STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is entered into as of
the 21st day of December 1998, by and between Andaman Investments Inc., a
British Columbia, Canada corporation, and/or its Nominees, and/or its Assigns
(the "Purchaser"), Alta California Broadcasting, Inc. ("Alta"), a wholly-owned
subsidiary of Redwood Broadcasting, Inc., a Colorado corporation, (the
"Company") and the shareholders of the Company listed on the signature pages
hereto (each, individually, a Seller, and collectively, the "Sellers").
(Capitalized terms not otherwise defined herein shall have the meaning set
forth on Exhibit A hereto.)
WITNESSETH:
WHEREAS, the Sellers own a majority of the outstanding shares of Common
stock, par value $0.004 par share (the "Common Stock") of the Company;
WHEREAS, Xxxx X. Power ("Power") and J. Xxxxxx Xxxxxx ("Xxxxxx") are
Officers and Directors for the Company;
WHEREAS, the Purchaser wishes to acquire from the Sellers, and the
Sellers wish to sell to the Purchaser, 690,000 shares of the Common Stock (the
"Purchase");
WHEREAS, immediately prior to the closing of the Purchase, the Company
will contribute all of its assets (other than the Retained Assets as defined
below) and all of its liabilities to Alta and distribute all of the shares of
Alta to a trust (the "Spin-Off Trust") for the benefit of the shareholders of
the Company pro-rata (such transaction, the "Spin-Off");
WHEREAS, in order to induce the Purchaser to enter into this Agreement,
certain of the Sellers are simultaneously entering into an Indemnity Agreement
with the Purchaser;
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
1. Purchase and Sale of Common Stock.
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1.1 Subject to the terms and conditions of this Agreement, the Sellers
hereby agree to sell, assign, transfer, and convey to the Purchaser, and the
Purchaser hereby agrees to purchase from the Sellers, at the Closing (as
defined in Section 1.3), an aggregate of 690,000 shares of the Common Stock of
the Company (the "Shares") as set forth on Exhibit B hereto (which Exhibit
lists the number of Shares being sold by each Seller). The Sellers shall
deliver the Shares to Corporate Stock Transfer, Inc., the Company's Registrar
and Stock Transfer Company, as escrow agent ("Escrow Agent"). Upon delivery
to the Escrow Agent, the stock certificates representing the Shares shall be
duly endorsed in blank or accompanied by stock powers duly endorsed in blank,
in each case in proper form for transfer, and with all stock transfer and any
other required documentary stamps affixed thereto.
1.2 CONSIDERATION. As consideration for the Shares being sold to
the Purchaser, the Purchaser agrees to pay to Escrow Agent, at the Closing,
the total sum of Sixty Two Thousand One Hundred Dollars (US$ 62,100.00),
pursuant to an escrow letter agreement to be reasonably agreed upon by Sellers
and Purchaser.
1.3 CLOSING. The Exchange will be consummated (the "Closing") at the
offices of the Company at 9:00 a.m. on December 24th, 1998 or, if all of
conditions in Section 7 have not been satisfied or waived at that time, on the
first business day after satisfaction or waiver of all such conditions (the
"Closing Date"), but in no event, later than December 31, 1998, unless this
Agreement has been earlier terminated in accordance with its terms.
2. Representations, Warranties and Agreements of the Sellers.
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Each Seller hereby represents and warrants to the Purchaser, severally
and not jointly, that:
2.1 AUTHORITY; APPROVAL. Such Seller 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 Seller, if not a natural
person, and the consummation by such Seller 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 Seller 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 Seller and, assuming the due authorization, execution and delivery
thereof by Purchaser, constitutes the legal, valid and binding obligations of
such Seller, enforceable against such Seller in accordance with its terms,
except that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally.
2.2 NO CONFLICT. The execution and delivery of this Agreement by such
Seller and any other transaction contemplated hereby, do not, and the
performance of this Agreement by such Seller 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 Seller,
if not a natural person, (ii) conflict with or violate any Laws applicable to
such Seller 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
Seller pursuant to any contract, agreement or other instrument to which such
Seller is a party or by which such Seller 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
Seller's ability to perform its obligations hereunder.
2.3 NO APPROVALS. The execution and delivery of this Agreement by such
Seller does not, and the performance of this Agreement by such Seller 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 ("Governmental Entities"), other than any such consents, approvals,
authorizations or permits that have been obtained or such filings or
notifications that have been made.
2.4 ABSENCE OF LITIGATION. There is no Litigation pending or, to the
knowledge and belief of such Seller, threatened against, affecting or
involving such Seller which seeks to prevent or challenge the transactions
contemplated hereby, or which seeks to challenge the record ownership of the
Common Stock by such Seller, and such Seller is not subject to any Orders,
except for Orders that do not prevent or challenge the transactions
contemplated hereby and do not challenge the record ownership of the Common
Stock by such Seller.
