EXHIBIT 10.32
COMMON STOCK PURCHASE AGREEMENT
AGREEMENT, dated February 28, 2002 among Digital Creative Development
Corporation, a Utah corporation having an office at 101 Larkspur Circle,
Larkspur, CA 94939 ("Seller"), Digital Creative Development Corporation, a
Delaware corporation having an office at 101 Larkspur Circle, Larkspur, CA
94939, ("DCDC Delaware"), Arthur Treacher's Inc., a Delaware corporation having
an office at 5 Dakota Drive, Suite 302, Lake Success, New York, 11042 ("ATI"),
PAT Services, Inc., a Delaware corporation having an office at 5 Dakota Drive,
Suite 302, Lake Success, New York 11042 ("Purchaser") and Jeffrey Bernstein,
having an office at 5 Dakota Drive, Suite 302, Lake Success, New York 11042
("Bernstein").
R E C I T A L S
WHEREAS, the Purchaser wishes to purchase and Seller wishes to sell an
aggregate of 41,594,709 shares (the "Shares") of common stock of ATI, par value
$0.0001 (the "ATI Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:
1. Sale of Shares. Subject to and upon the terms and conditions set forth
in this Agreement, Seller hereby sells, transfers, conveys, assigns and delivers
to the Purchaser, free and clear of all claims, charges, liens, contract rights,
options, security interests, mortgages, encumbrances and restrictions whatsoever
(collectively, the "Encumbrances"), and Purchaser hereby purchases from Seller
the Shares at a purchase price of one hundred dollars ($100). In consideration
for the sale of Shares to Purchaser pursuant to the terms and conditions of this
Agreement, Bernstein hereby waives any and all rights to convert any of his
10,398,677 shares of ATI Common Stock into shares of Seller pursuant to that
certain Purchase Agreement among Seller, ATI and Bernstein dated as of October
19, 2000 (the "Pudgies Purchase Agreement") and that certain Conversion
Agreement among Seller, ATI and Bernstein dated as of October 19, 2000 (the
"Conversion Agreement"), or otherwise.
Purchaser hereby purchases the Shares from Seller by delivery
simultaneously herewith a check payable to Seller of the purchase price in the
amount of $100. Simultaneously herewith, Seller is delivering to Purchaser stock
certificates representing the Shares duly endorsed in blank for transfer or
accompanied by a separate stock power duly executed in blank, subject to Section
4.
2. Representations and Warranties of Seller and DCDC Delaware. Seller and
DCDC Delaware, jointly and severally, represent and warrant to Purchaser and
Bernstein as follows:
a. Organization, Standing and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Utah and DCDC
Delaware is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. Each of Seller and DCDC Delaware has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. Each of Seller and DCDC is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business or properties.
b. Capitalization and Voting Rights. The authorized capital of ATI consists
of: 75,000,000 shares of ATI Common Stock, of which 51,993,386 shares are issued
and outstanding as of the date hereof and 10,000,000 shares of preferred stock,
$.01 par value per share, of which no shares are issued and outstanding on the
date hereof. Except as set forth on Schedule 2(b), there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from ATI of any shares of its capital
stock. ATI is not a party or subject to any agreement or understanding of any
kind, and, to Seller's knowledge, there is no agreement or understanding of any
kind between any individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof,
which affects or relates to the acquisition, disposition or voting or giving of
written consents with respect to any equity security (or securities convertible
into equity securities) of ATI. The Shares have been duly and validly issued,
are fully paid and non-assessable and were issued in compliance with all
applicable Federal and state securities laws.
c. Execution, Delivery and Performance. The execution, delivery and
performance by Seller and DCDC Delaware of this Agreement and the documents
contemplated hereby are within Seller's and DCDC Delaware's corporate powers and
have been duly authorized by all necessary corporate action.
d. Binding Effect. This Agreement and the agreements contemplated hereby,
when executed and delivered will be the legal, valid and binding obligations of
Seller and DCDC Delaware enforceable against Seller and DCDC Delaware in
accordance with their terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (ii) other laws of general application
affecting the enforcement of creditors' rights generally and general principles
of equity, (iii) the discretion of the court before which any proceeding
therefor may be brought, and (iv) as rights to indemnity may be limited by
federal or state securities laws or by public policy.
