Item 1.01 Entry into a Material Definitive Agreement
On October 22nd, 2022, International Media Acquisition Corp. ("IMAQ") entered
into a Stock Purchase Agreement (the "SPA") with Risee Entertainment Holdings
Private Limited, a company incorporated in India ("Seller"), and Reliance
Entertainment Studios Private Limited, company incorporated in India (the
"Target Company"). Pursuant to the terms of the SPA, a business combination
between IMAQ and the Target Company will be effected by the acquisition of 100%
of the issued and outstanding share capital of the Target Company from Seller in
a series of transactions (collectively, the "Stock Acquisition"). The board of
directors of IMAQ has (i) approved and declared advisable the SPA and the other
transactions contemplated thereby, and (ii) resolved to recommend approval of
the SPA and related transactions by the stockholders of IMAQ. All capitalized
terms used herein, but not otherwise defined, shall have the respective meanings
ascribed to such terms in the SPA.
Stock Acquisition Consideration
In accordance with the terms and subject to the conditions of the SPA, the
Seller shall, in exchange for the consideration set forth below, sell, transfer,
convey, assign and deliver to IMAQ, and IMAQ shall purchase, acquire and accept
from the Seller all rights, title and interest in and to the shares of the
Target Company (the "Company Shares") in the manner described herein, free and
clear of all liens, excepting only restrictions on the subsequent transfer of
the Company Shares by IMAQ imposed under applicable laws, IMAQ's organizational
documents, and the Shareholders' Agreement (as defined below). Such purchases
shall be made as follows:
(a) Tranche 1: IMAQ shall purchase and Seller shall sell 3,920 Company
Shares (the "Tranche 1 Company Shares") at the initial closing of the Stock
Acquisition which shall occur within four days of the satisfaction or waiver of
the closing conditions set forth in the SPA (the "Initial Closing," and any
subsequent closing thereafter, an "Additional Closing"), which shares shall
represent 39.20 % of the fully diluted equity ownership of the Target Company as
of the date of the Initial Closing, for the higher of: (i) the fair market value
of the Tranche 1 Company Shares determined in accordance with the requirements
of the Foreign Exchange Management Act, 1999, of the Republic of India (the
"FEMA"), or (ii) $40,000,000;
(b) Tranche 2: IMAQ shall purchase and Seller shall sell 1,570 Company
Shares ("Tranche 2 Company Shares") on or prior to the 90th day following the
Initial Closing for the higher of: (i) the fair market value of the Tranche 2
Company Shares determined in accordance with the requirements of the FEMA, or
(ii) $16,000,000 (and simultaneously, IMAQ shall also infuse $4,000,000 as
primary equity capital into the Target Company and be issued common equity
shares in the Target Company against such subscription amount, or,
alternatively, IMAQ may also infuse this amount as a loan to the Target Company
in accordance with applicable laws), which shares (i.e., the Tranche 2 Company
Shares and the shares allotted pursuant to the primary equity infusion
contemplated under the SPA, if issued) shall (together with the shares purchased
under paragraph (a) above) represent 54.90% of the fully diluted equity
ownership of the Target Company as of such Additional Closing;
(c) Tranche 3: IMAQ shall purchase and Seller shall sell 1,960 Company
Shares ("Tranche 3 Company Shares") on or prior to 12 months from the Initial
Closing for the higher of: (i) the fair market value of the Tranche 3 Company
Shares determined in accordance with the requirements of the FEMA, or (ii)
$20,000,000 (and simultaneously, IMAQ shall also infuse $20,000,000 as primary
equity capital into the Target Company and be issued common equity shares in the
Target Company against such subscription amount, or, alternatively, IMAQ may
also infuse this amount as a loan to the Target Company in accordance with
applicable laws), which shares (i.e., the Tranche 3 Company Shares and the
shares allotted pursuant to the primary equity infusion contemplated under the
SPA, if issued) shall (together with the shares purchased and subscribed under
paragraphs (a) and (b) above, as the case may be) represent 74.50% of the fully
diluted equity ownership of the Target Company as of such Additional Closing;
(d) Tranche 4: IMAQ shall purchase and Seller shall sell 2,550 Company
Shares ("Tranche 4 Company Shares") on or prior to 18 months from the Initial
Closing for the higher of: (i) the fair market value of the Tranche 4 Company
Shares determined in accordance with the requirements of the FEMA, or (ii)
$26,000,000 (and simultaneously, IMAQ shall also infuse $14,000,000 as primary
equity capital into the Target Company and be issued common equity shares in the
Target Company against such subscription amount, or, alternatively IMAQ may also
infuse this amount as a loan to the Target Company in accordance with applicable
Laws), which shares (i.e., the Tranche 4 Company Shares and the shares allotted
pursuant to the primary equity infusion contemplated under the SPA, if issued)
shall (together with the shares purchased and subscribed under paragraphs (a),
(b) and (c) above, as the case may be) represent 100% of the fully diluted
equity ownership of the Target Company as of such Additional Closing.
