EXHIBIT 10.7
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of March 28, 1997, is entered
into by and between DCC COMPACT CLASSICS, INC., A COLORADO CORPORATION ("DCC"),
and DAYSTAR PARTNERS, L.P., A CALIFORNIA LIMITED PARTNERSHIP ("DayStar").
FACTUAL BACKGROUND
DayStar wishes to purchase from DCC, and DCC wishes to sell to DayStar,
shares of DCC'S Common Stock, $.005 par value ("Common Stock"). DayStar and DCC
desire to provide for the foregoing purchase and sale and to establish various
rights and obligations in connection therewith. Certain other persons (the
"Other Purchasers") will purchase Common Stock under Agreements substantially
similar to this Agreement. The Other Purchasers and DayStar are collectively
referred to as the "Purchasers."
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. SALE OF SHARES.
Subject to the terms and conditions of this Agreement, at the Closing
(as defined below), DCC will sell and issue to DayStar, and DayStar will
purchase, 80,000 shares of Common Stock (the "Shares") for a total price in cash
of Eighty Thousand Dollars ($80,000) (the "Total Purchase Price"), which equals
$1.00 per Share (the "Share Purchase Price"). The Shares shall be subject to a
Registration Rights Agreement (the "Registration Rights Agreement"),
substantially in the form of Exhibit A hereto. DCC hereby authorizes Day Star to
deduct from the purchase price of the Shares $7500 on account of the legal
expenses which the Purchasers incur in negotiating and documenting this
Agreement, which legal expenses DCC has agreed to reimburse upon presentation of
invoice.
2. THE CLOSING.
2.1 Closing. The closing ("Closing") of this transaction shall
take place at the offices of Coblentz, Cahen, XxXxxx & Breyer, LLP ("CCMB"), 000
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m. on the
date hereof (the "Closing Date"), or at such other time, date and place as are
mutually agreeable to DCC and DayStar.
2.2 Delivery. At the Closing, subject to the terms of this
Agreement, DCC will deliver or cause to be delivered to DayStar, against
DayStar's payment at the Closing of the Total Purchase Price by one or more
checks or by wire transfer to an account or accounts designated by DCC, a stock
certificate or certificates evidencing the Shares in such denominations as
DayStar has requested, dated the Closing Date and registered in the name or
names requested by DayStar.
STOCK PURCHASE AGREEMENT Page 1
3. REPRESENTATIONS OF DCC. DCC hereby represents, warrants and
covenants to DayStar as follows:
3.1 Organization and Standing. DCC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. DCC is duly qualified to do business as a foreign corporation and is
in good standing in all states and jurisdictions in which the nature of the
business conducted or property owned by DCC make such qualification necessary.
DCC has furnished DayStar with copies of its Certificate of Incorporation and
its Bylaws and those of any subsidiaries. Said copies are true, correct, and
complete and contain all amendments through the date of the Closing.
3.2 Due Authorization. The execution and delivery of this
Agreement and the consummation by DCC of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on behalf of DCC.
This Agreement, when executed and delivered, will have been duly executed and
delivered by DCC and constitutes a valid and binding agreement of DCC,
enforceable in accordance with its terms.
3.3 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement have been duly authorized by all
necessary corporate action on the part of DCC, and all the Shares have been duly
reserved for issuance. The Shares, when issued and delivered against payment
therefor, will be duly and validly issued, fully paid and non-assessable. The
Shares are not subject to any preemptive rights or any right of first refusal
and the issuance of the Shares will not give rise to any such rights.
3.4 Exchange Act Documents.
3.4.1 DCC has been subject to the requirements of
Section 12 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") for a period of at least twelve calendar months immediately
preceding the Closing Date hereof and has filed in a timely manner all reports
required to be filed during the twelve calendar months immediately preceding
the Closing Date (the "Exchange Act Documents"). At the time of filing, the
Exchange Act Documents conformed in all material respects to the requirements
of the Exchange Act and all the rules and regulations thereunder, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed, when
such documents become effective or are filed with the Securities and Exchange
Commission (the "Commission"), as the case may be, will conform in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder, and none of such documents will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
3.4.2 The financial statements (together with the
related notes thereto) contained in the Exchange Act Documents present fairly
the financial position of DCC and its consolidated subsidiaries as of and at
the dates indicated and the results of their operations for the
STOCK PURCHASE AGREEMENT Page 2
periods specified; and except as otherwise disclosed in the Exchange Act
Documents, said financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied. The accountants
who have audited certain financial statements included in the Exchange Act
Documents are independent public accountants as required by the Exchange Act and
the rules and regulations thereunder.
3.4.3 The information set forth in the Form 10KSB
filed by DCC on May 30, 1996 (the "10K") is complete and accurate in all
material respects as of the Closing Date, and since the date of the 10K, except
as otherwise stated therein, (i) there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of DCC and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) there have been
no transactions entered into by DCC or any of its subsidiaries, other than
those in the normal course of business, which are material with respect to DCC
and its subsidiaries considered as one enterprise and (iii) except for regular
dividends on the common stock in amounts per share that are consistent with
past practice, there' has been no dividend or distribution of any kind
declared, paid or made by DCC on any class of its capital stock.
3.5 Compliance with Other Instruments, None Burdensome, etc.
DCC is not in violation of any term of its Articles of Incorporation or Bylaws,
or in any material respect of any mortgage, indenture, contract, agreement,
instrument, or, to DCC's best knowledge, any judgment, decree, order, statute,
rule, or regulation applicable to it. The execution, delivery, and performance
by DCC of this Agreement and the issuance and sale of the Shares pursuant
hereto, will not result in any such material violation or be in conflict with or
constitute a material default under any such term, or cause the acceleration of
maturity of any loan or material obligation to which DCC is a party or by which
it is bound or with respect to which it is an obligor or guarantor, or result in
the creation or imposition of any material lien, claim, charge, restriction,
equity or encumbrance of any kind whatsoever upon, or, to DC C's best knowledge
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of DCC. To DCC's best knowledge, no
such term or condition materially adversely affects the business, property,
prospects, condition, affairs, or operations of DCC.
3.6 Governmental Consents. Other than the timely filing of a
Form D pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act") and similar Blue Sky notification, no consent,
approval, order or authorization of; or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by DayStar in Section 4 hereof the offer and sale of
the Shares to DayStar will be in compliance with applicable Federal and state
securities laws.
3.7 Registration Rights. Except for the grant of registration
rights to the Purchasers as contemplated by the provisions hereof; DCC is not
under any obligation to register any of its presently outstanding securities or
any of its securities which may hereafter be issued.
STOCK PURCHASE AGREEMENT Page 3
3.8 Patents, Trademarks, etc. Except as set forth on Schedule
3.8, DCC owns and possesses or licenses all patents, patent applications,
licenses, trademarks, service marks, trade names, brand names, inventions, trade
secrets, processes, formulae, copyrights, hardware and software necessary for
the operation of its business as now conducted and as proposed to be conducted
(the "Intellectual Property"). DCC has not received any notice or claim of
infringement of any rights, trademarks, trade names, trade secrets, copyrights
or other intellectual property or proprietary rights of others with respect to
DCC's operation of its business. To the knowledge of DCC, except as set forth on
Schedule 3.8, the Intellectual Property does not infringe upon or violate any
rights, trademarks, trade names, trade secrets, copyrights or other intellectual
property or proprietary rights of any person or entity.
3.9 Insurance. DCC has adequate insurance, with financially
sound and reputable insurers, with respect to its business and properties which
are of a character customarily insured by corporations of established reputation
engaged in the same or a similar business and similarly situated, against loss
or damage of the kinds customarily insured against by such corporations, which
insurance is of such types (including public liability and workmen's
compensation insurance) as are customarily carried under similar circumstances
by such other corporations.
3.10 Use of Proceeds. The net proceeds from the sale of the
Shares shall be used as set forth in Schedule 3.10 hereto. DCC shall not
directly or indirectly use such proceeds for any other purpose.
3.11 Disclosure. Neither this Agreement (including, without
limitation, the Schedules and the Exhibits hereto), nor any other document
delivered to DayStar or its counsel or agents in connection herewith contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. To the best of DCC's knowledge, there is no fact (or facts) which
(individually or in the aggregate) materially adversely affects the business,
prospects, condition, affairs, or operations of DCC or its properties or assets
which has (or have) not been set forth in this Agreement and the Schedules and
Exhibits hereto.