2.5 ACCURACY OF INFORMATION: FULL DISCLOSURE. Neither this Agreement,
nor any certificate, exhibit, schedule or other instrument or list or
information, in each case relating to such Seller and furnished by or on
behalf of such Seller pursuant to this Agreement, or any of the documents
relating to such Seller and furnished by or on behalf of such Seller to
Purchaser, contains, or will contain, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be stated
therein or necessary in order to make the statements contained herein or
therein, in the light of the circumstances in which they were made, not
misleading.
2.6 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Seller, individually or as part of a group.
2.7 TITLE. Seller has good and marketable title to the Common Stock
proposed to be sold by such Seller hereunder and full right, power and
authority to sell, assign, transfer and deliver such Company Common Stock
hereunder, free and clear of all Encumbrances (other than those imposed by the
Securities Act of 1933 and the securities or Blue Sky laws of certain
jurisdictions); and upon delivery of and payment for such Common Stock
hereunder, the Purchaser will acquire good and marketable title thereto, free
and clear of all Encumbrances.
3. Representations, Warranties and Agreements of Alta, Power and Xxxxxx.
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Alta, Power and Xxxxxx represent and warrant to the Purchaser that:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the Company
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of each of their respective jurisdictions of
incorporation or organization, as the case may be, has all requisite corporate
power and authority to own, lease and operate its respective properties and to
carry on its respective business as is now being conducted.
3.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has heretofore
furnished to the Purchaser complete and correct copies of the articles of
incorporation ("Articles of Incorporation") or bylaws ("Bylaws") or the
equivalent organizational documents, in each case as amended or restated
(collectively, "Organizational Documents") of the Company, which are in full
force and effect on the date hereof. The Company is not in violation of any
of the provisions of any of its Organizational Documents.
3.3 CAPITALIZATION; TITLE TO SHARES.
3.3.1 AUTHORIZED CAPITAL STOCK. The authorized capital stock
of the Company consists two million five hundred thousand (2,500,000) shares
of preferred stock, par value $.04 per share, of which none are outstanding,
and twelve million five hundred thousand (12,500,000) shares of common stock,
$0.004 par value, of which, as of the date hereof one million four hundred ten
thousand (1,410,000) shares of common stock are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and non assessable and
not subject to preemptive rights created by statute, the Company's
Organizational Documents or any agreement to which the Company is a party or
is bound. Each of the outstanding shares of capital stock of, or other equity
interests in, each of the Company and its subsidiaries is duly authorized and
validly issued, and, in the case of shares of capital stock, fully paid and
non assessable, and such shares or other equity interests owned by the Company
or another subsidiary of the Company are owned free and clear of all
Encumbrances.
3.3.2 NO OPTIONS, ETC. Except as set forth in note 8 to the
Company's financial statements for the fiscal year ended March 31, 1998, and
except for the obligations pursuant to the agreement dated January 31, 1997 by
and between Merit Broadcasting, Inc. and Power Curve, Inc., there are no
options, warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which the Company is a party
relating to the issued or unissued capital stock of, or other equity interests
in, the Company, or obligating the Company to grant, issue or sell any shares
of the capital stock of, or other equity interests in, the Company, by sale,
lease, license or otherwise.
3.4 AUTHORITY; APPROVAL. The Company has all requisite corporate power
and authority to consummate the Spin-Off. The consummation by the Company of
the Spin-Off has been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
consummate the Spin-Off.
3.5 NO CONFLICT. To the knowledge and belief of Alta, Power and Xxxxxx,
the consummation of the Spin-Off and any other transaction contemplated hereby
do not and will not (i) conflict with or violate the Organizational Documents
of the Company or any of its subsidiaries, (ii) conflict with or violate any
Laws applicable to the Company or any of its subsidiaries or by which any of
their respective properties is 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 the Company
or any of its subsidiaries pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, instrument, obligation
(whether written or oral) ("Contract") to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties is bound or affected.
3.6 NO APPROVALS NECESSARY. Except for approvals from the Federal
Communications Commission, the Spin-Off and performance of this Agreement will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entities, other than (i) any such
consents, approvals, authorizations or permits that have been obtained or such
filings or notifications that have been made, (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not, either individually or in the aggregate, prevent
or delay consummation of the Spin-Off or the other transactions contemplated
in this Agreement.