(e) The Target Company shall, and IMAQ shall ensure that, all primary
investments into the Target Company by IMAQ as contemplated under the SPA,
aggregating to $38,000,000, shall be used solely for the purposes of repayment
of the inter-company loans aggregating to $38,000,000 as existing on the books
of the Target Company at the Initial Closing (the "Existing Inter-Company
Loans"), as set forth in the SPA.
(f) Any loan extended by IMAQ to the Target Company pursuant to paragraphs
(b) to (d) above shall be repaid (including any interest repayment or payment of
charges) by the Target Company only after the Seller has been paid the entire
consideration contemplated under the SPA.
At the Initial Closing and each Additional Closing, the applicable consideration
will be paid by IMAQ to the Seller in Indian National Rupees, the currency of
the Republic of India ("INR"), based upon the foreign exchange rates published
by Bloomberg as set forth in the SPA.
Default of Additional Purchase and Subscription Obligations
In the event that IMAQ defaults/fails: (i) to consummate the Additional Closings
as contemplated under the SPA, (ii) to make the infusion of primary investment
or loan of $38,000,000 in the Target Company, (iii) to ensure that the Target
Company repays the Existing Inter-Company Loans, in each case, in accordance
with the time periods specified in the SPA, for any reason whatsoever (including
on account of delay or failure in obtaining any approval from any Authority or
non-fulfillment of any other condition mentioned in the SPA and the other
agreements related thereto (the "Additional Agreements")), the following
consequences shall follow, without prejudice to the other rights and remedies of
the Seller provided for under the SPA and the Additional Agreements:
(a) the Seller shall have the right to seek specific performance and in the
event that such specific performance is not enforceable or available under any
provision of applicable law, IMAQ shall be liable to pay damages to the Seller
on account of the default/breach committed by IMAQ;
(b) the Seller shall have an unfettered right to transfer, sell, dispose,
and/or create liens on all or any of the Company Shares held by it;
(c) the Seller shall have affirmative vote rights with respect to the
matters specified in the Shareholders' Agreement;
(d) if any default as stipulated under the SPA has not been cured by IMAQ
within a period of 18 months of the Initial Closing, the Seller shall have the
right to appoint majority of the directors on the board of directors of the
Target Company (the "Board") upon completion of such 18 month period, provided
that IMAQ shall continue to have the right to nominate one director or observer
on the Board, as long as IMAQ holds at least 10% of the total share capital of
the Target Company as determined on a fully diluted basis, and further provided
that if: (i) the Seller has transferred, sold, disposed of and/or created any
liens on all (and not some) of the Company Shares held by it, and (ii) IMAQ has
completed the purchase of more than 75% of the Company Shares, the Board shall
be reconstituted in a manner which reflects the inter se shareholding
percentages of the stockholders of the Target Company, however, the transferee
of the Seller's transferred Company Shares shall continue to have the right to
nominate one director or observer on the Board, as long as such transferee holds
at least 10% of the total share capital of the Target Company, and, further,
IMAQ shall have certain affirmative vote rights with respect to the matters
specified in the Shareholders' Agreement; and
(e) if any default as stipulated under the SPA has not been cured by IMAQ
within a period of 21 months of the Initial Closing and IMAQ has not completed
the purchase of more than 75% of the Company Shares, at the option of the
Seller: (i) all the rights of IMAQ under the SPA and the Additional Agreements
shall fall away and cease to exist, and (ii) all the liabilities, obligations,
and responsibilities of the Seller under the SPA and the Additional Agreements
shall fall away and cease to exist other than the right of IMAQ to nominate one
director on the Board of the Target Company, as long as IMAQ holds at least 10%
of the total share capital of the Target Company as determined on a fully
diluted basis; provided, however, that if the Seller has transferred, sold, or
disposed of all (and not some) of the Company Shares, the transferee of the
Seller's transferred Company Shares and IMAQ shall mutually discuss and agree on
the affirmative vote rights which may be available to IMAQ with respect to the
matters specified in the Shareholders' Agreement.
