EXHIBIT 10.33
SHARE SALE AND PURCHASE AND OPTION AGREEMENT
This Share Sale and Purchase and Option Agreement ("Agreement") is made and
entered into as of March 31, 1999 by and between Super Stage, Inc., a Japanese
company with its principal place of business at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇-▇ ▇▇▇▇-▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇ ("Super
Stage"), and Liquid Audio, Inc., a California corporation with its principal
place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
("Liquid Audio").
WITNESSETH:
WHEREAS, Super Stage, Liquid Audio and certain other parties have entered
into a Shareholder Agreement (the "Shareholder Agreement") as of March 31, 1999
with respect to Liquid Audio Japan, Inc., a Japanese company with its principal
place of business at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇-▇ ▇▇▇▇-▇▇▇▇▇ ▇-
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇ ("LAJ");
WHEREAS, the Shareholder Agreement provides that (i) Liquid Audio will
purchase a certain number of Shares from Super Stage in accordance with the
terms and subject to the conditions set forth herein, and (ii) Super Stage will
grant to Liquid Audio an option to purchase additional Shares in an amount, at a
purchase price and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Super Factory, Inc. ("Super Factory") and Liquid Audio have
entered into a Loan Agreement, dated as of March __, 1999 pursuant to which
Super Factory will loan the Purchase Price (as such term is defined in Section
3.2) to Liquid Audio, which loan will be secured by the Initial Shares (as such
term is defined in Section 3.2);
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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For the purposes of this Agreement, the following definitions shall apply:
1.1 "Party" shall mean Liquid Audio or Super Stage, as applicable.
"Parties" shall mean Liquid Audio and Super Stage.
1.2 "Person" shall mean a natural individual, partnership, firm, company,
corporation and any other form of business association.
1.3 "Reseller Agreement" shall have the meaning assigned to such term in
the Shareholder Agreement.
1.4 "Shares" shall mean shares of common stock of LAJ with a par value of
[*] per share.
* Certain information in this Exhibit has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
1.5 "Warrant Bond" shall mean the outstanding warrant bond owned by Super
Stage for the issuance of [*] Shares at an issue price of (Yen) [*] per Share.
1.6 "(Yen) " shall mean Japanese (Yen).
ARTICLE II
SALE AND PURCHASE
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2.1 Sale and Purchase. On the terms and subject to the conditions
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contained in this Agreement, Super Stage shall sell, convey, transfer, assign
and deliver to Liquid Audio, and Liquid Audio shall purchase and acquire from
Super Stage, at the Closing (as such term is defined in Section 3.1), all right,
title and interest of Super Stage in and to the Initial Shares (as defined
below).
ARTICLE III
THE CLOSING
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3.1 Place and Date. The closing (the "Closing") of the sale and purchase
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of the Initial Shares shall take place in Tokyo, Japan at the offices of
Nishimura & Partners, at 10 a.m. on March 31, 1999, unless the Parties
otherwise agree in writing (the "Closing Date").
3.2 Purchase Price; Payment. On the terms and subject to the conditions
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set forth herein, Super Stage will sell 900 Shares (such Shares, the "Initial
Shares") to Liquid Audio and Liquid Audio will purchase the Initial Shares from
Super Stage at the price of (Yen) [*] per share for an aggregate purchase price
of (Yen) [*] (the "Purchase Price").
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3.3 The Closing. At the Closing (i) on the terms and subject to the
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conditions set forth herein, Super Stage shall deliver to Liquid Audio one or
more stock certificates representing the Initial Shares, free and clear of any
security interests, claims, liens, pledges, charges or other encumbrances or
adverse claims of any nature, and (ii) Liquid Audio shall pay the Purchase
Price.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SUPER STAGE
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4.1 Representations and Warranties of Super Stage. Super Stage hereby
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represents and warrants to Liquid Audio as follows:
(a) Organization and Power. Super Stage is a company duly organized and
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validly existing under the laws of Japan and has corporate power and authority
to enter into this Agreement and to perform its obligations hereunder.
(b) Authorization. All corporate action on the part of Super Stage and its
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officers and directors necessary for the authorization, execution, delivery and
performance of this Agreement has been, or on or before the Closing Date will
be, taken. On the Closing Date, this Agreement will constitute a valid and
legally binding obligation of Super Stage, enforceable against Super Stage in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws affecting generally the enforceability of
creditor's rights.
* Certain information in this Exhibit has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
(c) Government and Other Consents. No consent, authorization, license,
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permit, registration or approval of governmental or public body or authority is
required in connection with execution and delivery of this Agreement by Super
Stage or with the performance by Super Stage of any of its respective
obligations hereunder.
