Exhibit 10.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT") made as of April 1, 1999,
among NewStar Media Inc., a California corporation (the "COMPANY") and Ronald
Lightstone ("Lightstone").
WITNESSETH:
WHEREAS, the Company may from time to desire to issue and sell to
purchasers shares of Common Stock of the Company, par value $0.1 per share
("Common Stock");
WHEREAS, such purchasers may desire to purchase registered shares of
Common Stock;
WHEREAS, Lightstone owns shares of Common Stock covered by an effective
registration statement ("Registered Shares");
WHEREAS, in order to assist the Company in obtaining financing,
Lightstone has agreed with the Company that from time to time Lightstone will
sell Registered Shares to purchasers identified by the Company at such prices
and in such amounts as may be approved by the Company; provided that Lightstone
shall simultaneously purchase from the Company, and the Company shall issue and
sell to Lightstone, an equal number of shares of Common Stock at the same price
that Lightstone sold Registered Shares; provided further, that Lightstone shall
not be obligated or required to sell Registered Shares hereunder;
WHEREAS, the Board of Directors of the Company has approved the
purchase of Common Stock by Lightstone as contemplated in this Agreement and has
approved and authorized such transactions as exempt transactions under Rule
16b-3(d) promulgated under Section 16 of the Securities and Exchange Act of
1938.
NOW, THEREFORE, in the consideration of the foregoing and the
covenants, agreements, representations and warranties herein contained, and
intending to be legally bound, the parties hereby mutually agree as follows:
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SECTION 1
SALE AND PURCHASE OF THE COMPANY'S SECURITIES; CLOSING
1.1. SALE OF THE SECURITIES. During the period commencing on the date
hereof and ending June 15, 1999, the Company shall have the right to request
that Lightstone sell from time to time up to 2,000,000 Registered Shares to one
or more purchasers for such prices and in such amounts and at such times as the
Company may determine. If Lightstone agrees to sell Registered Shares to the
purchasers at the time and for the price determined by the Company (a
"Transaction"), Lightstone shall purchase from the Company, and the Company
shall sell and issue to Lightstone, the Replacement Shares (as defined below)
for a purchase price equal to the Replacement Price (as defined below). For any
Transaction, the "Replacement Shares" shall be that number of shares of Common
Stock equal to the number of Registered Shares sold in the Transaction, and the
"Replacement Price" shall be the price that Lightstone received for the
Registered Shares from the purchaser of such Registered Shares in the
Transaction.
1.2 PURCHASE OF REPLACEMENT SHARES; DELIVERY. Immediately upon sale of
Registered Shares by Lightstone hereunder, Lightstone shall pay the Replacement
Price for the Replacement Shares to the Company. Upon amendment of the Company's
articles of incorporation to increase the authorized number of shares, and
shareholder approval of the transactions contemplated herein in accordance with
Regulation 14C of the Securities and Exchange Act of 1934, the Company shall
issue and deliver to Lightstone a certificate or certificates, registered in the
name of Ronald Lightstone, representing the Replacement Shares.
1.3 NATURE OF TRANSACTION. It is the intent of the parties hereto that
the transactions contemplated in this Agreement are solely to assist the Company
in raising equity financing from persons other than Lightstone, and that
Lightstone will derive no economic benefit from any of the transactions
contemplated in this Agreement. It is not intended that Lightstone receive an
economic benefit upon the consummation of the transactions contemplated in this
Agreement. The parties hereto acknowledge that Lightstone may suffer an economic
detriment because, upon consummation of the transactions, Lightstone will own
the same number of shares of Common Stock as he did before the transaction, but
such shares will be unregistered, and accordingly may have a value less that the
registered shares owned by Lightstone prior to the transaction.
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1.4 TAXES. If Lightstone is required by law to make any payment on
account of any Federal or state income taxes due the sale and/or purchase of
Common Stock pursuant to this Agreement, the Company shall pay to Lightstone all
such amounts before the date on which penalties attach thereto, and such sum
payable by the Company shall be increased to the extent necessary to ensure
that, after the making of any payment of taxes on amounts to be received by
Lightstone from the Company under this Section 1.4, Lightstone receives a sum
equal to what it would have received had no taxes been payable by Lightstone on
account of any sales and/or purchases hereunder.
SECTION 2
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to Lightstone the following:
2.1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California, and has all
requisite corporate power and authority to own and lease its properties and
assets and to conduct its business as currently conducted.
2.2. The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery, and performance of this agreement
by the Company have been duly authorized by all requisite corporate action, and
this Agreement when duly executed and delivered by the Company will constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with its respective terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws relating to
or affecting the enforcement of creditors' rights generally and general
equitable principles.
2.3. The sale, issuance and delivery of the Replacement Shares in
accordance with the terms of this Agreement have been authorized by all
necessary corporate action, and the Replacement Shares when sold, issued and
delivered, against the full payment of the Replacement Price, will be duly and
validly issued, fully paid and nonassessable. The sale, issuance and delivery of
the Replacement Shares are not subject to any preemptive rights of stockholders
of the Company or to any right of first refusal or other similar right in favor
of any person.