4. REPRESENTATIONS OF DAYSTAR. DayStar hereby represents and warrants
to DCC as follows:
4.1 Investment. DayStar is acquiring the Shares for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same.
4.2 Authority. DayStar has lull power and authority to enter
into and to perform this Agreement in accordance with its terms.
4.3 Experience. DayStar has sufficient knowledge and
experience in investing in companies similar to DCC so as to be able to evaluate
the risks and merits of its investment in DCC.
STOCK PURCHASE AGREEMENT Page 4
4.4 Legend. DayStar understands that the stock certificate
representing the Shares shall bear a legend substantially to the following
effect:
THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO DCC IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
4.5 Accredited Investor. DayStar is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act.
5. COVENANTS OF DCC. DCC hereby covenants and agrees as follows:
5.1 Consents and Best Efforts. Subject to the terms and
conditions provided herein, DCC covenants and agrees to use its commercially
reasonable best efforts to take, or cause to be taken, all action or do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby and to cause the fulfillment of its obligations hereunder.
5.2 Notification of Certain Matters. DCC shall give prompt
notice to Day Star, and DayStar shall give prompt notice to DCC, of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect as of the Closing Date and (ii)
any material failure of DCC or DayStar, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use all reasonable efforts to remedy same.
5.3 Nondisclosure Agreements. DCC shall require all key
managers and other key employees now or hereafter employed by DCC who have
access to confidential and proprietary information of DCC to enter into
nondisclosure agreements in a form that is commercially reasonable.
5.4 Exchange Act Reports. Following the Closing, DCC shall
deliver to DayStar all reports required to be filed by it pursuant to the
Exchange Act and the rules and regulations thereunder concurrently with
transmittal of such reports to the Commission.
5.5 Board Visitation Rights. DCC shall allow DayStar, on
behalf of the Purchasers, to have one observer present at all meetings of the
Board of Directors and committees of the Board of Directors and such observer
shall be entitled to participate in discussions and consult with the Board of
Directors and committees of the Board of Directors, without voting. To
facilitate such visitation, DCC shall provide DayStar with written notice of all
such meetings not later than it provides such notice to its directors.
STOCK PURCHASE AGREEMENT Page 5
6. CLOSING CONDITIONS. The obligations of DayStar hereunder are
subject to Day Star's satisfaction in its sole discretion with the results of
its due diligence investigation and to the fulfillment or waiver on or before
the Closing of the following conditions:
6.1 Representations and Warranties True. All representations
and warranties of DCC made in Section 3 or otherwise under or pursuant to this
Agreement shall be true on the Closing Date and DCC shall have delivered to Day
Star a certificate of an authorized officer of DCC dated the Closing Date,
certifying to such effect.
6.2 Instruments and Proceedings to be Satisfactory. All
instruments and corporate proceedings relating to the sale of the Shares
hereunder by DCC or otherwise relating to the transactions contemplated hereby
shall be satisfactory to DayStar.
6.3 Other Agreements. All documents and instruments specified
for delivery at the Closing shall have been executed and delivered by DCC and
DayStar, as appropriate.
6.4 Due Diligence and Legal Fees. DCC shall pay at the Closing
or, if the estimated amount paid at closing is insufficient, promptly upon
demand all of the reasonable fees and expenses of counsel to DayStar incurred in
connection with the preparation and negotiation of this Agreement and the
Closing of the transactions contemplated hereby. In addition, DCC shall pay all
reasonable fees and expenses of counsel for DayStar in connection with any
amendment of any document contemplated hereby, any waiver under such document
and any consultation or action related to enforcement thereof.
6.5 Legal Opinion. Xxxxxxx Xxxxx, as counsel to DCC, shall
have executed and delivered to DayStar a legal opinion, dated the Closing Date,
in form and substance satisfactory to counsel for DayStar covering the matters
set forth in Schedule 6.6 hereto.
6.6 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of, or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
the value of the Shares, DayStar's registration rights, or DCC.
6.7 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions (including the materials
provided to DayStar and its special counsel) shall be reasonably satisfactory in
substance and form to DayStar and its special counsel, and DayStar and its
special counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
STOCK PURCHASE AGREEMENT Page 6
7. CONDITION TO THE OBLIGATIONS OF DCC. The obligations of DCC
hereunder are subject to the fulfillment or waiver of the following conditions
on or before the Closing:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of DayStar contained in Section 4 shall be true
on the Closing Date.
7.2 Purchase Price. Payment of the applicable purchase price
to DCC as set forth in Section 2 hereof.
7.3 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
DCC.
8. GENERAL.
8.1 Indemnity.
(a) Each party agrees to indemnify and save harmless the
other party hereto and such other party's officers, directors, employees and
agents, and each person who controls such other party within the meaning of the
Securities Act or the Exchange Act, from and against any and all costs,
expenses, damages, claims, actions, diminution in value or other liabilities,
including costs of investigation and defense (collectively, "Damages") suffered
or incurred by the indemnified party as a result of any breach by the
indemnifying party of any of its agreements, representations, warranties or
covenants contained in this Agreement, other than Damages resulting, directly
or indirectly from the breach by the indemnified party of any of its
agreements, representations, warranties or covenants contained herein;
provided, however, that if and to the extent that such indemnification is
unenforceable for any reason, the indemnifying party shall make the maximum
contribution to the payment and satisfaction of such indemnified liability
which shall be permissible under applicable law.
(b) The indemnified party under this Section 8.1 will,
promptly after the receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought from the
indemnifying party on account of an indemnity agreement contained in this
Section 8.1, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party to so notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party except to the extent the
indemnifying party shall have been materially prejudiced by the omission of
such indemnified party to so notify the indemnifying party, pursuant to this
Section 8.1. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof
the indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof the indemnifying party will not be liable to such indemnified party
under this Section 8.1 for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof nor for any
settlement thereof entered into without
STOCK PURCHASE AGREEMENT Page 7
the consent of the indemnifying party; provided, however, that (i) if the
indemnifying party shall elect not to assume the defense of such claim or action
or (ii) if the indemnified party reasonably determines (x) that there may be a
conflict between the positions of the indemnifying party and of the indemnified
party in defending such claim or action or (y) that there may be legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then separate counsel for the indemnified
party shall be entitled to participate in and conduct the defense, in the case
of (i) and (ii)(x), or such different defenses, in the case of (ii)(y), and the
indemnifying party shall be liable for any reasonable legal or other expenses
incurred by the indemnified party in connection with such defense(s);
(c) All representations and warranties made by the parties
herein or in any instrument or document finished in connection herewith shall
survive the Closing and any investigation at any time made by or on behalf of
the parties hereto. All such representations and warranties shall expire on the
second anniversary of the respective Closing Dates, except for claims, if any,
asserted in writing prior to such second anniversary, which shall survive until
finally resolved and satisfied in full. All claims and actions for indemnity
pursuant to this Section 8 for breach of any representation or warranty shall
be asserted or maintained in writing by a party hereto on or prior to the
expiration of such two-year period.
8.2 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by reputable overnight courier or mailed by first class certified or
registered mall, return receipt requested, postage prepaid:
If to DCC: 0000 Xxxxxx Xxxxxx, Xx.000
Xxxxxxxxxx, XX 00000
Attention: President
With copy to: Xxxxxxx Xxxxx
00000 Xxxxxxx Xxxxxxxxx, Xx.000
Xxxxxxxx Xxxxx, XX 00000
If to DayStar: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
With copy to: Coblentz, Cahen, XxXxxx & Breyer, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Notices provided in accordance with this Section 8.2 shall be deemed
delivered upon personal delivery, one business day after deposit with a
reputable overnight delivery service, or two business days after deposit in the
mail. Any party may change its address for notice by notice similarly given.
STOCK PURCHASE AGREEMENT Page 8
8.3 Further Assurances. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees, both before and
after the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder or thereunder, and (iii) to cooperate with
each other in connection with the foregoing, including, without limitation,
using their respective best efforts (A) to obtain all consents, approvals and
waivers from any person necessary to permit the consummation of the transactions
contemplated by this Agreement, and (B) to fulfill all conditions to this
Agreement.
8.4 Specific Enforcement. DayStar, on the one hand, and DCC,
on the other, acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they may be entitled at law or
equity.
8.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of DCC and DayStar. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
8.7 Survival. The representations, warranties, covenants, and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by DayStar.
8.8 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, provided, however, that DCC may not
assign any of its rights or delegate its duties without the prior written
consent of Day Star.
