STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of September, 2000 (the "Closing Date"), by and between DIG
Financial Corp., a British Virgin Islands corporation ("DIG Financial"), and
Play Co. Toys & Entertainment Corp., a Delaware corporation ("Play Co.").
RECITALS
A. As of the date hereof, DIG Financial owns an aggregate of 1,100,000
validly authorized and issued Ordinary 1p Shares of American Telecom, PLC
("American Telecom") a British public corporation, before giving effect to the
transaction contemplated hereby.
B. As of the date hereof, Play Co. has authorized 160,000,000 shares of
Common Stock, $.01 par value ("Play Co. Common Stock"), of which 56,217,377 are
issued and outstanding before giving effect to the transaction contemplated
herein.
C. DIG Financial desires to issue and sell to Play Co., and Play Co.
desires to purchase and acquire from DIG Financial, approximately 1,086,957
shares of authorized and issued Ordinary 1p Shares of American Telecom (the
"American Shares"), as calculated based on an approximate 30-day trailing
trading average of the American Shares from the Closing Date, in consideration
of the exchange therefor of approximately 26,315,789 shares of Play Co. Shares
("Play Co. Shares"), as calculated based on an approximate 30-day trailing
trading average of the Play Co. Common Stock from the Closing Date, on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing praises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE 1
ISSUANCE, SALE AND PURCHASE OF SHARES
Purchase and Sale. DIG Financial hereby agrees to sell, and Play Co. agrees
to purchase the American Shares. In consideration for the issuance and sale of
the American Shares, and as payment in full of the purchase price for the
American Shares to be issued and sold to and purchased by Play Co. pursuant to
the provisions of this Agreement, Play Co. hereby agrees to sell and issue to
DIG Financial the Play Co. Shares.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF DIG FINANCIAL
DIG Financial hereby represents and warrants to Play Co., as follows (it
being acknowledged that Play Co. is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
truth and accuracy of each of which constitutes a condition precedent to the
obligations of Play Co. hereunder):
2.1 Organization and Corporate Power. DIG Financial is a corporation duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands.
2.2 Authorization. DIG Financial has full power, legal capacity and
authority to enter into this Agreement, to execute all attendant documents and
instruments necessary to consummate the transactions herein contemplated, to
sell the American Shares to Play Co., to purchase the Play Co. Shares from Play
Co. and to perform all of its obligations hereunder. This Agreement and all
other agreements, documents and instruments to be executed in connection
herewith and therewith have been effectively authorized by all necessary action,
corporate or otherwise, on the part of DIG Financial, which authorizations
remain in full force and effect, have been duly executed and delivered by DIG
Financial, and no other corporate proceedings on the part of DIG Financial are
required to authorize this Agreement and the transactions contemplated hereby.
This Agreement constitutes the legal, valid and binding obligation of DIG
Financial and is enforceable with respect to DIG Financial in accordance with
its terms, except as enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, priority or other laws or court decisions relating
to or affecting generally the enforcement of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement, nor the consummation by DIG Financial of any of the
transactions contemplated hereby or compliance with any of the provisions
hereof, will (i) conflict with or result in a breach of, violation of, or
default under, any of the terms conditions or provision of any note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including without limitation, any of its
charter documents and by-laws) to which DIG Financial is a party or by which DIG
Financial or any of its assets or properties may be bound, or (ii) violate any
judgment, order, injunction, decree, statute, rule or properties of DIG
Financial. No authorization, consent or approval or filing of any public body or
authority is necessary for the consummation by DIG Financial of the transactions
contemplated by this Agreement.
2.3 American Shares. The American Shares have been duly and validly
authorized and issued, have not been issued to DIG Financial in violation of any
shareholder preemptive rights, and are valid and binding obligations of American
Telecom enforceable in accordance with their respective terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability relating to or
affecting the enforcement of creditors rights generally and (ii) general
principles of equity.
2.4 Ownership of American Shares. DIG Financial represents and warrants to
Play Co. that it owns the American Shares free and clear of any and all
mortgages, pledges, security interests, liens, charges, encumbrances, equities,
claims, restrictions on transfers and adverse claims of any nature whatsoever
(collectively, "Liens") and, upon delivery of and payment for such shares, Play
Co. will acquire good and valid title to all the American Shares free and clear
from all Liens.
