Exhibit 10.4
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT") made as of May 4, 1999,
among NewStar Media Inc., a California corporation (the "COMPANY"), and ▇▇▇▇▇▇
Limited Partnership (the "PURCHASER").
WITNESSETH:
WHEREAS, the Company desires to sell, and the Purchaser desires to
purchase, subject to the terms and conditions of this Agreement, shares of the
Common Stock of the Company, par value $.01 per share (the "COMMON STOCK").
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
1.1. SALE OF THE SECURITIES. Subject to the terms and conditions herein
set forth, the Company agrees to sell and issue to the Purchaser, and the
Purchaser agrees to purchase from the Company, 416,667 shares of Common Stock of
the Company for a purchase price per share equal to $1.20 (or an aggregate of
$500,000). The shares being purchased hereunder are hereinafter referred to as
the "PURCHASED SHARES". In connection with the purchase of the Purchased Shares,
the Purchaser shall have the right to assign all or a portion of its rights (but
not its obligation) to purchase the Purchased Shares from the Company under this
Agreement to one or more persons affiliated with the Purchaser, provided that
such person(s) submits to the Company a certificate setting forth the
representations in Section 3 below. Any such assignees shall be deemed a
"Purchaser" hereunder.
1.2. CLOSING. The closing of the issuance and sale of the Purchased
Shares to the Purchaser (the "CLOSING") shall take place at on or before May 11,
1999 (the "CLOSING DATE").
1.3 DELIVERY. At the Closing, the Company shall deliver to the
Purchaser a Registration Rights Agreement in form and substance satisfactory to
the Purchaser, duly executed by the Company, and the Purchaser shall pay the
purchase price for the Purchased Shares to the Company. Upon notice to the
Company's shareholders of the amendment of the Company's articles of
incorporation to increase the authorized number of shares, in accordance with
Regulation 14C of the Securities and Exchange Act of 1934, the Company shall
issue and deliver to the Purchaser a certificate or certificates, registered in
the name of the Purchaser, representing the Purchased Shares.
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SECTION 2
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchaser 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 Purchased Shares in
accordance with the terms of this Agreement have been authorized by all
necessary corporate action, and the Purchased Shares when sold, issued and
delivered, against the full payment of the purchase price, will be duly and
validly issued, fully paid and nonassessable. The sale, issuance and delivery of
the Purchased 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 Purchased 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 the Purchaser. Assuming the accuracy of the
Purchaser's representations contained in Section 3 of this Agreement, the offer,
issuance and delivery of the Purchased Shares 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
The Purchaser represents and warrants to the Company the following:
3.1. AUTHORIZATION. The Purchaser 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 the Purchaser have
been duly authorized by all requisite corporate action, and this Agreement when
executed and delivered by the Purchaser will constitute its valid and binding
obligation, enforceable against the Purchaser 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 Purchased Shares are being acquired
by the Purchaser 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 the Purchaser will not
distribute the Purchased Shares in violation or contravention of the 1933 Act;
provided that immediately upon the purchase of the Purchased Shares by the
Purchaser, the Purchaser intends to exchange the Purchased Shares, on a one for
one basis, for issued and outstanding shares of Common Stock of the Company that
are covered by an effective registration statement, with such persons as will
make to the Purchaser substantially the same representations and warranties as
contained in this Section 3. The Purchaser 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. The Purchaser acknowledges that (a) the
Purchased Shares are not registered under the 1933 Act as of the Closing Date,
(b) the Purchased Shares will not be transferable unless so registered or unless
an exception for such registration is applicable and (c) certificates
representing the Purchased 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) The Purchaser represents and warrants to the Company, that the
Purchaser and if the Purchaser is a limited liability company each member of the
Purchaser (i) is an "accredited investor" as defined in the 1933 Act and is
financially able to purchase the Purchased 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 Purchased Shares is consistent with their overall investment programs and
financial position, (iv) recognizes that there are substantial risks involved in
their purchase of the Purchased 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 Purchased Shares.
(b) The Purchaser 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 Purchased Shares and (ii) business and financial conditions of
the Company; and the Purchaser 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 Purchased 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, contain 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/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President &
Chief Financial Officer
The Purchaser:
▇▇▇▇▇▇ LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner