Exhibit 10.7
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT is made as of the 9th day of August, 1996,
by and between JONES GLOBAL GROUP, INC., a Colorado corporation ("Seller") and
JONES INTERNATIONAL NETWORKS, LTD., a Colorado corporation ("Buyer").
RECITALS
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A. Seller owns one hundred percent (100%) of the issued and outstanding
stock of Jones Galactic Radio, Inc. ("Galactic"), a company engaged in audio
programming for cable television systems and radio programming for radio
stations.
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, one hundred percent (100%) of the issued and outstanding stock of
Galactic (the "Galactic Stock") upon the terms and conditions set forth in this
Agreement.
AGREEMENT
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In consideration of the mutual promises contained in this Agreement and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth in
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this Agreement, Seller shall sell, convey, assign, transfer and deliver to
Buyer,
and Buyer shall purchase from Seller, on the Closing Date (as defined in
Paragraph 7 hereof), one hundred percent (100%) of all issued and outstanding
stock of Galactic currently held by Seller, which shall be one hundred percent
(100%) of all issued and outstanding stock of Galactic. The Galactic Stock shall
be transferred free and clear of any and all security interests, liens, pledges,
charges and encumbrances.
2. Purchase Price. The total purchase price for the Galactic Stock shall
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be $17,200,000.00 (the "Purchase Price"). The Purchase Price shall be payable to
Seller at Closing as follows: (a) $1,200,000.00 in the form of a wire transfer
of immediately available funds in accordance with written wire transfer
instructions delivered by Seller to Buyer; and (b) $16,000,000.00 in the form of
a promissory note (the "Promissory Note") to be delivered by Buyer to Seller at
Closing, as hereinafter defined, in substantially the form of Exhibit 1 attached
hereto.
3. Seller's Representations. Seller hereby represents and warrants to
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Buyer that:
(a) Seller is a corporation duly organized and validly existing under
the laws of the State of Colorado. Seller has all requisite corporate power and
authority to own and operate its properties and to carry on its business as now
and where being conducted.
(b) All necessary consents and approvals have been obtained by Seller
for the execution and delivery of this Agreement except for the approval
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of the transaction by the Board of Directors of Seller. The execution and
delivery of this Agreement by Seller has been duly and validly authorized and
approved by all necessary action of Seller except as noted above. This Agreement
is a valid and binding obligation of Seller, enforceable against it in
accordance with its terms.
(c) Subject to the receipt of any required consents, Seller is the
owner of the Galactic Stock and has full legal power, right and authority to
sell and convey to Buyer legal and beneficial title to the Galactic Stock, and
Seller's sale to Buyer shall transfer good and marketable title thereto, free
and clear of all security interests, liens, pledges, charges and encumbrances of
every kind. The Galactic Stock is not subject to, or bound or affected by, any
proxies, voting agreements or other restrictions on the incidents of ownership
thereof.
(d) The authorized capital stock of Galactic consists solely of
50,000,000 shares of Class A Common Stock, $.01 par value per share, and 100,000
shares of Class B Common Stock, $.01 par value per share (collectively, the
"Shares"). As of the date hereof, 62,963 shares of Class A Common stock of
Galactic are issued and outstanding, and are held of record by Seller, and
62,963 shares of Galactic of Class B Common Stock are issued and outstanding,
and are held of record by Seller. The Shares have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable. There are no
authorized or outstanding subscriptions, options, convertible securities,
warrants, calls or other rights of any kind issued or granted by, or
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binding upon, Seller or Galactic to purchase or otherwise acquire any security
of, or equity interest in, Galactic.
(e) The execution, delivery and performance of this Agreement by
Seller will not violate any provision of law and will not, with or without the
giving of notice or the passage of time, conflict with or result in any breach
of any of the terms or conditions of, or constitute a default under, any
mortgage, agreement or other instrument to which Seller is a party or by which
Seller is bound. The execution, delivery and performance of this Agreement by
Seller will not result in the creation of any security interest, lien, pledge,
charge or encumbrance upon the Galactic Stock.
4. Conditions Precedent to Buyer's Obligations. The obligations of Buyer
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under this Agreement with respect to the purchase and sale of the Galactic Stock
shall be subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
(a) All of the representations and warranties by Seller contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date. Seller shall have complied with and performed all of the
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it on or prior to the Closing Date.
(b) Seller shall have delivered to Buyer such instruments, consents
and approvals of third parties as are necessary to transfer the Galactic
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Stock to Buyer pursuant to this Agreement, which consents and approvals shall
not have resulted in any material change in the business of Galactic and its
subsidiaries.