2.5 Equity in American Telecom. DIG Financial represents and warrants to
Play Co., other than the 1,100,000 shares of American Telecom owned by it, that
neither it, nor any beneficial shareholder thereof (direct or indirect) (i) owns
or (ii) otherwise has any beneficial interest in, control of, is controlled by
or under common control with any other entity or person owning securities of
either American Telecom or Play Co. or holds/owns any rights convertible or
exercisable into securities of either of such entities.
2.6 Limited Public Market. DIG Financial understands that there is a
limited public market for the Play Co. Common Stock. Play Co.'s Common Stock was
delisted from the Nasdaq SmallCap Stock Market in September 1997. Play Co.'s
Common Stock is currently quoted on the over-the-counter market on the OTC
Bulletin Board under the symbol "PLCO". DIG Financial understands that, even if
a meaningful market develops for the Play Co. Common Stock, Rule 144 (the
"Rule") promulgated under the Securities Act of 1933, as amended (the "Act")
requires, among other conditions, a one year holding period prior to the resale
(in limited amounts) of securities acquired in a non-public offering without
having to satisfy the registration requirements under the Act. DIG Financial
understands that Play Co. makes no representation or warranty regarding its
fulfillment in the future of any reporting requirements under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or its dissemination to
the public of any current financial or other information concerning Play Co., as
is required by the Rule as one of the conditions of its availability.
2.7 Exempt Transaction. DIG Financial represents and warrants to Play Co.
that the delivery of American Shares to Play Co. contemplated hereby is an
exempt transaction not requiring registration, filing or fulfillment of any
other requirements under all applicable securities laws, including, but not
limited to, British Virgin Islands or United Kingdom securities laws, whether
national, local or otherwise, and that all of the American Shares are freely
tradable upon delivery to Play Co. commencing on the Closing Date without any
limitation whatsoever. DIG Financial represents and warrants to Play Co. that
consummation of the transactions contemplated hereby will not result in a
violation of any applicable law, rule, regulation or ordinance.
2.8 Investment Experience. DIG Financial represents and warrants to Play
Co. that it has prior investment experience, including investment in non-listed
securities, and has employed the services of an investment advisor, attorney or
accountant to read all of the documents reviewed in connection herewith and to
evaluate the merits and risks of the purchase of the Play Co. Shares on his
behalf.
2.9 Access to Documents. DIG Financial acknowledges access to and careful
review of all public filings of Play Co. on file with the United States
Securities and Exchange Commission and hereby represents that it has been
furnished by Play Co. with all information regarding Play Co. which it had
requested or desired to know; that all documents which could be
reasonably provided have been made available for its inspection and review; and
that it has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of Play Co.
2.10 Tax Implications. DIG Financial acknowledges that the purchase of Play
Co. Shares may involve certain tax or other consequences and it has consulted
with its tax and professional advisors to evaluate the tax and other
consequences of such purchase.
2.11 Liability and Indemnification. DIG Financial agrees to hold Play Co.
and its directors, officers, controlling persons, legal counsel and advisors and
their respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by it contained herein or in connection
with any violation of any securities laws of the United States or otherwise.
2.12 No Representation. DIG Financial hereby represents that no
representations or warranties have been made to DIG Financial by Play Co. or any
agent, employee or affiliate of Play Co. and in entering into this transaction,
DIG Financial has conducted its own independent investigation, has had
independent legal representation and is not relying on any information or advice
of any third person or party.
2.13 Legends. DIG Financial agrees to the placement of a legend on the
certificate for the Play Co. Shares as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION
STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933
AND OTHER APPLICABLE STATE LAWS AND RULES.
2.14 Legal Opinion. DIG Financial agrees to deliver to Play Co. on the
Closing Date a legal opinion in form and substance acceptable to Play Co.'s
counsel.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PLAY CO.
Play Co. hereby represents and warrants to DIG Financial, as follows (it
being acknowledged that DIG Financial is entering into this Agreement in
material reliance upon each of the following representations and warranties, and
that the truth and accuracy of each of which constitutes a condition precedent
to the obligations of DIG Financial hereunder):
3.1 Organization and Corporate Power. Play Co. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where the failure to be so qualified would have a materially adverse effect upon
Play Co. Play Co. has all requisite corporate power and authority to conduct its
business as now being conducted and to own and lease the properties which it now
owns and leases.