3.7 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed with the
Securities and Exchange Commission ("SEC") all reports, forms, schedules and
statements and other documents required to be filed by it (the "SEC
Documents"). As of their respective filing dates, (i) the SEC Documents
complied in all material respects with the requirements of the Securities Act,
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Documents, and (ii) none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements included in the SEC
Documents complied, as of their respective filing dates as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present, in all material respects,
the consolidated financial position of the Company and its subsidiaries as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
3.8 ABSENCE OF LITIGATION. To the knowledge and belief of Alta, Power
and Xxxxxx, there is no Litigation pending or threatened against, directly
affecting or directly involving the Company or any of its subsidiaries or any
properties or rights of the Company or any of its subsidiaries, or which seek
to prevent or challenge the Spin-Off or the other transactions contemplated
hereby, or which seek to challenge the record ownership of the Shares by the
Sellers, and neither the Company nor any of its subsidiaries is subject to any
continuing Orders, including, without limitation, cease-and-desist or other
orders.
3.9 TAXES.
3.9.1 Except as disclosed on Exhibit C, the Company and each of
its subsidiaries has (i) filed in accordance with all applicable Laws (without
having to pay penalties) all Returns required to be filed by it, (ii) paid all
Taxes shown to have become due pursuant to such returns, and (iii) paid all
Taxes (other than those being contested in good faith) for which a notice of,
or assessment or demand for, payment has been received or which are otherwise
due and payable. All returns filed by the Company and each of its
subsidiaries with respect to Taxes are true, complete and correct, in all
material respects. The accruals for Taxes set forth on the balance sheets as
of March 31, 1998 and September 30, 1998 fully cover all known or contingent
liabilities for Taxes through the date thereof.
3.9.2 To the knowledge and belief of Alta, Power and Xxxxxx,
there is no Litigation pending or proposed with respect to any liability for
Tax that relates to the Company or any of its subsidiaries. All amounts
required to be collected or withheld by the Company or any of its subsidiaries
with respect to Taxes have been duly collected or withheld and any such
amounts that are required to be remitted to any taxing authority have been
duly remitted; no extension of time within which to file any Return that
relates to the Company or any of its subsidiaries has been requested, which
Return has not since been filed; there are no waivers or extensions of any
applicable statute of limitations for the assessment or collection of Taxes
with respect to any Return that relates to the Company or any of its
subsidiaries which remain in effect; there are no tax rulings, requests for
rulings, or closing agreements to which the Company or any of its subsidiaries
is a party or is subject which could affect its liability for Taxes for any
period after the Closing. No power of attorney has been granted by the
Company or any of its subsidiaries with respect to any matter relating to
Taxes of the Company or any of its subsidiaries which is currently in force;
the Company and each of its subsidiaries have made all payments of estimated
Taxes required to be made under Section 6655 of the Code and any comparable
provisions of state, local or foreign law. The Company was not included and
is not includible in any consolidated, combined or unitary Return with any
other corporation. The Company is not and has not been a party to any tax
sharing agreement (including any agreement or arrangement regarding Taxes with
respect to any entity that has been sold or disposed by the Company or any of
its subsidiaries). To the knowledge and belief of Alta, Power and Xxxxxx,
there does not exist any fact or condition which, if known to any taxing
authority having jurisdiction, would likely result in the issuance of a notice
of proposed deficiency or similar notice of intention to assess Taxes against
the Company or any of its subsidiaries, and no issue has arisen in any
examination of any of the Company or any of its subsidiaries by any taxing
authority that if raised with respect to any other period not so examined
would result in a deficiency for such other period, if upheld.
3.9.3 For purposes of this Section 3.9, references to the
Company and each of its subsidiaries shall include former subsidiaries of the
Company for the periods during which the Company owned any such corporations,
directly or indirectly.
3.10 ACCURACY OF INFORMATION; FULL DISCLOSURE. With respect to any
documents furnished by the Sellers or the Company to Purchaser in connection
with the transactions contemplated hereby, the copies furnished by the
Purchasers are true, correct and complete in all material respects. Neither
this Agreement, nor any certificate, exhibit, schedule or other instrument or
list or information furnished by the Company pursuant to this Agreement, or
any of the documents furnished to Purchaser by the Company or Sellers or their
representatives, contains, or will contain, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be stated
therein or necessary in order to make the statements contained herein or
therein, in the light of the circumstances in which they were made, not
misleading. To the knowledge and belief of Alta, Power and Xxxxxx, there is
no fact that has not been disclosed to Purchaser that has or could reasonably
be expected to have a Company Material Adverse Effect, or that could be
expected to impair the ability of the Sellers to perform this Agreement and
the transactions contemplated hereby.
3.11 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
3.12 COMPLIANCE WITH LAWS. To the knowledge and belief of Alta, Power
and Xxxxxx, the Company and its subsidiaries are in compliance in all material
respects with all Laws in all jurisdictions in which the Company or any of its
subsidiaries is presently doing business.
3.13 NO LIABILITIES FOLLOWING SPIN-OFF. On the Closing Date, except
for any liability for Taxes as a result of the distribution in the Spin-Off,
the Company shall not have any liabilities or obligations of any nature,
actual or contingent, nor, to the knowledge and belief of Alta, Power and
Xxxxxx, shall there be any facts which could form the basis for any liability
or obligation.
4. Representations and Warranties of Purchaser.
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Purchaser hereby represents and warrants to the Sellers that:
4.1 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
province of British Columbia, and has all requisite corporate power and
authority to own, lease and operate its respective properties and to carry on
its respective business as is now being conducted.
4.2 AUTHORITY. Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary corporate action and no other corporate proceedings on the part
of Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery thereof by the Sellers, constitutes the legal, valid and binding
obligations of Purchaser enforceable against Purchaser in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally.
4.3 NO CONFLICT. The execution and delivery of this Agreement by
Purchaser do not, and the performance of this Agreement by Purchaser will not,
(i) conflict with or violate the Purchaser's Organizational Documents, or (ii)
conflict with or violate any Laws applicable to Purchaser or by which any of
its properties is bound or affected.
5. Covenants.
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5.1 Sellers shall not (and shall cause the Company not to) take any
action, or omit to take any action, the effect of which would reasonably be
expected to cause any of the representations and warranties contained in
Section 2 or Section 3 of this Agreement to be inaccurate as of the Closing or
any time prior thereto, except as to representations and warranties made as of
a specific date, authorize any of the foregoing, or enter into any Contract to
do any of the foregoing.
5.2 ACCESS AND INFORMATION. From the date hereof until the Closing,
Sellers shall, and shall cause the Company, its subsidiaries, officers,
directors, employees and agents, to, (i) afford to the Purchaser and its
officers, directors, employees, accountants, consultants, legal counsel,
advisors, agents and other representatives (collectively, the "Purchaser
Representatives") reasonable access to the books and records and contracts of
the Company and its subsidiaries and (ii) furnish promptly to the Purchaser
and the Purchaser Representatives all information concerning the business,
properties, contracts, records and personnel of the Company and its
subsidiaries (including, without limitation, financial, operating, technical
and other data and information) as may be reasonably requested, from time to
time, by the Purchaser or any Purchaser Representative.
5.3 BEST EFFORTS; CONSENTS; FILINGS.
5.3.1 Subject to the terms and conditions of this Agreement, the
Purchaser and the Sellers shall use their reasonable best efforts to (i) take
promptly, or cause to be taken, all appropriate action, and to do promptly, or
cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement; (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by the Purchaser, the Company or the Sellers
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated herein, including,
without limitation, the Spin-Off; (iii) make all necessary filings, and
thereafter make any other required submissions, notifications and filings with
respect to this Agreement and the Spin-Off, provided, however, that the
Purchaser and the Sellers shall cooperate with each other in connection with
the making of all such filings, including, without limitation, providing
copies of all such documents to the non-filing party and its advisors prior to
any filing and, if requested, to accept all reasonable additions, deletions or
changes suggested by the non-filing party in connection therewith; (iv)
satisfy the requirements of any Law; and (v) remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto all benefits contemplated by this Agreement.
5.3.2 Each of the Sellers and the Purchaser shall give (or shall
cause their respective subsidiaries to give) any notices to third parties, and
use, and cause their respective subsidiaries to use, its reasonable best
efforts to obtain any third party consents (i) necessary, proper or advisable
to consummate the transactions contemplated in this Agreement, or (ii)
otherwise required in connection with the consummation of the transactions
contemplated herein.
5.3.3 Each of the parties hereto shall provide all reasonable
assistance to, and shall cooperate with, each other to bring about the
consummation of the Purchase in accordance with the terms and conditions of
this Agreement.