8.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.10 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
STOCK PURCHASE AGREEMENT Page 9
8.11 Governing Law; Jurisdiction; Venue. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California as applied to contracts executed and entirely performed within
California. Any litigation or arbitration between the parties which arises out
of this Agreement shall be instituted and prosecuted only in the appropriate
California or Federal court or other tribunal, situated in San Francisco,
California. DCC specifically submits itself and its properties to the exclusive
jurisdiction of such courts for purposes of any such action and the enforcement
of any judgment or order arising therefrom. DCC waives any right to a change of
venue and any and all objections to the jurisdiction of the California courts.
Notwithstanding the foregoing, DayStar may take such actions in a foreign
jurisdiction which DayStar deems necessary and appropriate to enforce or collect
any court judgment in any dispute arising out of this Agreement or to seek and
obtain other relief as is necessary to enforce the terms of this Agreement. Each
party agrees that service upon such party in any such action or proceeding may
be made by first class mail, certified or registered, return receipt requested
as provided for the giving of notices in Section 8.2.
Executed as of the date first written above.
DCC:
DCC COMPACT CLASSICS, INC.
a California corporation
By:________________________________________
Title:______________________________________
DayStar:
DAYSTAR PARTNERS L.P.,
a California limited partnership
By: XXXXX XXXXX CO., INC., its
General Partner
By: _____________________________
Xxxxx Xxxxx, President
N:\USER\SCK\Xxxxx\DCC\STCKPUR6.doc
STOCK PURCHASE AGREEMENT Page 10
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - Form of Registration Rights Agreement
Schedules
Schedule 3.8 - Intellectual Property
Schedule 3.10 - Use of Proceeds
Schedule 6.6 - Matters to be Covered by Legal Opinion
STOCK PURCHASE AGREEMENT
EXHIBITS AND SCHEDULES
SCHEDULE 3.8
OF
THE STOCK PURCHASE AGREEMENT
INTELLECTUAL PROPERTY
There are no exceptions to be set forth on this Schedule 3.8 in accordance with
Section 3.8, Patents; Trademarks, etc., of the Stock Purchase Agreement.
SCHEDULE 3.10
OF
THE STOCK PURCHASE AGREEMENT
USE OF PROCEEDS
The net proceeds from the sale of the SHARES are to be used as follows:
Application $Amount Percentage
----------- ------- ----------
Purchase of additional equipment to $200,000 22.22%
employ the laser technology which
xxxxx the image onto the film used
in the Single Use Caption Camera.
Marketing and Advertising of the $300,000 33.33%
Single Use Caption Camera
Reserve related to trade financing $200,000 22.22%
for purchase orders of the Single
Use Caption Camera
Working capital $300,000* 22.22%
-------- ------
Total $1,000,000 100.00%
*commissions, legal fees and other costs of placement will be paid from working
capital.
SCHEDULE 6.6
MATTERS TO BE COVERED BY LEGAL OPINION
OF_____________________
(1) DCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
and authority to conduct its business as presently conducted and as proposed to
be conducted by it and to enter into and perform this Agreement and to carry out
the transactions contemplated by this Agreement. DCC is duly qualified to do
business as a foreign corporation and is in good standing in all states and
jurisdictions in which the nature of the business conducted or property owned by
DCC make such qualification necessary.
(2) The execution and delivery of this Agreement and the consummation
by DCC of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on behalf of DCC. This Agreement, when executed and
delivered, will have been duly executed and delivered by DCC and constitutes a
valid and binding agreement of DCC, enforceable in accordance with its terms.
(3) The issuance, sale and delivery of the Shares in accordance with
this Agreement have been duly authorized by all necessary corporate action on
the part of DCC. The Shares, when issued and delivered against payment therefor,
will be duly and validly issued, fully paid and non-assessable. The Shares are
not subject to any preemptive rights or any right of first refusal right nor
will the issuance of the Shares give rise to any such rights.
(4) DCC has been subject to the requirements of Section 12 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") for a
period of at least twelve calendar months immediately preceding the Closing
Date, and has filed in a timely manner all reports required to be filed during
the twelve calendar months immediately preceding the Closing date (the "Exchange
Act Documents"). At the time of filing, the Exchange Act Documents (other than
financial statements, schedules and other financial data included therein as to
which such counsel need not express any opinion) conformed in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder.
(5) DCC is not in violation of any term of its Articles of
Incorporation or Bylaws, or in any material respect of any mortgage, indenture,
contract, agreement, instrument, or, to such counsel's best knowledge, any
judgment, decree, order, statute, rule, or regulation applicable to it. The
execution, delivery, and performance by DCC of the Agreement and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation or
be in conflict with or constitute a default under any such term, or cause the
acceleration of maturity of any loan or material obligation to which DCC is a
party or by which it is bound or with respect to which it is an obligor or
guarantor, or result in the creation or imposition of any material lien, claim,
charge, restriction, equity or encumbrance of any kind whatsoever upon, or, to
such counsel's best knowledge give to any other person any interest or right
(including any right of termination or
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 1
cancellation) in or with respect to any of the material properties, assets,
business or agreements of DCC. To such counsel's best knowledge, no such term
or condition materially adversely affects the business, property, prospects,
condition, affairs, or operations of DCC.
(6) Other than the timely filing of a Form D pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by DayStar in Section 4 of the Agreement, the offer
and sale of the Shares to DayStar will be in compliance with applicable Federal
and state securities laws.
(7) Except for the grant of registration rights to the Purchasers as
contemplated by the provisions hereof DCC is not under any obligation to
register any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(8) To such counsel's best knowledge, DCC has not received any notice
or claim of infringement of any rights, trademarks, trade names, trade secrets,
copyrights or other intellectual property or proprietary rights of others with
respect to DCC's operation of its business.
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of March 28, 1997, is entered
into by and between DCC COMPACT CLASSICS, INC., A COLORADO CORPORATION ("DCC"),
and SUNDANCE VENTURE PARTNERS, L.P., A DELAWARE LIMITED PARTNERSHIP
("Purchaser").
FACTUAL BACKGROUND
Purchaser wishes to purchase from DCC, and DCC wishes to sell to
Purchaser, shares of DCC's Common Stock, $.005 par value ("Common Stock").
Purchaser and DCC desire to provide for the foregoing purchase and sale and to
establish various rights and obligations in connection therewith. Persons other
than Purchaser (the "Other Purchasers") have purchased, or will purchase Common
Stock under agreements substantially similar to this Agreement. The Other
Purchasers and Purchaser are collectively referred to as the "Purchasers."
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. SALE OF SHARES.
Subject to the terms and conditions of this Agreement, at the Closing
(as defined below), DCC will sell and issue to Purchaser, and Purchaser will
purchase, 150,000 shares of Common Stock (the "Shares") for a total price in
cash of One Hundred Fifty Thousand Dollars ($150,000) (the "Total Purchase
Price"), which equals $1.00 per Share (the "Share Purchase Price"). The Shares
shall be subject to a Registration Rights Agreement (the "Registration Rights
Agreement"), substantially in the form of Exhibit A hereto.
2. THE CLOSING.
2.1 Closing. The closing ("Closing") of this transaction shall
take place at the offices of Coblentz, Cahen, XxXxxx & Breyer, LLP ("CCMB"), 000
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m. on
______________, 1997 (the "Closing Date"), or at such other time, date and place
as are mutually agreeable to DCC and Purchaser.
2.2 Delivery. At the Closing, subject to the terms of this
Agreement, DCC will deliver or cause to be delivered to Purchaser, against
Purchaser's payment at the Closing of the Total Purchase Price by one or more
checks or by wire transfer to an account or accounts designated by DCC, a stock
certificate or certificates evidencing the Shares in such denominations as
Purchaser has requested, dated the Closing Date and registered in the name or
names requested by Purchaser.
STOCK PURCHASE AGREEMENT Page 1
3. REPRESENTATIONS OF DCC. DCC hereby represents, warrants and
covenants to Purchaser as follows:
3.1 Organization and Standing. DCC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. DCC is duly qualified to do business as a foreign corporation and is
in good standing in all states and jurisdictions in which the nature of the
business conducted or property owned by DCC make such qualification necessary.
DCC has furnished Purchaser with copies of its Certificate of Incorporation and
its Bylaws and those of any subsidiaries. Said copies are true, correct, and
complete and contain all amendments through the date of the Closing.
3.2 Due Authorization. The execution and delivery of this
Agreement and the consummation by DCC of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on behalf of DCC.
This Agreement, when executed and delivered, will have been duly executed and
delivered by DCC and constitutes a valid and binding agreement of DCC,
enforceable in accordance with its terms.