(c) There shall have been no material adverse change in the business,
financial condition or operations of Galactic and its subsidiaries since
May 31, 1996.
(d) At Closing, Galactic will have no outstanding debt, other than
trade payables, customer deposits and other miscellaneous accrued liabilities,
in an aggregate amount approved prior to Closing by Buyer. All intercompany
debt of Galactic shall have been paid in full or otherwise discharged.
(e) All requisite approvals of the Board of Directors of Seller and
Buyer shall have been obtained.
5. Conditions Precedent to Seller's Obligations. The obligations of
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Seller under this Agreement with respect to the purchase and sale of the
Galactic Stock shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
(a) Buyer shall have delivered the Purchase Price to Seller in
accordance with Paragraph 2 hereof.
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(b) Buyer shall have delivered to Seller a Security Agreement,
executed by Jones Satellite Networks, Inc., and any related documents referred
to therein, in substantially the form of Exhibit 2 attached hereto.
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(c) All requisite approvals of the Board of Directors of Seller and
Buyer shall have been obtained.
6. Indemnification.
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(a) Indemnification by Seller. From and after Closing, Seller shall
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indemnify and hold harmless Buyer, its affiliates, their respective officers and
directors, employees, agents and representatives and any person claiming by or
through any of them, from and against any and all claims, losses, liabilities,
damages, penalties, costs and expenses, including reasonable attorneys' fees,
arising out of or resulting from:
(i) any representations and warranties of Seller in this
Agreement not being true and accurate when made or when required by this
Agreement; or
(ii) any failure by Seller to perform any of its covenants,
agreements or obligations in this Agreement.
(b) Indemnification by Buyer. From and after Closing, Buyer shall
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indemnify and hold harmless Seller, its affiliates, officers and directors,
agents and representatives and any person claiming by or through any of them, as
the case may be, from and against any and all claims, losses, liabilities,
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damages, penalties, costs and expenses, including reasonable attorneys' fees,
arising out of or resulting from:
(i) any representations and warranties of Buyer in this
agreement not being true and accurate when made or when required by this
Agreement; or
(ii) any failure by Buyer to perform any of its covenants,
agreements or obligations in this Agreement; or
(iii) all liabilities and obligations of Galactic relating to, or
arising out of its activities during periods subsequent to Closing.
7. Closing. The closing hereunder (the "Closing") shall be held in the
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offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado 80112 on
August 15, 1996, or such other date as may be designated by Buyer (the "Closing
Date"); provided that in no event shall the Closing Date be later than the date
which is 60 days from the date of this Agreement. At the Closing, all cash,
checks, share certificates, bills of sale, assignments and assumptions, notes,
security instruments and other instruments and documents referred to or
contemplated by this Agreement shall be exchanged by the parties hereto.
8. Brokerage. Seller represents and warrants to Buyer that Seller will be
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solely responsible for, and pay in full, any and all brokerage or finder's fees
or agent's commissions or other like payment owing in connection with Seller's
use of any broker, finder or agent in connection with this Agreement or the
transactions contemplated hereby. Buyer represents and warrants to Seller that
Buyer will be solely responsible for, and pay in full, any and all brokerage or
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finder's fees or agent's commissions or other like payment owing in connection
with Buyer's use of any broker, finder or agent in connection with this
Agreement or the transactions contemplated hereby. Each party hereto shall
indemnify and hold the other party hereto harmless against and in respect of any
breach by it of the provisions of this Paragraph 8.
9. Miscellaneous.
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(a) Buyer shall have the right, upon notice to Seller, to assign prior
to the Closing Date, in whole or in part, its rights and obligations hereunder
to any affiliate of Buyer, including, without limitation, to any subsidiary of
Buyer or other entity controlled by, controlling or under common control with
Buyer, or, subject to Seller's consent, to any other entity.
(b) From time to time after the Closing Date, Seller shall, if
requested by Buyer, make, execute and deliver to Buyer such additional
assignments, bills of sale, deeds and other instruments of transfer, as may be
necessary or proper to transfer to Buyer all of Seller's right, title and
interest in and to the Galactic Stock covered by this Agreement. Such efforts
and assistance shall be without cost to Buyer.
(c) This Agreement embodies the entire understanding and agreement
among the parties concerning the subject matter hereof and supersedes any and
all prior negotiations, understandings or agreements in regard thereto. This
Agreement shall be interpreted, governed and construed in
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accordance with the laws of the State of Colorado. This Agreement may not be
modified or amended except by an agreement in writing executed by both Buyer and
Seller.
