Exhibit 10.2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT") made as of April 1, 1999,
among NewStar Media Inc., a California corporation (the "COMPANY") and Gorman
Limited Partnership ("GLP").
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, GLP owns shares of Common Stock covered by an effective
registration statement ("Registered Shares");
WHEREAS, in order to assist the Company in obtaining financing, GLP has
agreed with the Company that from time to time GLP 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 GLP shall simultaneously purchase
from the Company, and the Company shall issue and sell to GLP, an equal number
of shares of Common Stock at the same price that GLP sold Registered Shares;
provided further, that GLP 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 GLP 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:
SECTION 1
SALE AND PURCHASE OF THE COMPANY'S SECURITIES; CLOSING
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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 GLP 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 GLP agrees to sell Registered Shares to the purchasers at the
time and for the price determined by the Company (a "Transaction"), GLP shall
purchase from the Company, and the Company shall sell and issue to GLP, 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 GLP 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 GLP hereunder, GLP 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 GLP a certificate or certificates, registered in GLP's name,
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 GLP, and that GLP will
derive no economic benefit from any of the transactions contemplated in this
Agreement. It is not intended that GLP receive an economic benefit upon the
consummation of the transactions contemplated in this Agreement. The parties
hereto acknowledge that GLP may suffer an economic detriment because, upon
consummation of the transactions, GLP will own the same number of shares of
Common Stock as it did before the transaction, but such shares will be
unregistered, and accordingly may have a value less that the registered shares
owned by GLP prior to the transaction.
1.4 TAXES. If GLP 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 GLP 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 GLP from the Company under
this Section 1.4, GLP receives a sum equal to what it would have received had no
taxes been payable by GLP on account of any sales and/or purchases hereunder.
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SECTION 2
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to GLP 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 GLP. Assuming the accuracy of GLP's
representations contained in Section 3 of this Agreement, the offer, issuance
and delivery of the Replacement Shares to GLP 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
GLP represents and warrants to the Company the following:
3.1. AUTHORIZATION. GLP 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 GLP have been duly
authorized by all requisite corporate action, and this Agreement when executed
and delivered by GLP will constitute its valid and binding obligation,
enforceable against GLP 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 GLP 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 GLP will not distribute the
Replacement Shares in violation or contravention of the 1933 Act. GLP 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. GLP acknowledges that (a) the
Replacement Shares will not be registered under the 1933 Act at the time of
delivery of such shares to GLP, (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) GLP represents and warrants to the Company, that GLP and if
GLP is a limited liability company each member of GLP (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) GLP 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 GLP 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:
GORMAN LIMITED PARTNERSHIP
By:/s/ Kenneth F. Gorman
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Kenneth F. Gorman
Managing General Partner