Representations and Warranties
The SPA contains customary representations and warranties of the parties
thereto. The Target Company has made representations and warranties with respect
to (a) corporate existence and power, (b) authorization to enter into the SPA
and related transactions, (c) governmental authorization, (d) non-contravention,
(e) capitalization, (f) corporate records, (g) subsidiaries, (h) consents, (i)
financial statements, (j) books and records, (k) internal accounting controls,
(l) absence of certain changes, (m) properties and title to assets, (n)
litigation, (o) contracts, (p) licenses and permits, (q) compliance with Laws,
(r) intellectual property, (s) accounts payable and affiliate loans, (t)
employees and employee matters, (u) withholding, (v) employee benefits, (w) real
property, (x) tax matters, (y) environmental laws, (z) finders' fees, (aa)
powers of attorney, suretyships and bank accounts, (bb) directors and officers,
(cc) anti-money laundering laws, (dd) insurance, (ee) related party
transactions, and (ff) investment company status.
The Seller has made representations and warranties with respect to (a) corporate
existence, (b) corporate power and authority, (c) conflicts, (d) consents, (e)
liens and encumbrances, (f) title, (g) taxes, (h) jurisdiction of formation, (i)
pendency of proceedings, and (j) absence of voting agreements.
IMAQ has made representations and warranties with respect to, among other
things, (a) corporate existence and power, (b) corporate authorization to enter
into the SPA and related transactions, (c) governmental authorization, (d)
non-contravention, (e) finders' fees, (f) board approval, (g) litigation, (h)
capitalization, (i) compliance, (j) SEC filings and financial statements, (k)
IMAQ's trust fund, (l) SEC registration, and (m) listing.
Covenants
The SPA includes customary covenants of the parties with respect to operation of
their respective businesses prior to consummation of the Stock Acquisition, and
efforts to satisfy conditions to the consummation of the Stock Acquisition.
The SPA also contains additional covenants of the parties, including, among
others, access to information, tax matters, notices of certain events,
cooperation in the preparation of the Proxy Statement and other filings required
to be filed in connection with the Stock Acquisition, efforts to obtain Company
Consents, satisfaction of indebtedness, the Target Company providing additional
financial information, and non-competition and non-solicitation.
Exclusivity
Each of Seller and the Target Company has agreed that from the date of the SPA
until the Initial Closing or, if earlier, the valid termination of the SPA in
accordance with its terms, it will not initiate any negotiations with any party
relating to an Alternative Transaction (as such term is defined in the SPA) or
enter into any agreement relating to such a proposal. Each of Seller and the
Target Company has also agreed to be responsible for any acts or omissions of
any of its respective representatives that, if they were the acts or omissions
of Seller or the Target Company, as applicable, would be deemed a breach of the
party's obligations with respect to these non-solicitation restrictions.
Conditions to Closing
The consummation of the Initial Closing and any Additional Closing is
conditioned upon, among other things, (i) the absence of any applicable law or
order restraining, prohibiting or imposing any condition on the consummation of
the Stock Acquisition and related transactions, (ii) no action being brought by
any Authority to enjoin or otherwise restrict the consummation of the Initial
Closing and any Additional Closing, and (iii) with respect to the Initial
Closing, approval by IMAQ stockholders of the Stock Acquisition and related
transactions and each of the Purchaser Proposals (as defined in the SPA).
IMAQ's obligation to close is subject to the satisfaction of the following
conditions, which include, among other things, (a) the Target Company having
duly performed or complied with all of its obligations under the SPA in all
material respects, (b) the Target Company having obtained a valuation
certificate to determine the fair market value of the Company Shares in
accordance with the FEMA for transfer of the Company Shares to IMAQ as required
under the applicable Indian laws, (c) the Target Company having obtained any
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Description
2.1* Stock Purchase Agreement, dated as of October 22, 2022, by and among
International Media Acquisition Corp., Seller and the Target Company.
10.1 Shareholders' Agreement, dated October 22, 2022, by and among Seller,
Target Company and International Media Acquisition Corp.
10.2 Earnout Agreement, dated October 22, 2022, by and among Seller, the
Target Company and International Media Acquisition Corp.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
* Certain exhibits and schedules to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(a)(5). International Media
Acquisition Corp. agrees to furnish supplementally a copy of all omitted
exhibits and schedules to the Securities and Exchange Commission upon its
request.
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