e. Share Ownership. Seller is the record and beneficial owner of the Shares
free and clear of all Encumbrances, except for the lien of DCDC Delaware arising
from a certain secured loan from DCDC Delaware to MIE Hospitality Inc. ("MIE"),
ATI and Seller dated as of December 15, 2000, which loan had an outstanding
principal balance of $996,000 at June 30, 2001 (the "DCDC Delaware Lien"), and
is conveying good and valid title to the Shares to Purchaser, free and clear of
all Encumbrances, except for the DCDC Delaware Lien.
f. Shareholder Approval. The sale of the Shares to Purchaser does not
represent the sale of all or substantially all of the assets of Seller or DCDC
Delaware and no approval of Seller's or DCDC Delaware's shareholders is required
in connection with this Agreement and the transactions contemplated hereby.
3. Representations and Warranties by the Purchaser. The Purchaser and ATI
jointly and severally represent and warrant to Seller as follows:
a. Organization. Purchaser and ATI are corporations duly organized, validly
existing and in good standing under the laws of Delaware. Each of Purchaser and
ATI and has all requisite corporate power and authority to carry on its business
as now conducted and as proposed to be conducted. Each of Purchaser and ATI is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a material adverse effect on its
business or properties. Bernstein is the owner of all of the outstanding capital
stock of Purchaser and is the President of Purchaser and ATI.
b. Execution, Delivery, Authorization and Performance. The execution,
delivery and performance by Purchaser and ATI of this Agreement and of the
documents contemplated hereby are within the powers of Purchaser and ATI and
have been duly authorized by all necessary corporate action.
c. Binding Effect. This Agreement and the agreements contemplated hereby,
when executed and delivered will be the legal, valid and binding obligations of
Purchaser, ATI and Bernstein enforceable against them in accordance with their
terms, subject to (i) applicable bankruptcy, insolvency, reorganization and
moratorium laws, (ii) other laws of general application affecting the
enforcement of creditors' rights generally and general principles of equity,
(iii) the discretion of the court before which any proceeding therefor may be
brought, and (iv) as rights to indemnity may be limited by federal or state
securities laws or by public policy.
d. Investment Representation: Purchaser represents that it is acquiring the
Shares for its own account for investment only and not with a view towards the
distribution or resale, and agrees not to sell, transfer, pledge, hypothecate or
otherwise dispose of, or offer to dispose of, the Shares, unless the Shares have
been registered under the Securities Act of 1933 (the "1933 Act") and applicable
state securities laws or such registration is not required in the opinion of
counsel for Purchaser. Any routine sale of the Shares made in reliance upon Rule
144 promulgated under the 1933 Act can be made only in accordance with the terms
and conditions of said Rule and further, that in case such Rule is not
applicable to any sale of the Shares, resale thereof may require compliance with
some other exemption under the 1933 Act prior to resale. Purchaser understands
that certificates for the Shares purchased pursuant to this Agreement shall bear
the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION FOR
SUCH SALE, OFFER, TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER
SUCH ACT."
Purchaser represents that (i) it is purchasing the Shares after having made
adequate investigation of the business, finances and prospects of ATI, (ii) it
has been furnished any information and materials relating to the business,
finances and operation of ATI and any information and materials relating to the
sale of the Shares which it has requested and (iii) it has been given an
opportunity to make any further inquiries desired of the management and any
other personnel of ATI and has received satisfactory responses to such
inquiries. Bernstein represents that he (i) is knowledgeable regarding the
financial statements, assets and liabilities of ATI and that the assets of ATI
are being sold "as is, where is," (ii) is aware that ATI and its subsidiaries
are in default with respect to certain contracts, (iii) acknowledges that no
consents with respect to the transfer of contracts and leases to which ATI and
its subsidiaries are being obtained prior to the purchase of the Shares.