3.3 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement have been duly authorized by all
necessary corporate action on the part of DCC, and all the Shares have been duly
reserved for issuance. The Shares, when issued and delivered against payment
therefor, will be duly and validly issued, fully paid and non-assessable. The
Shares are not subject to any preemptive rights or any right of first refusal
and the issuance of the Shares will not give rise to any such rights.
3.4 Exchange Act Documents.
3.4.1 DCC has been subject to the requirements of
Section 12 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") for a period of at least twelve calendar months immediately
preceding the Closing Date hereof and has filed in a timely manner all reports
required to be filed during the twelve calendar months immediately preceding
the Closing Date (the "Exchange Act Documents"). At the time of filing, the
Exchange Act Documents conformed in all material respects to the requirements
of the Exchange Act and all the rules and regulations thereunder, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed, when
such documents become effective or are filed with the Securities and Exchange
Commission (the "Commission"), as the case may be, will conform in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder, and none of such documents will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
3.4.2 The financial statements (together with the
related notes thereto) contained in the Exchange Act Documents present fairly
the financial position of DCC and its consolidated subsidiaries as of and at
the dates indicated and the results of their operations for the
STOCK PURCHASE AGREEMENT Page 2
periods specified; and except as otherwise disclosed in the Exchange Act
Documents, said financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied. The accountants
who have audited certain financial statements included in the Exchange Act
Documents are independent public accountants as required by the Exchange Act
and the rules and regulations thereunder.
3.4.3 The information set forth in the Form 10KSB
filed by DCC on May 30, 1996 (the "10K") is complete and accurate in all
material respects as of the Closing Date, and since the date of the 10K, except
as otherwise stated therein, (i) there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of DCC and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) there have been
no transactions entered into by DCC or any of its subsidiaries, other than
those in the normal course of business, which are material with respect to DCC
and its subsidiaries considered as one enterprise and (iii) except for regular
dividends on the common stock in amounts per share that are consistent with
past practice, there' has been no dividend or distribution of any kind
declared, paid or made by DCC on any class of its capital stock.
3.5 Compliance with Other Instruments, None Burdensome, etc.
DCC is not in violation of any term of its Articles of Incorporation or Bylaws,
or in any material respect of any mortgage, indenture, contract, agreement,
instrument, or, to DCC's best knowledge, any judgment, decree, order, statute,
rule, or regulation applicable to it. The execution, delivery, and performance
by DCC of this Agreement and the issuance and sale of the Shares pursuant
hereto, will not result in any such material violation or be in conflict with or
constitute a material default under any such term, or cause the acceleration of
maturity of any loan or material obligation to which DCC is a party or by which
it is bound or with respect to which it is an obligor or guarantor, or result in
the creation or imposition of any material lien, claim, charge, restriction,
equity or encumbrance of any kind whatsoever upon, or, to DC C's best knowledge
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of DCC. To DCC's best knowledge, no
such term or condition materially adversely affects the business, property,
prospects, condition, affairs, or operations of DCC.
3.6 Governmental Consents. Other than the timely filing of a
Form D pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act") and similar Blue Sky notification, no consent,
approval, order or authorization of; or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by Purchaser in Section 4 hereof the offer and sale
of the Shares to Purchaser will be in compliance with applicable Federal and
state securities laws.
3.7 Registration Rights. Except for the grant of registration
rights to the Purchasers as contemplated by the provisions hereof; DCC is not
under any obligation to register any of its presently outstanding securities or
any of its securities which may hereafter be issued.
STOCK PURCHASE AGREEMENT Page 3
3.8 Patents, Trademarks, etc. Except as set forth on Schedule
3.8, DCC owns and possesses or licenses all patents, patent applications,
licenses, trademarks, service marks, trade names, brand names, inventions,
trade secrets, processes, formulae, copyrights, hardware and software necessary
for the operation of its business as now conducted and as proposed to be
conducted (the "Intellectual Property"). DCC has not received any notice or
claim of infringement of any rights, trademarks, trade names, trade secrets,
copyrights or other intellectual property or proprietary rights of others with
respect to DCC's operation of its business. To the knowledge of DCC, except as
set forth on Schedule 3.8, the Intellectual Property does not infringe upon or
violate any rights, trademarks, trade names, trade secrets, copyrights or other
intellectual property or proprietary rights of any person or entity.
3.9 Insurance. DCC has adequate insurance, with financially
sound and reputable insurers, with respect to its business and properties which
are of a character customarily insured by corporations of established reputation
engaged in the same or a similar business and similarly situated, against loss
or damage of the kinds customarily insured against by such corporations, which
insurance is of such types (including public liability and workmen's
compensation insurance) as are customarily carried under similar circumstances
by such other corporations.
3.10 Use of Proceeds. The net proceeds from the sale of the
Shares shall be used as set forth in Schedule 3.10 hereto. DCC shall not
directly or indirectly use such proceeds for any other purpose.
3.11 Disclosure. Neither this Agreement (including, without
limitation, the Schedules and the Exhibits hereto), nor any other document
delivered to Purchaser or its counsel or agents in connection herewith contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. To the best of DCC's knowledge, there is no fact (or facts) which
(individually or in the aggregate) materially adversely affects the business,
prospects, condition, affairs, or operations of DCC or its properties or assets
which has (or have) not been set forth in this Agreement and the Schedules and
Exhibits hereto.
4. REPRESENTATIONS OF Purchaser. Purchaser hereby represents and
warrants to DCC as follows:
4.1 Investment. Purchaser is acquiring the Shares for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same.
4.2 Authority. Purchaser has lull power and authority to enter
into and to perform this Agreement in accordance with its terms.
4.3 Experience. Purchaser has sufficient knowledge and
experience in investing in companies similar to DCC so as to be able to evaluate
the risks and merits of its investment in DCC.
STOCK PURCHASE AGREEMENT Page 4
4.4 Legend. Purchaser understands that the stock certificate
representing the Shares shall bear a legend substantially to the following
effect:
THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO DCC IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
4.5 Accredited Investor. Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
5. COVENANTS OF DCC. DCC hereby covenants and agrees as follows:
5.1 Consents and Best Efforts. Subject to the terms and
conditions provided herein, DCC covenants and agrees to use its commercially
reasonable best efforts to take, or cause to be taken, all action or do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby and to cause the fulfillment of its obligations hereunder.
5.2 Notification of Certain Matters. DCC shall give prompt
notice to Day Star, and Purchaser shall give prompt notice to DCC, of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect as of the Closing Date and (ii)
any material failure of DCC or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use all reasonable efforts to remedy same.
5.3 Nondisclosure Agreements. DCC shall require all key
managers and other key employees now or hereafter employed by DCC who have
access to confidential and proprietary information of DCC to enter into
nondisclosure agreements in a form that is commercially reasonable.
5.4 Exchange Act Reports. Following the Closing, DCC shall
deliver to Purchaser all reports required to be filed by it pursuant to the
Exchange Act and the rules and regulations thereunder concurrently with
transmittal of such reports to the Commission.
5.5 Board Visitation Rights. DCC shall allow Purchaser, on
behalf of the Purchasers, to have one observer present at all meetings of the
Board of Directors and committees of the Board of Directors and such observer
shall be entitled to participate in discussions and consult with the Board of
Directors and committees of the Board of Directors, without voting. To
facilitate such visitation, DCC shall provide Purchaser with written notice of
all such meetings not later than it provides such notice to its directors.
STOCK PURCHASE AGREEMENT Page 5
6. CLOSING CONDITIONS. The obligations of Purchaser hereunder are
subject to Day Star's satisfaction in its sole discretion with the results of
its due diligence investigation and to the fulfillment or waiver on or before
the Closing of the following conditions:
6.1 Representations and Warranties True. All representations
and warranties of DCC made in Section 3 or otherwise under or pursuant to this
Agreement shall be true on the Closing Date and DCC shall have delivered to Day
Star a certificate of an authorized officer of DCC dated the Closing Date,
certifying to such effect.
6.2 Instruments and Proceedings to be Satisfactory. All
instruments and corporate proceedings relating to the sale of the Shares
hereunder by DCC or otherwise relating to the transactions contemplated hereby
shall be satisfactory to Purchaser.
6.3 Other Agreements. All documents and instruments specified
for delivery at the Closing shall have been executed and delivered by DCC and
Purchaser, as appropriate.
6.4 Due Diligence and Legal Fees. DCC shall pay at the Closing
or, if the estimated amount paid at closing is insufficient, promptly upon
demand all of the reasonable fees and expenses of counsel to Purchaser incurred
in connection with the preparation and negotiation of this Agreement and the
Closing of the transactions contemplated hereby. In addition, DCC shall pay all
reasonable fees and expenses of counsel for Purchaser in connection with any
amendment of any document contemplated hereby, any waiver under such document
and any consultation or action related to enforcement thereof.
6.5 Legal Opinion. Xxxxxxx Xxxxx, as counsel to DCC, shall
have executed and delivered to Purchaser a legal opinion, dated the Closing
Date, in form and substance satisfactory to counsel for Purchaser covering the
matters set forth in Schedule 6.6 hereto.
6.6 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of, or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
the value of the Shares, Purchaser's registration rights, or DCC.
6.7 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions (including the materials
provided to Purchaser and its special counsel) shall be reasonably satisfactory
in substance and form to Purchaser and its special counsel, and Purchaser and
its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
STOCK PURCHASE AGREEMENT Page 6
7. CONDITION TO THE OBLIGATIONS OF DCC. The obligations of DCC
hereunder are subject to the fulfillment or waiver of the following conditions
on or before the Closing:
7.1 Accuracy of Representations and Warranties. The
representations and Warranties of Purchaser contained in Section 4 shall be
true on the Closing Date.
7.2 Purchase Price. Payment of the applicable purchase
price to DCC as set forth in Section 2 hereof.
7.3 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
DCC.
8. GENERAL.
8.1 Indemnity.
(a) Each party agrees to indemnify and save
harmless the other party hereto and such other party's officers, directors,
employees and agents, and each person who controls such other party within the
meaning of the Securities Act or the Exchange Act, from and against any and all
costs, expenses, damages, claims, actions, diminution in value or other
liabilities, including costs of investigation and defense (collectively,
"Damages") suffered or incurred by the indemnified party as a result of any
breach by the indemnifying party of any of its agreements, representations,
warranties or covenants contained in this Agreement, other than Damages
resulting, directly or indirectly from the breach by the indemnified party of
any of its agreements, representations, warranties or covenants contained
herein; provided, however, that if and to the extent that such indemnification
is unenforceable for any reason, the indemnifying party shall make the maximum
contribution to the payment and satisfaction of such indemnified liability
which shall be permissible under applicable law.
(b) The indemnified party under this Section
8.1 will, promptly after the receipt of notice of the commencement of any
action against such indemnified party in respect of which indemnity may be
sought from the indemnifying party on account of an indemnity agreement
contained in this Section 8.1, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party to so notify the
indemnifying party of any such action shall not relieve the indemnifying party
from any liability which it may have to such indemnified party except to the
extent the indemnifying party shall have been materially prejudiced by the
omission of such indemnified party to so notify the indemnifying party,
pursuant to this Section 8.1. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 8.1 for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof nor for any settlement thereof entered into without
STOCK PURCHASE AGREEMENT Page 7
the consent of the indemnifying party; provided, however, that (i) if the
indemnifying party shall elect not to assume the defense of such claim or action
or (ii) if the indemnified party reasonably determines (x) that there may be a
conflict between the positions of the indemnifying party and of the indemnified
party in defending such claim or action or (y) that there may be legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then separate counsel for the indemnified
party shall be entitled to participate in and conduct the defense, in the case
of (i) and (ii)(x), or such different defenses, in the case of (ii)(y), and the
indemnifying party shall be liable for any reasonable legal or other expenses
incurred by the indemnified party in connection with such defense(s);
(c) All representations and warranties made by
the parties herein or in any instrument or document finished in connection
herewith shall survive the Closing and any investigation at any time made by or
on behalf of the parties hereto. All such representations and warranties shall
expire on the second anniversary of the respective Closing Dates, except for
claims, if any, asserted in writing prior to such second anniversary, which
shall survive until finally resolved and satisfied in full. All claims and
actions for indemnity pursuant to this Section 8 for breach of any
representation or warranty shall be asserted or maintained in writing by a
party hereto on or prior to the expiration of such two-year period.
8.2 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by reputable overnight courier or mailed by first class certified or
registered mall, return receipt requested, postage prepaid:
If to DCC: 0000 Xxxxxx Xxxxxx, Xx.000
Xxxxxxxxxx, XX 00000
Attention: President
With copy to: Xxxxxxx Xxxxx
00000 Xxxxxxx Xxxxxxxxx, Xx.000
Xxxxxxxx Xxxxx, XX 00000
If to Purchaser: Sundance Venture Partners, L.P.
00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
With copy to: COBLENTZ, CAHEN, XXXXXX & BREYER, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
If to DayStar: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
STOCK PURCHASE AGREEMENT Page 8
With copy to: Coblentz, Cahen, XxXxxx & Breyer, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Notices provided in accordance with this Section 8.2 shall be deemed
delivered upon personal delivery, one business day after deposit with a
reputable overnight delivery service, or two business days after deposit in the
mail. Any party may change its address for notice by notice similarly given.
8.3 Further Assurances. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees, both before and
after the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder or thereunder, and (iii) to cooperate with
each other in connection with the foregoing, including, without limitation,
using their respective best efforts (A) to obtain all consents, approvals and
waivers from any person necessary to permit the consummation of the transactions
contemplated by this Agreement, and (B) to fulfill all conditions to this
Agreement.
8.4 Specific Enforcement. Purchaser, on the one hand, and DCC,
on the other, acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they may be entitled at law or
equity.
8.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of DCC and Purchaser. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
8.7 Survival. The representations, warranties, covenants, and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by Purchaser.
8.8 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, provided, however, that DCC may not
assign any of its rights or delegate its duties without the prior written
consent of Day Star.
STOCK PURCHASE AGREEMENT Page 9
8.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.10 Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
8.11 Governing Law; Jurisdiction; Venue. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California as applied to contracts executed and entirely performed within
California. Any litigation or arbitration between the parties which arises out
of this Agreement shall be instituted and prosecuted only in the appropriate
California or Federal court or other tribunal, situated in San Francisco,
California. DCC specifically submits itself and its properties to the exclusive
jurisdiction of such courts for purposes of any such action and the enforcement
of any judgment or order arising therefrom. DCC waives any right to a change of
venue and any and all objections to the jurisdiction of the California courts.
Notwithstanding the foregoing, Purchaser may take such actions in a foreign
jurisdiction which Purchaser deems necessary and appropriate to enforce or
collect any court judgment in any dispute arising out of this Agreement or to
seek and obtain other relief as is necessary to enforce the terms of this
Agreement. Each party agrees that service upon such party in any such action or
proceeding may be made by first class mail, certified or registered, return
receipt requested as provided for the giving of notices in Section 8.2.
Executed as of the date first written above.
DCC: DCC COMPACT CLASSICS, INC.
a California corporation
By:/s/Xxxxxxxx Xxxxxxxxx
-------------------------------
Title: President
----------------------------
Purchaser: SUNDANCE VENTURE PARTNERS, L.P., A
DELAWARE LIMITED PARTNERSHIP
By:
------------------------------
Xxxxx Xxxxx
STOCK PURCHASE AGREEMENT Page 10
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - Form of Registration Rights Agreement
Schedules
Schedule 3.8 - Intellectual Property
Schedule 3.10 - Use of Proceeds
Schedule 6.6 - Matters to be Covered by Legal Opinion
STOCK PURCHASE AGREEMENT
EXHIBITS AND SCHEDULES
SCHEDULE 3.8
OF
THE STOCK PURCHASE AGREEMENT
INTELLECTUAL PROPERTY
There are no exceptions to be set forth on this Schedule 3.8 in accordance with
Section 3.8, Patents; Trademarks, etc., of the Stock Purchase Agreement.
SCHEDULE 3.10
OF
THE STOCK PURCHASE AGREEMENT
USE OF PROCEEDS
The net proceeds from the sale of the SHARES are to be used as follows:
Application $Amount Percentage
----------- ------- ----------
Purchase of additional equipment to $200,000 22.22%
employ the laser technology which
xxxxx the image onto the film used
in the Single Use Caption Camera.
Marketing and Advertising of the $300,000 33.33%
Single Use Caption Camera
Reserve related to trade financing $200,000 22.22%
for purchase orders of the Single
Use Caption Camera
Working capital $300,000* 22.22%
-------- ------
Total $1,000,000 100.00%
*commissions, legal fees and other costs of placement will be paid from working
capital.
SCHEDULE 6.6
MATTERS TO BE COVERED BY LEGAL OPINION
OF_____________________
(1) DCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
and authority to conduct its business as presently conducted and as proposed to
be conducted by it and to enter into and perform this Agreement and to carry
out the transactions contemplated by this Agreement. DCC is duly qualified to
do business as a foreign corporation and is in good standing in all states and
jurisdictions in which the nature of the business conducted or property owned
by DCC make such qualification necessary.
(2) The execution and delivery of this Agreement and the consummation
by DCC of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on behalf of DCC. This Agreement, when executed and
delivered, will have been duly executed and delivered by DCC and constitutes a
valid and binding agreement of DCC, enforceable in accordance with its terms.
(3) The issuance, sale and delivery of the Shares in accordance with
this Agreement have been duly authorized by all necessary corporate action on
the part of DCC. The Shares, when issued and delivered against payment therefor,
will be duly and validly issued, fully paid and non-assessable. The Shares are
not subject to any preemptive rights or any right of first refusal right nor
will the issuance of the Shares give rise to any such rights.
(4) DCC has been subject to the requirements of Section 12 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") for a
period of at least twelve calendar months immediately preceding the Closing
Date, and has filed in a timely manner all reports required to be filed during
the twelve calendar months immediately preceding the Closing date (the "Exchange
Act Documents"). At the time of filing, the Exchange Act Documents (other than
financial statements, schedules and other financial data included therein as to
which such counsel need not express any opinion) conformed in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder.
(5) DCC is not in violation of any term of its Articles of
Incorporation or Bylaws, or in any material respect of any mortgage, indenture,
contract, agreement, instrument, or, to such counsel's best knowledge, any
judgment, decree, order, statute, rule, or regulation applicable to it. The
execution, delivery, and performance by DCC of the Agreement and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation or
be in conflict with or constitute a default under any such term, or cause the
acceleration of maturity of any loan or material obligation to which DCC is a
party or by which it is bound or with respect to which it is an obligor or
guarantor, or result in the creation or imposition of any material lien, claim,
charge, restriction, equity or encumbrance of any kind whatsoever upon, or, to
such counsel's best knowledge give to any other person any interest or right
(including any right of termination or
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 1
cancellation) in or with respect to any of the material properties, assets,
business or agreements of DCC. To such counsel's best knowledge, no such term or
condition materially adversely affects the business, property, prospects,
condition, affairs, or operations of DCC.
(6) Other than the timely filing of a Form D pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by Purchaser in Section 4 of the Agreement, the
offer and sale of the Shares to Purchaser will be in compliance with applicable
Federal and state securities laws.
(7) Except for the grant of registration rights to the Purchasers as
contemplated by the provisions hereof DCC is not under any obligation to
register any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(8) To such counsel's best knowledge, DCC has not received any notice
or claim of infringement of any rights, trademarks, trade names, trade secrets,
copyrights or other intellectual property or proprietary rights of others with
respect to DCC's operation of its business.
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of March 28, 1997, is entered
into by and between DCC COMPACT CLASSICS, INC., A COLORADO CORPORATION ("DCC"),
and XXXXX XXXXX, AN INDIVIDUAL ("Purchaser").
FACTUAL BACKGROUND
Purchaser wishes to purchase from DCC, and DCC wishes to sell to
Purchaser, shares of DCC'S Common Stock, $.005 par value ("Common Stock").
Purchaser and DCC desire to provide for the foregoing purchase and sale and to
establish various rights and obligations in connection therewith. Persons other
than Purchaser (the "Other Purchasers") have purchased, or will purchase Common
Stock under agreements substantially similar to this Agreement. The Other
Purchasers and Purchaser are collectively referred to as the "Purchasers."
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. SALE OF SHARES.
Subject to the terms and conditions of this Agreement, at the Closing
(as defined below), DCC will sell and issue to Purchaser, and Purchaser will
purchase, 20,000 shares of Common Stock (the "Shares") for a total price in cash
of Twenty Thousand Dollars ($20,000) (the "Total Purchase Price"), which equals
$1.00 per Share (the "Share Purchase Price"). The Shares shall be subject to a
Registration Rights Agreement (the "Registration Rights Agreement"),
substantially in the form of Exhibit A hereto.
2. THE CLOSING.
2.1 Closing. The closing ("Closing") of this transaction shall
take place at the offices of Coblentz, Cahen, XxXxxx & Breyer, LLP ("CCMB"), 000
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m. on
___________, 1997 (the "Closing Date"), or at such other time, date and place as
are mutually agreeable to DCC and Purchaser.
2.2 Delivery. At the Closing, subject to the terms of this
Agreement, DCC will deliver or cause to be delivered to Purchaser, against
Purchaser's payment at the Closing of the Total Purchase Price by one or more
checks or by wire transfer to an account or accounts designated by DCC, a stock
certificate or certificates evidencing the Shares in such denominations as
Purchaser has requested, dated the Closing Date and registered in the name or
names requested by Purchaser.
STOCK PURCHASE AGREEMENT Page 1
3. REPRESENTATIONS OF DCC. DCC hereby represents, warrants and
covenants to Purchaser as follows:
3.1 Organization and Standing. DCC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. DCC is duly qualified to do business as a foreign corporation and is
in good standing in all states and jurisdictions in which the nature of the
business conducted or property owned by DCC make such qualification necessary.
DCC has furnished Purchaser with copies of its Certificate of Incorporation and
its Bylaws and those of any subsidiaries. Said copies are true, correct, and
complete and contain all amendments through the date of the Closing.
3.2 Due Authorization. The execution and delivery of this
Agreement and the consummation by DCC of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on behalf of DCC.
This Agreement, when executed and delivered, will have been duly executed and
delivered by DCC and constitutes a valid and binding agreement of DCC,
enforceable in accordance with its terms.
3.3 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement have been duly authorized by all
necessary corporate action on the part of DCC, and all the Shares have been duly
reserved for issuance. The Shares, when issued and delivered against payment
therefor, will be duly and validly issued, fully paid and non-assessable. The
Shares are not subject to any preemptive rights or any right of first refusal
and the issuance of the Shares will not give rise to any such rights.
3.4 Exchange Act Documents.
3.4.1 DCC has been subject to the requirements of
Section 12 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") for a period of at least twelve calendar months immediately
preceding the Closing Date hereof and has filed in a timely manner all reports
required to be filed during the twelve calendar months immediately preceding
the Closing Date (the "Exchange Act Documents"). At the time of filing, the
Exchange Act Documents conformed in all material respects to the requirements
of the Exchange Act and all the rules and regulations thereunder, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed, when
such documents become effective or are filed with the Securities and Exchange
Commission (the "Commission"), as the case may be, will conform in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder, and none of such documents will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
3.4.2 The financial statements (together with the
related notes thereto) contained in the Exchange Act Documents present fairly
the financial position of DCC and its consolidated subsidiaries as of and at
the dates indicated and the results of their operations for the
STOCK PURCHASE AGREEMENT Page 2
periods specified; and except as otherwise disclosed in the Exchange Act
Documents, said financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied. The accountants
who have audited certain financial statements included in the Exchange Act
Documents are independent public accountants as required by the Exchange Act and
the rules and regulations thereunder.
3.4.3 The information set forth in the Form 10KSB
filed by DCC on May 30, 1996 (the "10K") is complete and accurate in all
material respects as of the Closing Date, and since the date of the 10K, except
as otherwise stated therein, (i) there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of DCC and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (ii)
there have been no transactions entered into by DCC or any of its subsidiaries,
other than those in the normal course of business, which are material with
respect to DCC and its subsidiaries considered as one enterprise and (iii)
except for regular dividends on the common stock in amounts per share that are
consistent with past practice, there' has been no dividend or distribution of
any kind declared, paid or made by DCC on any class of its capital stock.
3.5 Compliance with Other Instruments, None Burdensome, etc.
DCC is not in violation of any term of its Articles of Incorporation or Bylaws,
or in any material respect of any mortgage, indenture, contract, agreement,
instrument, or, to DCC's best knowledge, any judgment, decree, order, statute,
rule, or regulation applicable to it. The execution, delivery, and performance
by DCC of this Agreement and the issuance and sale of the Shares pursuant
hereto, will not result in any such material violation or be in conflict with or
constitute a material default under any such term, or cause the acceleration of
maturity of any loan or material obligation to which DCC is a party or by which
it is bound or with respect to which it is an obligor or guarantor, or result in
the creation or imposition of any material lien, claim, charge, restriction,
equity or encumbrance of any kind whatsoever upon, or, to DC C's best knowledge
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of DCC. To DCC's best knowledge, no
such term or condition materially adversely affects the business, property,
prospects, condition, affairs, or operations of DCC.
