STOCK PURCHASE
AGREEMENT
This STOCK
PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of the _____ day of March, 2005, by and among Gibbs 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 :
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 John Gibbs, the
owner of Purchaser, using the form of guaranty attached as Exhibit
C.
1.03
C losings 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
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.
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) John
Power 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 John Gibbs 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
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.
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 John Power shall have
entered into an indemnification agreement in the form attached as
Exhibit D.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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.
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.
John Power,
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 John Gibbs
(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.
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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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