3.2 Authorization. Play Co. has full power, legal capacity and authority to
enter into this Agreement, to execute all attendant documents and instruments
necessary to consummate the transaction herein contemplated, and to issue and
sell the Play Co. Common Stock to DIG Financial and to perform all of its
obligations hereunder. This Agreement and all other agreements, documents and
instruments to be executed in connection herewith have been effectively
authorized by all necessary action, corporate or otherwise, on the part of Play
Co., which authorizations remain in full force and effect, have been duly
executed and delivered by Play Co., and no other corporate proceedings on the
part of Play Co. are required to authorize this Agreement and the transactions
contemplated hereby, except as specifically so forth herein. This Agreement
constitutes the legal, valid and binding obligation of Play Co. and is
enforceable with respect to Play Co. in accordance with its terms, except as
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, priority or other laws or court decisions relating to or
affecting generally the enforcement of creditors' rights or affecting generally
the availability of equitable remedies. Neither the execution and delivery of
this Agreement, nor the consummation by Play Co. of any of the transactions
contemplated hereby or compliance with any of the provisions hereof, will (i)
conflict with or result in a breach of, violation of, or default under, any of
the terms conditions or provision of any note, bond, mortgage, indenture,
license, lease, credit agreement or other agreement, document, instrument or
obligation (including without limitation, any of its charter documents) to which
Play Co. is a party or by which Play Co. or any of its assets or properties may
be bound, or (ii) violate any judgment, order, injunction, decree, statute, rule
or properties of Play Co. No authorization, consent or approval of any public
body or authority is necessary for the consummation by Play Co. of the
transactions contemplated by this Agreement.
ARTICLE 4
MISCELLANEOUS
4.1 Other Documents. Each of the parties hereto shall execute and deliver
such other and further documents and instruments, and take such other and
further actions, as may be requested of them for the implementation and
consummation of this Agreement and the transactions herein contemplated.
4.2 Parties in Interest. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, and the heirs, personal representatives,
successors and assigns of all of them, but shall not confer, expressly or by
implication, any rights or remedies upon any other party.
4.3 Governing Law. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware, USA.
4.4 Notices. All notices, requests or demands and other communications
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or mailed, postage prepaid, to the parties as follows:
(a) If to DIG Financial, to: DIG Financial Corp.
PO Box 2180
Laguna Switzerland CH 6901
Attn: Mr. Fabio Rossi
(b) If to Play Co., to: Play Co. Toys & Entertainment Corp.
550 Rancheros Drive
San Marcos, California 92069
Attn: Mr. Richard Brady
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 4.4.
4.5 Entire Agreement. This Agreement and the exhibits attached hereto
contain the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to the
subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, which are not embodied herein or in an exhibit hereto,
and that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally. This Agreement may be amended or any
term hereof may be changed, waived, discharged, or terminated by an agreement in
writing signed by all parties hereto.
4.6 Headings. The captions and headings used herein are for convenience
only and shall not be construed as a part of this Agreement.
4.7 Attorneys' Fees. In the event of any litigation between the parties
hereto, the non-prevailing party shall pay the reasonable expenses, including
the attorneys' fees, of the prevailing party in connection therewith.
4.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
DIG Financial Corp.
A British Virgin Islands Corporation
By: /s/ Fabio Rossi
Fabio Rossi
PLAY CO. TOYS & ENTERTAINMENT CORP.
A Delaware Corporation
By: /s/ Richard Brady
Richard Brady
CERTIFICATION AND NOTARIZATION
I, Fabio Rossi, Manager of Fiduciara Biaggini hereby represent in my
individual capacity and as a President of DIG Financial Corp. and as a
______________ of Fidiciara Biaggini, that I have the full right, power and
authority to execute and deliver this Stock Purchase Agreement, dated September
1, 2000, by and between Play Co. Toys & Entertainment Corp. and DIG Financial
Corp. (the "Agreement") and all other documents contemplated or required thereby
and perform all obligations thereunder on behalf of DIG Financial Corp and its
shareholders without any limitation whatsoever.
Fiduciara Biaggini
By: /s/ Fiduciara Biaggini
----------------------
[Authorized Representative]
/s/ Fabio Rossi
Fabio Rossi
September 1, 2000