed in Schedule A hereto (Xxxxxx, Xxxxxx and the
individuals listed in Schedule A hereinafter sometimes referred to as the
"Control Group," and Laken and the Control Group hereinafter sometimes
collectively referred to as "Seller" or individually as an "Individual Seller").
WHEREAS, Laken has represented that he is the owner of 420,000 shares (the
"Laken Shares") of Harmony Holdings, Inc., a Delaware corporation ("HHI"); and
WHEREAS, Laken has represented that he owns an option to purchase 200,000
shares of HHI at an exercise price of $1.50 per share (the "Laken Options"); and
WHEREAS, the Control Group represents that it owns an aggregate of 399,500
shares of HHI (the "Control Group Shares"); and
WHEREAS, Laken has offered to sell to Purchaser the Laken Shares and the
Laken Options, and the Control Group has offered to sell to Purchaser the
Control Group Shares, and Purchaser desires to accept the offers of Laken and
the Control Group, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. OWNERSHIP OF HHI SECURITIES.
1.1 LAKEN SECURITIES. Laken represents and warrants that he is the
owner of the following securities of HHI:
(a) the Laken Shares, consisting of 420,000 shares of HHI common
stock and
(b) the Laken Options consisting of an option issued by HHI to
purchase 200,000 shares of HHI common stock at an exercise price of
$1.50 per share the form of which options are attached hereto as
Exhibit X. Xxxxx
(Page 8 of 57 Pages)
shall execute an assignment of the Laken Options, together with option
exercise letters as requested by Purchaser.
Laken represents that his entire beneficial ownership and interest in the
securities of HHI is set forth in Amendment No. 2 to the Laken Committee's
Schedule 14A on file with the Securities and Exchange Commission (the "Schedule
14A").
1.2 CONTROL GROUP SHARES. The Control Group severally represents and
warrants that its members are the owners of 399,500 shares of common stock of
HHI as follows:
(a) Xxxxxx: 9,974 shares;
(b) Xxxxxx: 180,732 shares;
(c) Control Group members other than Xxxxxx and Xxxxxx: shares
as set forth in Schedule A.
Individual Sellers other than Laken severally represent and warrant that their
entire ownership and interest in HHI is as set forth in the Schedule 14A or
Schedule A to this Agreement.
2. SALE AND PURCHASE OF THE SHARES. Subject to the terms and
conditions hereof, each Individual Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase, the securities described in Sections 1.1 and 1.2.
2.1 LAKEN SHARES. The purchase price payable to Laken for the Laken
Shares shall be $3.15 per share, or an aggregate sum of $1,323,000.
2.2 LAKEN OPTIONS. The purchase price payable to Laken for the Laken
Options shall be $1.65 per option or right, or an aggregate of $330,000.
2.3 CONTROL GROUP SHARES. The purchase price for the Control Group
Shares shall be $2.70 per share, or an aggregate of $1,078,650.
The amounts to be paid pursuant to Sections 2.1, 2.2 and 2.3 are hereinafter
referred to as the "Purchase Price."
3. CLOSING. The closing of the purchase of the Laken Shares, the
Laken Options and the Control Group Shares shall take place as soon as
practicable following the wire transfer of the Purchase Price for the Shares to
Norwest Bank Minnesota, ABA #000000000, for Equity Securities Trading Co.,
Account #48565, to further credit Children's Broadcasting Corporation #127055.
Seller shall transmit the Shares to Equity Securities Trading Co., DTC #368, for
the account of Children's Broadcasting Corporation, Account #127055. Upon
receipt of the Purchase Price and the Shares, Seller and Purchaser shall
(Page 9 of 57 Pages)
have authorized the payment of the purchase price to Seller and the delivery of
the Shares to Purchaser, pursuant to the Letter of Instructions of even date
herewith.
4. REPRESENTATIONS AND WARRANTIES BY SELLERS. Each Individual
Seller represents and warrants that:
(a) he owns or has a beneficial interest in, and has good and
marketable title to the HHI securities to be sold to Purchaser hereby, and
in the case of Laken, the Laken Options, free and clear of all liens,
security interests and encumbrances, of any kind or nature;
(b) he has duly authorized, executed and delivered this Agreement,
and that the same is the valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms, and not in
violation of any agreement to which such Seller is a party;
(c) he has the right, power and authority to transfer, convey and
sell to Purchaser, at the Closing, or has the power to cause the transfer,
conveyance and sale to Purchaser at the Closing, the securities to be sold
by him as described in Sections 1.1 and 1.2 of this Agreement and, upon
consummation of this Agreement, Purchaser will acquire good and marketable
title to such securities, free and clear of all liens, security interests
or other covenants or agreements, other than encumbrances resulting from
actions of Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants that this Agreement has been duly authorized by all
necessary action on the part of the Purchaser and is a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms.