3.6 Governmental Consents. Other than the timely filing of a
Form D pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act") and similar Blue Sky notification, no consent,
approval, order or authorization of; or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by Purchaser in Section 4 hereof the offer and sale
of the Shares to Purchaser will be in compliance with applicable Federal and
state securities laws.
3.7 Registration Rights. Except for the grant of registration
rights to the Purchasers as contemplated by the provisions hereof; DCC is not
under any obligation to register any of its presently outstanding securities or
any of its securities which may hereafter be issued.
STOCK PURCHASE AGREEMENT Page 3
3.8 Patents, Trademarks, etc. Except as set forth on Schedule
3.8, DCC owns and possesses or licenses all patents, patent applications,
licenses, trademarks, service marks, trade names, brand names, inventions, trade
secrets, processes, formulae, copyrights, hardware and software necessary for
the operation of its business as now conducted and as proposed to be conducted
(the "Intellectual Property"). DCC has not received any notice or claim of
infringement of any rights, trademarks, trade names, trade secrets, copyrights
or other intellectual property or proprietary rights of others with respect to
DCC's operation of its business. To the knowledge of DCC, except as set forth on
Schedule 3.8, the Intellectual Property does not infringe upon or violate any
rights, trademarks, trade names, trade secrets, copyrights or other intellectual
property or proprietary rights of any person or entity.
3.9 Insurance. DCC has adequate insurance, with financially
sound and reputable insurers, with respect to its business and properties which
are of a character customarily insured by corporations of established reputation
engaged in the same or a similar business and similarly situated, against loss
or damage of the kinds customarily insured against by such corporations, which
insurance is of such types (including public liability and workmen's
compensation insurance) as are customarily carried under similar circumstances
by such other corporations.
3.10 Use of Proceeds. The net proceeds from the sale of the
Shares shall be used as set forth in Schedule 3.10 hereto. DCC shall not
directly or indirectly use such proceeds for any other purpose.
3.11 Disclosure. Neither this Agreement (including, without
limitation, the Schedules and the Exhibits hereto), nor any other document
delivered to Purchaser or its counsel or agents in connection herewith contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. To the best of DCC's knowledge, there is no fact (or facts) which
(individually or in the aggregate) materially adversely affects the business,
prospects, condition, affairs, or operations of DCC or its properties or assets
which has (or have) not been set forth in this Agreement and the Schedules and
Exhibits hereto.
4. REPRESENTATIONS OF Purchaser. Purchaser hereby represents and
warrants to DCC as follows:
4.1 Investment. Purchaser is acquiring the Shares for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same.
4.2 Authority. Purchaser has lull power and authority to enter
into and to perform this Agreement in accordance with its terms.
4.3 Experience. Purchaser has sufficient knowledge and
experience in investing in companies similar to DCC so as to be able to evaluate
the risks and merits of its investment in DCC.
STOCK PURCHASE AGREEMENT Page 4
4.4 Legend. Purchaser understands that the stock certificate
representing the Shares shall bear a legend substantially to the following
effect:
THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO DCC IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
4.5 Accredited Investor. Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
5. COVENANTS OF DCC. DCC hereby covenants and agrees as follows:
5.1 Consents and Best Efforts. Subject to the terms and
conditions provided herein, DCC covenants and agrees to use its commercially
reasonable best efforts to take, or cause to be taken, all action or do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby and to cause the fulfillment of its obligations hereunder.
5.2 Notification of Certain Matters. DCC shall give prompt
notice to Day Star, and Purchaser shall give prompt notice to DCC, of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect as of the Closing Date and (ii)
any material failure of DCC or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use all reasonable efforts to remedy same.
5.3 Nondisclosure Agreements. DCC shall require all key
managers and other key employees now or hereafter employed by DCC who have
access to confidential and proprietary information of DCC to enter into
nondisclosure agreements in a form that is commercially reasonable.
5.4 Exchange Act Reports. Following the Closing, DCC shall
deliver to Purchaser all reports required to be filed by it pursuant to the
Exchange Act and the rules and regulations thereunder concurrently with
transmittal of such reports to the Commission.
5.5 Board Visitation Rights. DCC shall allow Purchaser, on
behalf of the Purchasers, to have one observer present at all meetings of the
Board of Directors and committees of the Board of Directors and such observer
shall be entitled to participate in discussions and consult with the Board of
Directors and committees of the Board of Directors, without voting. To
facilitate such visitation, DCC shall provide Purchaser with written notice of
all such meetings not later than it provides such notice to its directors.
STOCK PURCHASE AGREEMENT Page 5
6. CLOSING CONDITIONS. The obligations of Purchaser hereunder are
subject to Day Star's satisfaction in its sole discretion with the results of
its due diligence investigation and to the fulfillment or waiver on or before
the Closing of the following conditions:
6.1 Representations and Warranties True. All representations
and warranties of DCC made in Section 3 or otherwise under or pursuant to this
Agreement shall be true on the Closing Date and DCC shall have delivered to Day
Star a certificate of an authorized officer of DCC dated the Closing Date,
certifying to such effect.
6.2 Instruments and Proceedings to be Satisfactory. All
instruments and corporate proceedings relating to the sale of the Shares
hereunder by DCC or otherwise relating to the transactions contemplated hereby
shall be satisfactory to Purchaser.
6.3 Other Agreements. All documents and instruments specified
for delivery at the Closing shall have been executed and delivered by DCC and
Purchaser, as appropriate.
6.4 Due Diligence and Legal Fees. DCC shall pay at the Closing
or, if the estimated amount paid at closing is insufficient, promptly upon
demand all of the reasonable fees and expenses of counsel to Purchaser incurred
in connection with the preparation and negotiation of this Agreement and the
Closing of the transactions contemplated hereby. In addition, DCC shall pay all
reasonable fees and expenses of counsel for Purchaser in connection with any
amendment of any document contemplated hereby, any waiver under such document
and any consultation or action related to enforcement thereof.
6.5 Legal Opinion. Xxxxxxx Xxxxx, as counsel to DCC, shall
have executed and delivered to Purchaser a legal opinion, dated the Closing
Date, in form and substance satisfactory to counsel for Purchaser covering the
matters set forth in Schedule 6.6 hereto.
6.6 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of, or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
the value of the Shares, Purchaser's registration rights, or DCC.
6.7 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions (including the materials
provided to Purchaser and its special counsel) shall be reasonably satisfactory
in substance and form to Purchaser and its special counsel, and Purchaser and
its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
STOCK PURCHASE AGREEMENT Page 6
7. CONDITION TO THE OBLIGATIONS OF DCC. The obligations of DCC
hereunder are subject to the fulfillment or waiver of the following conditions
on or before the Closing:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of Purchaser contained in Section 4 shall be true
on the Closing Date.
7.2 Purchase Price. Payment of the applicable purchase price
to DCC as set forth in Section 2 hereof.
7.3 No Suit. No suit, action, investigation, inquiry or other
proceeding by any person shall have been instituted or threatened which
questions the validity or legality of or seeks to enjoin or invalidate, the
transactions contemplated hereby and which is reasonably likely to succeed and
which, if successful, is reasonably likely to materially and adversely affect
DCC.
8. GENERAL.
8.1 Indemnity.
(a) Each party agrees to indemnify and save harmless
the other party hereto and such other party's officers, directors, employees
and agents, and each person who controls such other party within the meaning of
the Securities Act or the Exchange Act, from and against any and all costs,
expenses, damages, claims, actions, diminution in value or other liabilities,
including costs of investigation and defense (collectively, "Damages") suffered
or incurred by the indemnified party as a result of any breach by the
indemnifying party of any of its agreements, representations, warranties or
covenants contained in this Agreement, other than Damages resulting, directly
or indirectly from the breach by the indemnified party of any of its
agreements, representations, warranties or covenants contained herein;
provided, however, that if and to the extent that such indemnification is
unenforceable for any reason, the indemnifying party shall make the maximum
contribution to the payment and satisfaction of such indemnified liability
which shall be permissible under applicable law.