5.4 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the others of (i) the occurrence or failure to occur of any event,
which occurrence or failure would be likely to cause any representation or
warranty or on its part contained in this Agreement to be untrue or inaccurate
at any time from the date hereof to the Closing, and (ii) any material failure
of such party, or any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
5.5 ASSETS TO SATISFY TAX LIABILITIES. Sellers shall cause the Company
to retain certain assets (the "Retained Assets") that will not be distributed
in the Spin-Off, including (i) true, correct and legible copies of the
Company's shareholder, corporate, financial, tax and other files, reports,
correspondence, books, records and documents, so that the Company shall
continue to be able to file its SEC reports, prepare audited financial
statements, respond to claims relating to the period preceding the Closing,
file tax returns and comply with Laws, (ii) sufficient amounts represented by
a recourse note ("Note") receivable bearing 7% interest, compounded annually
from Four Rivers Broadcasting, Inc. ("Four Rivers") in form and substance
reasonably acceptable to Purchaser (which note shall be unconditionally
guaranteed by Alta pursuant to a guarantee which shall be in form and
substance reasonably acceptable to Purchaser) to satisfy any liabilities for
Taxes owing by the Company arising as a result of the Spin-Off. Alta shall
purchase the Note upon the earlier of (i) the date of filing by the Company of
its Return for federal income taxes covering the taxable period during which
the Spin-Off occurred, and (ii) upon the sale (or series of related sales) by
Four Rivers of an asset (or related assets) for aggregate proceeds amounting
to $400,000 or more, at a purchase price equal to the aggregate amount of any
and all state and/or federal income taxes payable by the Company.
5.6 COOPERATION WITH RESPECT TO PRESS RELEASES. Sellers and Purchaser
shall consult each other and reasonably cooperate in connection with any press
releases discussing this Agreement or the transactions consummated hereunder.
5.7 MERGER AGREEMENT. Following the Closing, the Company shall enter
into a merger agreement with Interactive Radio Group, Inc no later than
January 31, 1999. Whereby such merger agreement shall be subject to the
approval of the Interactive Radio Group, Inc. shareholders and the
effectiveness of an S-4 filing with the Securities and Exchange Commission in
order to consummate such merger.
6. Indemnification.
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6.1 INDEMNIFICATION OBLIGATIONS OF EACH SELLER. Each Seller shall
indemnify and hold harmless Purchaser, severally and not jointly any of its
subsidiaries and affiliates and their respective officers, directors,
employees, agents, representatives, advisors and stockholders (collectively,
the "Indemnified Parties") from and against any losses, claims, obligations,
liabilities, dimunitions in value, expenses (including, without limitation,
fees and disbursements of counsel) or other damages (collectively, "Losses")
caused by or arising out of (i) the failure in whole or in part of such Seller
to satisfy its obligations pursuant to this Agreement; or (ii) any breach by
such Seller of any representation or warranty of such Seller in Section 2 of
this Agreement.
6.2 INDEMNIFICATION OBLIGATIONS OF ALTA, POWER, AND XXXXXX. Xxxx (in
consideration of its status as the beneficiary of the transfer of assets by
the Company to Alta contemplated pursuant to the Spin-Off), Power and Xxxxxx
(in consideration of their status as officers and directors of Alta and the
Company), (collectively, the "Indemnifying Parties"), jointly and severally,
hereby agree to and shall unconditionally indemnify, defend and hold harmless
the Indemnified Parties from and against: (i) any Losses of the Company to
the extent that such Losses are attributable to, relate to, arise out of or
accrued during any and all periods of time up to and including the Closing
(the "Pre-Closing Period"), including, without limitation, Losses caused by or
arising out of (x) any claim(s) of any kind or nature whatsoever by any
shareholder or debtholder of the Company that any stockholder, director or
employee of the Company breached any duties (fiduciary or otherwise) to any
stockholder or debtholder in connection with any transaction of the Company
whatsoever regardless of nature, including but not limited to, the Spin-Off
and the Purchase, and (y) any claim for any Taxes owing by the Company
attributable to operations, transactions or events occurring during the Pre-
Closing Period, including, without limitation, Taxes owing in connection with
the Spin-Off; and (z) any claims relating to any violations (or alleged
violations) of any laws, regulations or government orders or permits; (ii)
Losses related to or arising out of the failure in whole or in part of the
Indemnifying Parties to satisfy any obligations pursuant to this Agreement;
(iii) Losses attributable to or arising out of any breach of the
representations and warranties made by the Indemnifying Parties herein; (iv)
any Losses relating to or arising out of any violations (or alleged
violations) of any Law in connection with any distribution of the shares of
Alta by the Spin-Off Trust; and (vi) any Losses relating to or arising out of
claims brought against the Company as a result of any actions, transactions or
omissions to act by Alta, the Spin-Off Trust or their affiliates after the
closing of the Purchase. Notwithstanding the foregoing, the Indemnified
Parties shall not be entitled to indemnification from the Indemnifying Parties
under this Section 6.2 until the aggregate amount of all Losses pursuant to
Section 6.2 against which all Indemnified Parties are so entitled to
indemnification exceeds $20,000 and then only to the extent in excess of
$20,000 and the aggregate amount that may be recovered from the Indemnifying
Parties pursuant to this Section 6.2 shall not exceed $2,000,000; provided,
however, the foregoing shall not limit any of the Indemnified Parties' rights
to indemnification pursuant to Section 6.1.