6. STANDSTILL AND RELEASE.
6.1 STANDSTILL. Each Individual Seller covenants and agrees that,
for a period of five years from the date of this Agreement, unless such shall
have been specifically invited in writing by the Boards of Directors, HHI or
Purchaser, neither Seller nor any affiliates of Seller, or their agents or
representatives will in any manner, directly or indirectly, (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect, or cause or participate in,
(i) any acquisition of any securities (or beneficial ownership thereof) or
assets of HHI or Purchaser or any of their subsidiaries; (ii) any tender or
exchange offer, merger or other business combination involving HHI or Purchaser
or any of their subsidiaries; (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to HHI
or Purchaser or any of their subsidiaries (iv) any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote any voting securities of HHI or Purchaser or any
of their subsidiaries; or (v) any
(Page 10 of 57 Pages)
communication with any employee of HHI or Purchaser or any of their subsidiaries
(except that this restriction shall not apply to communications to Xxxxxx
Xxxxxxxx on matters unrelated to HHI, its business, employees or independent
contractors, or to Purchaser); (b) form, join or in any way participate in a
"group" (as defined under the 1934 Act); (c) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of Directors
or policies of HHI or Purchaser or any of their subsidiaries; (d) take any
action which might force HHI or Purchaser or any of their subsidiaries to make a
public announcement regarding any of the types of matters set forth in (a)
above; or (e) enter into any discussions or arrangements with any third party
with respect to any of the foregoing. Seller also agrees during such period not
to request HHI or Purchaser or any of their subsidiaries (or their directors,
officers, employees or agents), directly or indirectly, to amend or waive any
provision of this paragraph (including this sentence). Each Individual Seller
covenants and agrees that he will not encourage any other shareholder of HHI to
bring actions or assert claims against HHI or Purchaser. The provisions of this
Section 6.1 shall survive the closing of the transactions contemplated by this
Agreement.
6.2 RELEASE BY SELLER. For valuable consideration, receipt of which
is hereby acknowledged, Seller jointly and severally, releases and will release
HHI, its shareholders, officers and directors, and Purchaser, and its
shareholders, officers and directors, and the respective agents, independent
contractors and representatives of the same (collectively, the "Seller Released
Parties") from and against any and all claims, costs or causes of action which
Seller or any Individual Seller has or may have against the Seller Released
Parties, known or unknown, now existing or hereafter arising or relating to this
Agreement, or the ownership or acquisition of the securities of HHI, except such
cause of action or claim as may arise subsequent to the date hereof relating to
the enforcement or performance of this Agreement.
6.3 RELEASE BY PURCHASER. For valuable consideration, receipt of
which is hereby acknowledged, Purchaser hereby releases and will release Seller
and each Individual Seller and their respective agents, independent contractors
and personal representatives (collectively, the "Purchaser Released Parties")
from and against any and all claims, costs or causes of action which Purchaser
may have against Seller or any Individual Seller, known or unknown, now existing
or hereafter arising or relating to this Agreement, or the ownership or
acquisition of the Shares or the Laken Options, except such cause of action or
claim as may arise subsequent to the date hereof relating to the enforcement or
performance of this Agreement.
7. MISCELLANEOUS.
7.1 CHANGES, WAIVERS, ETC. Neither this Agreement nor any provision
hereof may be changed, amended, waived, discharged or terminated orally, but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
(Page 11 of 57 Pages)
7.2 NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or certified mail:
(a) if to Seller, to Xxxxxx X. Xxxxxx, c/x Xxxxxx & Capitel, Ltd.,
0000 Xxxx Xxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, XX 00000;
(b) if to Purchaser, to Xxxxxxxxxxx X. Xxxx, at 000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, with a copy to Xxxxx X. Xxxxx, 000
Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, or at such other address
as Purchaser may specify by written notice to Seller;
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, or, if sent by mail, when received.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations, warranties, covenants and agreements contained herein shall
survive the execution and delivery of this Agreement, any investigation at any
time made by Purchaser on their behalf, and the sale and purchase of the Shares
and payment therefor.
7.4 LAW TO GOVERN; JURISDICTION. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of Minnesota
without regard to principles of conflict of laws. The Seller hereby consents to
jurisdiction in the State of Minnesota.
7.5 REFERENCES. Unless the content indicates otherwise, all
references in the singular shall include the plural, and all references in the
masculine or neuter shall include the feminine.
7.6 BINDING EFFECT. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns.
7.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts all of which, taken together, shall constitute one and the same
Agreement, whether or not all parties hereto have executed the same instrument.
7.8 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
(Page 12 of 57 Pages)
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be duly executed as of the date first written above.
CHILDREN'S BROADCASTING CORPORATION
By /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxx
Chief Operating Officer
INDIVIDUAL SELLERS
/s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx Xxxxx, M.D.
---------------------------------------
Xxxx Xxxxx, M.D.
/s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxxxxx
---------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx
---------------------------------------
Xxxxxx Xxxxxxx
(Page 13 of 57 Pages)
SCHEDULE A
CONTROL GROUP
NUMBER OF HHI COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED
------------------------ ------------------
Xxxxxx Xxxxxxx 15,374
Xxxx Xxxxxxxx 9,000
Xxxx Xxxxx, M.D. 47,500
Xxxxxxx Xxxxxx 86,920
Xxxxxx Xxxxx 50,000
(Page 14 of 57 Pages)