(d) Any sales, use, transfer or documentary taxes imposed in
connection with the sale and delivery of the Galactic Stock and the rights
acquired by Buyer under this Agreement shall be paid by Buyer.
(e) All exhibits attached hereto shall be deemed incorporated into
this Agreement by reference as if fully set forth herein.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first above written.
SELLER
JONES GLOBAL GROUP, INC.,
a Colorado corporation
By: /s/ Jay B. Lewis
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Jay B. Lewis
Vice President/Finance and Treasurer
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BUYER
JONES INTERNATIONAL NETWORKS, LTD.,
a Colorado corporation
By: /s/ Gregory J. Liptak
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Gregory J. Liptak
Assistant Vice President
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PROMISSORY NOTE
Englewood, Colorado $16,000,000.00
August 15, 1996
FOR VALUE RECEIVED, the undersigned, JONES INTERNATIONAL NETWORKS, LTD., a
Colorado corporation ("Maker"), hereby promises to pay to the order of JONES
GLOBAL GROUP, INC., a Colorado corporation ("Holder"), at 9697 E. Mineral
Avenue, Englewood, Colorado, or at such other address as the holder hereof shall
designate in writing, the principal sum of Sixteen Million Dollars
($16,000,000.00), together with interest on the unpaid principal balance at a
per annum rate equal to eight and one quarter percent (8.25%) from the date
hereof until all amounts hereunder are paid in full.
Interest on the outstanding principal balance of this Promissory Note shall
be payable in quarterly installments commencing on November 15, 1996 and
continuing on each third month thereafter until the promissory note is paid in
full. Principal payments under this Promissory Note shall be made as follows:
(a) commencing on May 15, 2000 and each third month thereafter until the
principal payment is increased as provided below, Buyer shall make principal
payments in the amount of Two Hundred Thousand Dollars ($200,000.00); (b)
commencing on May 15, 2001, and each third month thereafter until the principal
payment is increased as provided below, Buyer shall make principal payments in
the amount of Three Hundred Thousand Dollars ($300,000.00); and (c) commencing
on May 15, 2002, and each third month thereafter until the Promissory Note is
paid in full, Buyer shall make principal payments in the amount of Four Hundred
Thousand Dollars ($400,000.00). All outstanding principal and interest unpaid
under this Promissory Note shall be immediately due and payable in full on
December 31, 2003.
This Promissory Note may be prepaid in whole or, from time to time, in part
at the option of Maker. All payments shall be applied first to the payment of
accrued interest and, after all such interest has been paid, any remainder shall
be applied to the reduction of the principal balance.
If Maker shall fail to pay any payment due hereunder on or before the date
which is five days after the date such payment is due hereunder (a "Late
Payment"), such Late Payment shall bear interest at the rate of 18% per annum.
In addition, in the event that Maker shall fail to make any payment when due
hereunder, the entire amount of this Promissory Note shall, at the option of the
holder hereof, become immediately due and payable. If this Promissory Note is
placed in the hands of an attorney for collection, by suit or otherwise, then
all costs of collection and litigation, including court costs and reasonable
attorneys' fees, shall be added hereto and collectible as a part of the
principal hereof.
Maker hereby waives demand for payment, presentment for payment, notice of
nonpayment or dishonor, protest and notice of protest, and agrees to any
extension of time of payment and partial payments before, at, or after maturity.
No renewal or extension of this Promissory Note, no delay in the enforcement
hereof, and no delay or omission in exercising any right or power hereunder,
shall affect the liability of Maker. No delay or omission by Holder in
exercising any power or right hereunder shall impair such right or power or be
construed to be a waiver of any default, nor shall any single or partial
exercise of any power or right hereunder preclude any or the full exercise
thereof or the exercise of any other right or power.
Payment of all amounts due under this Promissory Note is secured by a
security interest granted to Holder pursuant to the terms of that certain
Security Agreement dated as of date hereof between Holder and Jones Satellite
Networks, Inc., a wholly owned subsidiary of Maker. This Promissory Note is
issued under and shall be governed by and construed in accordance with the laws
of the State of Colorado.
IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of
the date set forth above.
MAKER
JONES INTERNATIONAL NETWORKS,
LTD., a Colorado corporation
By: /s/ Gregory J. Liptak
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Gregory J. Liptak
Assistant Vice President
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