6.3 CLAIMS FOR INDEMNIFICATION.
6.3.1 TIME FOR ASSERTING CLAIMS. Claims for indemnification
hereunder (other than claims relating to (i) Taxes or claims arising out of or
related to the Spin-Off, (ii) claims with respect to the representations and
warranties contained in Section 2 hereof or (iii) claims related to Contracts
entered into by the Company prior to the Closing) may only be asserted during
the period beginning on the date hereof and ending on the second anniversary
of the Closing. Claims for indemnification related to Taxes, claims arising
out of or related to the Spin-Off and claims related to Contracts entered into
by the Company prior to the Closing may only be asserted during the period
beginning on the date hereof and ending on the date which is 60 days after the
expiration of the relevant statute of limitations with respect to the
underlying claim (i.e., the underlying liability for Taxes or liability or
claim related to the Spin-Off which gave rise to the claim for
indemnification). Claims with respect to the representations and warranties
contained in Section 2 hereof may be brought at any time following the
Closing.
6.3.2 ALLOCATION OF LIABILITIES. The Indemnifying Parties
pursuant to Section 6.2 may agree among themselves as to the allocation among
them of any liability for indemnification pursuant hereto, but no such
agreement shall affect the joint and several liability of any of them to any
Indemnified Party.
6.3.3 PROCEDURE.
6.3.3.1 Promptly after receipt by an "Indemnified Party of
notice of the commencement of any action or claim, such Indemnified Party
will, if a claim in respect of such action is to be made against a party
providing indemnification pursuant to this Agreement (an "Indemnifying
Party"), notify the Indemnifying Parties in writing of the commencement
thereof; but the omission so to notify the Indemnifying Parties will not
relieve it from any liability which it may have to any Indemnified Party
except to the extent the Indemnified Parties are prejudiced as a proximate
result of such failure.
6.3.3.2 In case any such action is brought against any
Indemnified Party, and such Indemnified Party seeks or intends to seek
indemnity from the Indemnifying Parties, the Indemnifying Parties will be
entitled to participate in the defense of such action, and, if the
Indemnifying Party confirms to the Indemnified Party in writing that the
Indemnifying Party is liable for all Losses arising out of such action and
provides reasonable assurance of its ability to satisfy such Losses, it may,
to the extent that it wishes, jointly with all other Indemnifying Parties
similarly notified, assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided, however, if the Indemnified
Party shall have reasonably concluded that there is likely to be a conflict
between the positions of the Indemnifying Parties and the Indemnified Party in
conducting the defense of any such action or that there are likely to be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the Indemnifying Parties, the
Indemnified Party or Parties shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such Indemnified Party or Parties.
6.3.3.3 Upon receipt of notice from the Indemnifying Parties
to such Indemnified Party of its election so to assume the defense of such
action and approval by the Indemnified Party of counsel, the Indemnifying
Parties will not be liable to such Indemnified Party under this provision for
any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof unless (i) the Indemnified Party shall
have employed such counsel in connection with the assumption of legal defenses
in accordance with the last sentence of Section 6.3.3.2 or (ii) the
Indemnifying Parties shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a
reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
Indemnifying Parties.
6.3.3.4 The Indemnifying Parties shall not settle any such
action (except under circumstances involving no payment by or injunction or
other adverse consequences against the Indemnified Party and where the person
bringing such action provides a general release in favor of the Indemnified
Party) without the consent of the Indemnified Party, which shall not be
unreasonably withheld.
6.4 INDEMNIFICATION BY THE COMPANY. Following the Closing, the Company
and Xxx Xxxxxxxx ("Conquest") shall indemnify, defend and hold harmless the
Sellers, any of their subsidiaries and affiliates and their respective
officers, directors, employees, agents, representatives, advisors and
stockholders (collectively, the "Seller Indemnified Parties") from and against
any Losses to the extent that such Losses are attributable to activities of
the Company following the Closing; provided, no claims may be made against
Conquest pursuant to this Section 6.4 after the date which is two years
following the date of the Closing.
7. Closing Conditions.
------------------
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS AGREEMENT. The
respective obligations of each party to effect the Purchase and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable law:
7.1.1 NO ORDER. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Order which is in effect and which restricts, prevents
or prohibits consummation of the Purchase or any other transactions
contemplated in this Agreement.
7.1.2 GOVERNMENT CONSENTS. All consents, waivers, approvals and
authorizations required to be obtained, and all filings or notices required to
be made, by the Purchaser, the Sellers and the Company prior to consummation
of the transactions contemplated in this Agreement shall have been obtained
from and made with all required Governmental Entities, and all requirements of
any Law.