(b) The indemnified party under this Section 8.1
will, promptly after the receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may be sought from
the indemnifying party on account of an indemnity agreement contained in this
Section 8.1, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party to so notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party except to the extent the
indemnifying party shall have been materially prejudiced by the omission of
such indemnified party to so notify the indemnifying party, pursuant to this
Section 8.1. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof
the indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof the indemnifying party will not be liable to such indemnified party
under this Section 8.1 for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof nor for any
settlement thereof entered into without
STOCK PURCHASE AGREEMENT Page 7
the consent of the indemnifying party; provided, however, that (i) if the
indemnifying party shall elect not to assume the defense of such claim or action
or (ii) if the indemnified party reasonably determines (x) that there may be a
conflict between the positions of the indemnifying party and of the indemnified
party in defending such claim or action or (y) that there may be legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then separate counsel for the indemnified
party shall be entitled to participate in and conduct the defense, in the case
of (i) and (ii)(x), or such different defenses, in the case of (ii)(y), and the
indemnifying party shall be liable for any reasonable legal or other expenses
incurred by the indemnified party in connection with such defense(s);
(c) All representations and warranties made by the
parties herein or in any instrument or document finished in connection herewith
shall survive the Closing and any investigation at any time made by or on
behalf of the parties hereto. All such representations and warranties shall
expire on the second anniversary of the respective Closing Dates, except for
claims, if any, asserted in writing prior to such second anniversary, which
shall survive until finally resolved and satisfied in full. All claims and
actions for indemnity pursuant to this Section 8 for breach of any
representation or warranty shall be asserted or maintained in writing by a
party hereto on or prior to the expiration of such two-year period.
8.2 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by reputable overnight courier or mailed by first class certified or
registered mall, return receipt requested, postage prepaid:
If to DCC: 0000 Xxxxxx Xxxxxx, Xx.000
Xxxxxxxxxx, XX 00000
Attention: President
With copy to: Xxxxxxx Xxxxx
00000 Xxxxxxx Xxxxxxxxx, Xx.000
Xxxxxxxx Xxxxx, XX 00000
If to Purchaser: Xxxxx Xxxxx
00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
With copy to: COBLENTZ, CAHEN, XXXXXX & BREYER, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
If to DayStar: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
STOCK PURCHASE AGREEMENT Page 8
With copy to: Coblentz, Cahen, XxXxxx & Breyer, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Notices provided in accordance with this Section 8.2 shall be deemed
delivered upon personal delivery, one business day after deposit with a
reputable overnight delivery service, or two business days after deposit in the
mail. Any party may change its address for notice by notice similarly given.
8.3 Further Assurances. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees, both before and
after the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder or thereunder, and (iii) to cooperate with
each other in connection with the foregoing, including, without limitation,
using their respective best efforts (A) to obtain all consents, approvals and
waivers from any person necessary to permit the consummation of the
transactions contemplated by this Agreement, and (B) to fulfill all conditions
to this Agreement.
8.4 Specific Enforcement. Purchaser, on the one hand, and DCC,
on the other, acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they may be entitled at law or
equity.
8.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of DCC and Purchaser. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
8.7 Survival. The representations, warranties, covenants, and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by Purchaser.
8.8 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, provided, however, that DCC may not
assign any of its rights or delegate its duties
STOCK PURCHASE AGREEMENT Page 9
without the prior written consent of Day Star.
8.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.10 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
8.11 Governing Law; Jurisdiction; Venue. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California as applied to contracts executed and entirely performed within
California. Any litigation or arbitration between the parties which arises out
of this Agreement shall be instituted and prosecuted only in the appropriate
California or Federal court or other tribunal, situated in San Francisco,
California. DCC specifically submits itself and its properties to the exclusive
jurisdiction of such courts for purposes of any such action and the enforcement
of any judgment or order arising therefrom. DCC waives any right to a change of
venue and any and all objections to the jurisdiction of the California courts.
Notwithstanding the foregoing, Purchaser may take such actions in a foreign
jurisdiction which Purchaser deems necessary and appropriate to enforce or
collect any court judgment in any dispute arising out of this Agreement or to
seek and obtain other relief as is necessary to enforce the terms of this
Agreement. Each party agrees that service upon such party in any such action or
proceeding may be made by first class mail, certified or registered, return
receipt requested as provided for the giving of notices in Section 8.2.
Executed as of the date first written above.
DCC:
DCC COMPACT CLASSICS, INC.
a California corporation
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------------------
Title: President
--------------------------------
Purchaser:
-----------------------------
Xxxxx Xxxxx
STOCK PURCHASE AGREEMENT Page 10
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - Form of Registration Rights Agreement
Schedules
Schedule 3.8 - Intellectual Property
Schedule 3.10 - Use of Proceeds
Schedule 6.6 - Matters to be Covered by Legal Opinion
STOCK PURCHASE AGREEMENT
EXHIBITS AND SCHEDULES
SCHEDULE 3.8
OF
THE STOCK PURCHASE AGREEMENT
INTELLECTUAL PROPERTY
There are no exceptions to be set forth on this Schedule 3.8 in accordance with
Section 3.8, Patents; Trademarks, etc., of the Stock Purchase Agreement.
SCHEDULE 3.10
OF
THE STOCK PURCHASE AGREEMENT
USE OF PROCEEDS
The net proceeds from the sale of the SHARES are to be used as follows:
Application $Amount Percentage
----------- ------- ----------
Purchase of additional equipment to $200,000 22.22%
employ the laser technology which
xxxxx the image onto the film used
in the Single Use Caption Camera.
Marketing and Advertising of the $300,000 33.33%
Single Use Caption Camera
Reserve related to trade financing $200,000 22.22%
for purchase orders of the Single
Use Caption Camera
Working capital $300,000* 22.22%
-------- ------
Total $1,000,000 100.00%
*commissions, legal fees and other costs of placement will be paid from working
capital.
SCHEDULE 6.6
MATTERS TO BE COVERED BY LEGAL OPINION
OF_____________________
(1) DCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
and authority to conduct its business as presently conducted and as proposed to
be conducted by it and to enter into and perform this Agreement and to carry out
the transactions contemplated by this Agreement. DCC is duly qualified to do
business as a foreign corporation and is in good standing in all states and
jurisdictions in which the nature of the business conducted or property owned by
DCC make such qualification necessary.
(2) The execution and delivery of this Agreement and the consummation
by DCC of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on behalf of DCC. This Agreement, when executed and
delivered, will have been duly executed and delivered by DCC and constitutes a
valid and binding agreement of DCC, enforceable in accordance with its terms.
(3) The issuance, sale and delivery of the Shares in accordance with
this Agreement have been duly authorized by all necessary corporate action on
the part of DCC. The Shares, when issued and delivered against payment therefor,
will be duly and validly issued, fully paid and non-assessable. The Shares are
not subject to any preemptive rights or any right of first refusal right nor
will the issuance of the Shares give rise to any such rights.
(4) DCC has been subject to the requirements of Section 12 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") for a
period of at least twelve calendar months immediately preceding the Closing
Date, and has filed in a timely manner all reports required to be filed during
the twelve calendar months immediately preceding the Closing date (the "Exchange
Act Documents"). At the time of filing, the Exchange Act Documents (other than
financial statements, schedules and other financial data included therein as to
which such counsel need not express any opinion) conformed in all material
respects to the requirements of the Exchange Act and all the rules and
regulations thereunder.
(5) DCC is not in violation of any term of its Articles of
Incorporation or Bylaws, or in any material respect of any mortgage, indenture,
contract, agreement, instrument, or, to such counsel's best knowledge, any
judgment, decree, order, statute, rule, or regulation applicable to it. The
execution, delivery, and performance by DCC of the Agreement and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation or
be in conflict with or constitute a default under any such term, or cause the
acceleration of maturity of any loan or material obligation to which DCC is a
party or by which it is bound or with respect to which it is an obligor or
guarantor, or result in the creation or imposition of any material lien, claim,
charge, restriction, equity or encumbrance of any kind whatsoever upon, or, to
such counsel's best knowledge give to any other person any interest or right
(including any right of termination or
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 1
cancellation) in or with respect to any of the material properties, assets,
business or agreements of DCC. To such counsel's best knowledge, no such term or
condition materially adversely affects the business, property, prospects,
condition, affairs, or operations of DCC.
(6) Other than the timely filing of a Form D pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of DCC in connection with the execution and delivery of this
Agreement or the offer, issuance, sale and delivery of the Shares. Based in part
on the representations made by Purchaser in Section 4 of the Agreement, the
offer and sale of the Shares to Purchaser will be in compliance with applicable
Federal and state securities laws.
(7) Except for the grant of registration rights to the Purchasers as
contemplated by the provisions hereof DCC is not under any obligation to
register any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(8) To such counsel's best knowledge, DCC has not received any notice
or claim of infringement of any rights, trademarks, trade names, trade secrets,
copyrights or other intellectual property or proprietary rights of others with
respect to DCC's operation of its business.
STOCK PURCHASE AGREEMENT
SCHEDULE 6.6 PAGE 2