2.4. PRIVATE OFFERING. Neither the Company nor anyone acting on behalf
of the Company has offered the Replacement Shares for sale to, or solicited
offers to buy from, or otherwise approached or negotiated with, any individual
or entity in connection with the sale of such securities other than a limited
number of investors, including Lightstone. Assuming the accuracy of Lightstone's
representations contained in Section 3 of this Agreement, the offer, issuance
and delivery of the Replacement Shares to Lightstone are exempt from
registration under the Securities Act of 1933, as amended (the "1933 ACT").
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SECTION 3
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Lightstone represents and warrants to the Company the following:
3.1. AUTHORIZATION. Lightstone has all requisite power and authority to
execute this Agreement and to carry out the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Lightstone have
been duly authorized by all requisite corporate action, and this Agreement when
executed and delivered by Lightstone will constitute its valid and binding
obligation, enforceable against Lightstone in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally and general equitable principles.
3.2. PURCHASE FOR INVESTMENT. The Replacement Shares are being acquired
by Lightstone for its own account, not as a nominee or agent, for investment and
not with a view to resale or distribution within the meaning of the 1933 Act,
and the rules and regulations thereunder, and Lightstone will not distribute the
Replacement Shares in violation or contravention of the 1933 Act. Lightstone is
not aware of any facts or circumstances that contradict the representation in
the first sentence of Section 2.4.
3.3. RESTRICTIONS ON TRANSFER. Lightstone acknowledges that (a) the
Replacement Shares will not be registered under the 1933 Act at the time of
delivery of such shares to Lightstone, (b) the Replacement Shares will not be
transferable unless so registered or unless an exception for such registration
is applicable and (c) certificates representing the Replacement Shares will bear
a legend substantially in the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
DISPOSED OF, AND NO TRANSFER OF THE SECURITIES MAY BE MADE BY
THE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM."
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3.4. SOPHISTICATION: ACCESS TO INFORMATION.
(a) Lightstone represents and warrants to the Company, that
Lightstone and if Lightstone is a limited liability company each member of
Lightstone (i) is an "accredited investor" as defined in the 1933 Act and is
financially able to purchase the Replacement Shares, (ii) is fully capable of
understanding the type of investment being made pursuant to this Agreement, and
the risks involved in connection therewith, (iii) believes that the nature of
the Replacement Shares is consistent with their overall investment programs and
financial position, (iv) recognizes that there are substantial risks involved in
their purchase of the Replacement Shares, (v) is capable of bearing the economic
risk of its investment for an indefinite period of time and can afford a
complete loss of its investment, (vi) has adequate means of providing for their
current liquidity needs, (vii) has no need for liquidity of their investment,
(viii) is not expecting any short term income from their investment and (ix) has
no reason to anticipate any change in personal circumstances, financial or
otherwise, which may cause or require any sale of the Replacement Shares.
(b) Lightstone acknowledges to the Company that it has had the
opportunity to ask questions of and receive answers from the Company's officers
and directors concerning the terms and conditions of the (i) purchase and
delivery of the Replacement Shares and (ii) business and financial conditions of
the Company; and Lightstone has received to its satisfaction, such additional
information about the business and financial conditions of the Company and the
terms and conditions of the purchase and delivery of the Replacement Shares, as
it has requested.
SECTION 4
MISCELLANEOUS
4.1. GOVERNING LAW. This agreement shall be governed by and construed
and enforced in accordance with laws of the State of New York, without reference
to conflict of law provisions.
4.2. ENTIRE AGREEMENT. This Agreement including any Appendices,
Schedules or Exhibits hereto, contains the entire agreement and understanding
among the parties with respect to the subject matter hereof and shall not be
modified or affected by any offer, proposal, statement or representation, oral
or written, made by or for any party in connection with the negotiation of the
terms hereof. All references herein to this Agreement shall specifically
include, incorporate and refer to the Appendices, Schedules and Exhibits
attached hereto which are hereby made a part hereof. There are no
representations, promises, warranties, covenants, undertakings or assurances
(express or implied) other than those expressly set forth or provided for herein
and in the other documents referred to herein. This Agreement may not be
modified or amended orally, but only by a writing signed by the parties.
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4.3. SEVERABILITY. If any part of this Agreement is held to be
unenforceable or invalid under, or in conflict with, the applicable law of any
jurisdiction, the unenforceable, invalid or conflicting part shall, to the
extent permitted by applicable law, be narrowed or replaced, to the extent
possible, with a judicial construction in such jurisdiction that effects the
intent of the parties regarding this Agreement and such unenforceable, invalid
or conflicting part. To the extent permitted by applicable law, notwithstanding
the unenforceability, invalidity or conflict with applicable law of any part of
this Agreement, the remaining parts shall be valid, enforceable and binding on
the parties.
4.4. HEADINGS. The headings of the Sections of this Agreement are
reinstated for convenience of reference only and shall not be considered a part
hereof.
4.5. COUNTERPARTS. This agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date set forth above.
THE COMPANY:
NEWSTAR MEDIA INC.
By: /S/ROBERT MURRAY
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Name: Robert Murray
Title: Vice President & General
Counsel
THE PURCHASER:
/S/ RONALD LIGHTSTONE
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Ronald Lightstone