7.1.3 SECURITIES ACT AND "BLUE SKY" LAW COMPLIANCE. The offer,
sale, and delivery of the Shares under the circumstances contemplated by this
Agreement shall constitute exempted transactions under the Securities Act and
under any relevant "blue sky" laws, and registration of such shares under the
Securities Act and such "blue sky" laws shall not be required in connection
with any such offer, sale, or delivery of such shares.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to effect the Purchase and the other transactions
contemplated herein are also subject to the following conditions:
7.2.1 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of each of the Sellers contained in this
Agreement shall be true and correct in all material respects, when made and as
of the Closing Date as though made on and as of the Closing Date, except that
those representations and warranties which address matters only as of a
particular date shall remain true and correct in all material respects as of
such date. The Purchaser shall have received a certificate from each Seller
(relating to each such Seller, respectively), as of the Closing Date, to such
effect.
7.2.2 AGREEMENTS AND COVENANTS. Each of the Sellers shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. The Purchaser shall have received a certificate
from each Seller (relating to each such Seller, respectively), as of the
Closing Date, to that effect.
7.2.3 NO CHALLENGE. There shall not be pending or overtly
threatened any judicial or administrative action, proceeding or investigation
by any Governmental Entity (i) challenging or seeking damages in connection
with the Purchase, (ii) seeking to restrain or prohibit the consummation of
the Purchase or the Spin-Off.
7.2.4 RESIGNATIONS. All directors of the Company shall have
resigned at or prior to the Closing as directors and members of all committees
of the Board of Directors of the Company in writing effective immediately
after the Closing, and Sellers shall have caused Xxx Xxxxxxxx and Xxxx
Xxxxxxxxxx to be appointed as the sole directors of the Company. All officers
of the Company shall have resigned as officers of the Company at or prior to
the Closing, in writing effective immediately after the Closing subject to
acceptance by the Purchaser.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligation
of the Sellers to effect the Purchase and the other transactions contemplated
in this Agreement is also subject to the following conditions:
7.3.1 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects when made and as of the
Closing Date, as though made on and as of the Closing Date, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects as of such date.
The Sellers shall have received a certificate of an executive officer of the
Purchaser to such effect.
7.3.2 AGREEMENTS AND COVENANTS. The Purchaser shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. The Sellers shall have received a certificate
of an executive officer of the Purchaser to that effect.
7.3.3 NO CHALLENGE. There shall not be pending or threatened
any action, proceeding or investigation by any Governmental Entity challenging
or seeking damages in connection with the Purchase.
8. Termination.
-----------
8.1 This Agreement may be terminated at any time prior to the Closing
Date:
8.1.1 by mutual consent of the Purchaser and the Sellers;
8.1.2 by the Purchaser, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Sellers set
forth in this Agreement, or if any representation or warranty of the Sellers
shall have become untrue, in either case such that the conditions set forth in
Section 7.2.1 or Section 7.2.2 would not be satisfied and in either case not
less than five business days after notice of such breach by the Purchaser to
the Sellers;
8.1.3 by the Sellers, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Purchaser
set forth in this Agreement, or if any representation or warranty of the
Purchaser shall have become untrue, in either case such that the conditions
set forth in Section 7.3.1 or Section 7.3.2 would not be satisfied and in
either case not less than five business days after notice of such breach by
the Sellers to the Purchaser; or
8.1.4 by either the Purchaser or the Sellers, if there shall be
any final, non-appealable Order imposed by a court of competent jurisdiction
preventing the consummation of the Purchase.
8.2 EFFECT OF TERMINATION. Except as otherwise provided herein, in
the event of the termination of this Agreement pursuant to Section 8.1.1,
8.1.4 or 8.1.5, this Agreement shall forthwith become void, there shall be no
liability on the part of the Purchaser or the Sellers or any of their
respective officers or directors to the other and all rights and obligations
of any party hereto shall cease.
9. General Provisions.
------------------
9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and covenants of each party hereto shall survive
the Closing.
9.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission
(provided that a confirmation copy is sent by another approved means) to the
telecopier number specified below:
(a) If to Seller: Alta California Broadcasting, Inc.
00 Xxxxxxx Xxxxxx, Xxxxx #00
Post Office Box 3463
Carefree, Arizona 85377
(b) If to Purchaser: Andaman Investments Inc.
c/o Xxxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX, Xxxxxx X0X 0X0
(c) With a Copy to: Redwood Broadcasting, Inc.