4. Loan from DCDC Delaware
The Shares, which had formerly been pledged by Seller to DCDC Delaware as
collateral to secure the obligations of Seller, ATI and MIE under the promissory
note executed by Seller, MIE and ATI in favor of DCDC Delaware dated December
15, 2000, are hereby pledged by Purchaser to DCDC Delaware as collateral to
secure the obligations of Purchaser under the Amended and Restated Promissory
Note dated as of the date hereof attached in the form of Exhibit A (the "Note")
and under this Agreement pursuant to the terms of the Pledge Agreement attached
in the form of Exhibit B (the "Pledge Agreement"). Upon delivery of the Note,
the lien with respect to certain assets of ATI and MIE shall remain in full
force and effect. Purchaser hereby delivers a certificate representing the
Shares with a duly endorsed power to DCDC Delaware to be held as collateral
pursuant to the Pledge Agreement.
5. Conversion Agreement
The Conversion Agreement is hereby terminated and of no further force and
effect and no party has any further rights or obligations under the Conversion
Agreement.
6. Releases
Bernstein, on behalf of himself and and his affiliates, heirs,
administrators, executors, agents, attorneys, successors and assigns, does
hereby release and forever discharge and agree to hold harmless Seller and its
affiliates, successors and assigns, from any and all claims and liabilities
whatsoever under the Pudgies Purchase Agreement, whether now existing or
hereafter arising. Seller, on behalf of itself and its affiliates, successors
and assigns, does hereby release and forever discharge and agree to hold
harmless Berstein and his affiliates, heirs, administrators, executors, agents,
attorneys, successors and assigns, from any and all claims and liabilities
whatsoever under the Pudgies Purchase Agreement, whether now existing or
hereafter arising.
7. Indemnification
a. ATI and Purchaser (the "Indemnifying Party") shall be jointly and
severally responsible to indemnify Seller, its subsidiaries, successors,
officers, directors and affiliates (the "Indemnified Party," as the case may be)
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever and including reasonable fees and expenses of the Indemnified Party's
counsel) (collectively,"Losses") to which any of them may become subject which
arises from (i) the operations of ATI, Purchaser and their subsidiaries and
affiliates, (ii) any failure by the Indemnifying Party to perform or comply with
any provision of this Agreement, and (iii) any material breach of the
representations and warranties set forth in Section 3 of this Agreement.
b. The Indemnifying Party shall have no obligation to indemnify an
Indemnified Party under Section 7(a) from and against any Losses in respect of
the operations of ATI, Purchaser and their subsidiaries and affiliates
(including Seller's restaurant operations) prior to October 6, 2000 ("Pre- 2000
Losses") until the Indemnified Party shall have suffered Pre-2000 Losses in
excess of $50,000 (and then only to the extent that such Pre-2000 Losses exceed
such amount). The aggregate amount of all payments made by an Indemnifying Party
under Section 7(a) in satisfaction of claims for indemnification with respect to
Pre-2000 Losses shall not exceed $1,000,000. The Indemnified Party and the
Indemnifying Party shall each be responsible for one-half of any Pre-2000 Losses
in excess of $1,000,000.
c. Promptly after receipt by an Indemnified Party, of notice of the
commencement of any action, such Indemnified Party shall, if a claim in respect
thereof is to be made against an Indemnifying Party under such section, give
notice to the Indemnifying Party of the commencement thereof, but the failure to
so notify the Indemnifying Party shall not relieve it of any liability that it
may have to any Indemnified Party except to the extent the defense of such
action by the Indemnifying Party is prejudiced thereby. In case any such action
shall be brought against an Indemnified Party and it shall give notice to the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate therein and, to the extent that it shall wish, to assume
the defense thereof with counsel reasonable 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 shall not
be liable to such Indemnified Party under such section for any fees of other
counsel or any other expenses, in each case subsequently incurred by such
Indemnified Party in connection with the defense thereof, other than reasonable
costs of investigation. If an Indemnifying Party assumes the defense of such an
action, (a) no compromise or settlement thereof may be effected by the
Indemnifying Party without the Indemnified Party's consent (which shall not be
unreasonably withheld) unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person which is not fully
remedied by the payment referred to in clause (ii) and no adverse effect on any
other claims that may be made against the Indemnified Party and (ii) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party, (b) the Indemnifying Party shall have no liability with respect to any
compromise or settlement thereof effected without its consent (which shall not
be reasonably withheld) and (c) the Indemnified Party will reasonable cooperate
with the Indemnifying Party in the defense of such action. If notice is given to
an Indemnifying Party of the commencement of any action and it does not, within
15 days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its election to assume or participate in the defense
thereof, the Indemnifying Party shall be bound by any determination made in such
action or any compromise or settlement thereof effected by the Indemnified
Party. Notwithstanding the foregoing, if an Indemnified Party determined in good
faith that there is a reasonable probability that an action may materially and
adversely affect it or its affiliates other than as a result of monetary
damages, such Indemnified Party may, by notice to the Indemnifying Party, assume
the exclusive right to defend, compromise or settle such action, but the
Indemnifying Party shall not be bound by any determination of an action so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
d. The indemnification provisions contained in this Section 7 are in
addition to any other rights or remedies which any party hereto may have with
respect to the others hereunder.
e. The indemnification payments required by this Section 7 shall be made by
periodic payments on the amount thereof during the course of the investigation
or defense, as and when the invoices therefore are received, or expense, loss,
damage or liability incurred.
8. Miscellaneous.
a. Amendments, Etc. No amendment of any provision of this Agreement shall
in any event be effective unless the amendment shall be in writing and signed by
the parties hereto.
b. Notices, Etc. All notices or other communications given under this
Agreement shall be in writing, sent to the respective addresses first set forth
above or such other addresses as Purchaser or Seller or any other party to this
Agreement, as applicable, may designate, by certified mail (return receipt
requested), telecopy (with confirmation) overnight courier or personal delivery.
Notice shall be deemed given upon receipt. A copy of all notices to Seller shall
be given to Steven Schuster, Esq., McLaughlin & Stern LLP, 260 Madison Avenue,
New York, New York 10016. A copy of all notices to Purchaser shall be given to
Steven Wolosky, Esq., Olshan Grundman Frome Rosenzweig & Wolosky LLP, 505 Park
Avenue, New York, New York 10022.
c. No Waiver; Remedies. No failure on the part of any party to this
Agreement to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise thereof or the exercise of any other right operate as a waiver thereof.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
d. Survival of Agreements, etc. The agreements, representations,
warranties, covenants and provisions contained in this Agreement shall survive
the date hereof and the purchase of the Shares by the Purchaser hereunder for a
period of three (3) years from the date hereof.
e.Severability of Provisions. Any provision of this Agreement, which is
prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
f. Integration. This Agreement sets forth the entire understanding of the
parties hereto with respect to all matters contemplated hereby and thereby
supersedes any previous agreements and understandings among them concerning such
matters. No statements or agreements, oral or written, made prior to or at the
signing hereof, shall vary, waive or modify the written terms hereof.
g. Binding Effect; Governing Law. This Agreement shall be binding upon and
inure to the benefit of Seller and the Purchaser and their respective successors
and assigns, except that neither Seller nor the Purchaser may assign this
Agreement, or the rights or obligations hereunder, without the prior written
consent of the other party, except that the Seller and DCDC Delaware shall have
the right to assign this Agreement to an affiliate of the Seller and DCDC
Delaware. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements and instruments
executed and performed in the State of New York.
h. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same agreement.
i. Additional Actions. The parties to this Agreement (as reasonably
requested from time to time by the other parties) shall take all reasonably
appropriate action and execute additional documents, which may be necessary to
carry out the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
DIGITAL CREATIVE DEVELOPMENT CORPORATION,
a Utah Corporation
By:________________________________
Gary Herman, Chief Executive Officer
DIGITAL CREATIVE DEVELOPMENT CORPORATION,
a Delaware Corporation
By:______________________________
Gary Herman, Chief Executive Officer
ARTHUR TREACHER'S, INC.
By:______________________________
Gary Herman, Secretary
PAT SERVICES, INC.
By:_____________________________
Jeffrey Bernstein, President
_______________________________
Jeffrey Bernstein