0000 Xxxx Xxxx Xxxx., Xxxxx X-000
Xxxxxxxxxx, Xxxxxxx 00000
9.3. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.4 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
9.5 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
hereto, and the Indemnity Agreement, constitute the entire agreement of the
parties and supersede all prior agreements and undertakings, both written and
oral, between the parties, or any of them, with respect to the subject matter
hereof.
9.6 AMENDMENT. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors or
representatives at any time prior to the Closing Date. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
9.7 ASSIGNMENT. This Agreement shall not be assigned by any party
hereto, except that the Purchaser may assign its rights and obligations
hereunder to any party.
9.8 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
9.10 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Arizona without regard to rules
respecting conflicts of law.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
9.12 EXPENSES. Each party hereto shall bear its own expenses in
connection with the Purchase and the other transactions contemplated by this
Agreement, except that the Alta shall be responsible for any out-of-pocket
expenses (including legal, accounting and finder's fees) incurred by the
Company prior to the Closing Date hereof.
IN WITNESS WHEREOF, the Purchaser and the Sellers have caused this Agreement
to be executed as of the date first written above by their respective officers
and representatives thereunto duly authorized.
ANDAMAN INVESTMENTS INC.
By: _______________________________
ALTA CALIFORNIA BROADCASTING, INC.
By: _______________________________
Xxxx X. Power, President
By: _______________________________
J. Xxxxxx Xxxxxx, CFO
________________________________
J. Xxxxxx Xxxxxx (Individually)
________________________________
Xxxx X. Power (Individually)
Xxx Xxxxxxxx, by his signature below, joins in and agrees to the provisions of
Sections 6.4 of this Agreement, but shall not be bound by or obligated with
respect to any other provisions of the Agreement.
________________________________
Xxx Xxxxxxxx
SIGNATURE PAGE FOR SELLING SHAREHOLDERS
Redwood Microcap Fund, Inc.
413,397 Shares
By: _______________________________
Xxxx X. Power, President
Rockies Fund, Inc.
225,000 Shares
By: _______________________________
Xxxxxxx Xxxxxxxxxxx, President
Ratna Enterprises, LLC
30,000 Shares
By: _______________________________
Xxxxxxxx Xxxxxx, Manager
____________________________________
Xxxxx Xxxxxxxx, 7,603 Shares
____________________________________
Xxxxxx Xxxxxxx, 14,000 Shares
EXHIBIT A
CERTAIN DEFINED TERMS
"Company Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects of
the same general type, is or is reasonably likely to be materially adverse to
the assets, financial condition, business, operations or prospects of the
Company and its subsidiaries, taken as a whole at the time of such change or
effect
"Encumbrances" shall mean, with respect to any real or personal, tangible
or intangible property, any lien, charge, reservation, right of entry,
possibility of reverter, encroachment, easement, right of way, restrictive
covenant, lease, security interest (whether based on common law, statute or
contract and, including without limitation, any interest arising from any
capitalized lease, conditional sale, trust receipt or deposit interest),
option, right of first refusal, right of first offer, voting trust
arrangements or any other imperfection of title or right by any person to
assert a claim with respect to such property.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Law" shall mean any foreign, federal, state or local law, statute,
treaty, ordinance, rule, regulation, order, writ, injunction, decree, judgment
or decree.
"Litigation" means any claim, action, suit, litigation, proceeding, or
arbitration, investigation of any kind, at law or in equity, (including
actions or proceedings seeking injunctive relief).
"Order" shall mean a judgment, order, writ, injunction, rule, decree or
award of any Governmental Entity or arbitrator.
"Returns" shall mean any and all returns, reports, and information
statements with respect to Taxes required to be filed with the IRS or any
other Governmental Entity or Tax authority or agency, whether domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" or "Taxes" shall mean any and all taxes, charges, fees, levies, and
other governmental assessments and impositions of any kind, payable to any
federal, state, local or foreign Governmental Entity or taxing authority or
agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license,
payroll, withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, (ii) customs duties, imposts, charges, levies or other similar
assessments of any kind, and (iii) interest, penalties and additions to tax
imposed with respect thereto.
EXHIBIT B
NUMBER OF SHARES BEING SOLD BY EACH SELLER
Number of Shares
Name of Seller Being Sold Dollar Amount
-------------- ---------------- -------------
Redwood Microcap 413,397 Shares $37,205.73
Fund, Inc.
Rockies Fund, Inc. 225,000 Shares $20,250.00
Ratna Enterprises, LLC 30,000 Shares $2,700.00
Xxxxx Xxxxxxxx 7,603 Shares $684.27
Xxxxxx Xxxxxxx 14,000 Shares $1,260.00
EXHIBIT C
TAX MATTERS