(d) Effect of Agreement. Super Stage's execution and delivery of this
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Agreement, performance of its obligations hereunder and its consummation of the
transactions contemplated hereby will not, (i) to its knowledge, violate any
provision of any law, statute, rule or regulation to which it is subject; (ii)
violate any judgment, order, writ, injunction or decree of any court applicable
to it; (iii) to its knowledge, have any effect on its compliance with any laws,
statutes, rules, regulations, orders, decrees, licenses, permits or
authorizations which would materially and adversely affect it; (iv) to its
knowledge, result in the breach of, or be in conflict with, any term, covenant,
condition or provision of, or affect the validity, enforceability and
subsistence of any agreement, lease or other commitment to which it is a party
and which would materially and adversely affect it; or (v) to its knowledge,
result in the creation or imposition of any lien, pledge, mortgage, claim,
charge, or encumbrance upon any of its assets.
(e) Brokers, Finders. Super Stage has not retained any person to act on its
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behalf, nor has any person contended that such person was so retained, to assist
as its broker, finder or agent in connection with this transaction.
(f) Capitalization. The authorized capital stock of LAJ consists of [*]
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Shares, of which [*] Shares are issued and outstanding. The Initial Shares have
been duly authorized and validly issued and are fully paid and are not subject
to any preemption or similar rights. Warrant bonds for the issuance of [*]
Shares are outstanding as of the date hereof.
(g) Ownership of Shares. At the Closing, Liquid Audio will acquire good and
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marketable title to the Initial Shares, free and clear of any liens, charges,
security interests or encumbrances or any other limitation or restriction, other
than those specified in the Shareholder Agreement.
(h) Disclosure. No representation or warranty by Super Stage contained in
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this Agreement and no writing, certificate, exhibit, list or other instrument
required to be furnished pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements and information contained herein or therein not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LIQUID AUDIO
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5.1 Representations and Warranties of Liquid Audio. Liquid Audio hereby
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represents and warrants to Super Stage as follows:
(a) Organization and Good Standing of Liquid Audio. Liquid Audio is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of California and has the corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
* Certain information in this Exhibit has been omitted and filed seperately
with the Commission. Confidential treatment has been requested with
respect to the omitted portion.
(b) Authorization. All corporate action on the part of Liquid Audio and
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Liquid Audio's officers and directors necessary for the authorization,
execution, delivery and performance of this Agreement has been, or on or before
the Closing Date will be, taken. On the Closing Date, this Agreement will
constitute a valid and legally binding obligation of Liquid Audio, enforceable
against Liquid Audio in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, or other laws affecting generally the
enforceability of creditor's rights.
(c) Government and Other Consents. No consent, authorization, license,
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permit, registration or approval of any governmental or public body or authority
is required in connection with Liquid Audio's execution and delivery of this
Agreement or with the performance by Liquid Audio of its obligations hereunder.
(d) Effect of Agreement. Liquid Audio's execution and delivery of this
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Agreement, performance of its obligations hereunder and its consummation of the
transactions contemplated hereby will not, (i) to its knowledge, violate any
provision of any law, statute, rule or regulation to which it is subject; (ii)
violate any judgment, order, writ, injunction or decree of any court applicable
to it; (iii) to its knowledge, have any effect on its compliance with any laws,
statutes, rules, regulations, orders, decrees, licenses, permits or
authorizations which would materially and adversely affect it; (iv) to its
knowledge, result in the breach of, or be in conflict with, any term, covenant,
condition or provision of, or affect the validity, enforceability and
subsistence of any agreement, lease or other commitment to which it is a party
and which would materially and adversely affect it; or (v) to its knowledge,
result in the creation or imposition of any lien, pledge, mortgage, claim,
charge, or encumbrance upon any of its assets.
(e) Brokers, Finders. Other than ▇▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Liquid Audio has
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not retained any person to act on its behalf, nor has any person contended that
such person was so retained, to assist as its broker, finder or agent in
connection with this transaction.
(f) Disclosure. No representation or warranty by Liquid Audio contained in
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this Agreement and no writing, certificate, exhibit, list or other instrument
required to be furnished pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements and information contained herein or therein not
misleading.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
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6.1 Conditions to the Obligations of Both Parties. The obligation of
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Liquid Audio to purchase the Initial Shares and for Super Stage to sell the
Initial Shares hereunder is subject to the satisfaction, at or prior to the
Closing Date, of the following conditions:
(a) Government Approvals and Consents. All governmental approvals and third
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party consents required to be made or obtained by any party hereto in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby shall have been made or obtained.
(b) Absence of Litigation. No order of any court or administrative agency
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shall be in effect which restrains or prohibits the transactions contemplated by
this Agreement or which would limit or adversely affect Liquid Audio's ownership
of the Initial Shares, and there shall not have been threatened, nor shall there
be pending, any action or proceeding by or before any court or authority
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions.
(c) LAJ's Board Approval. LAJ's board shall have approved the sale by Super
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Stage of the Initial Shares to Liquid Audio.
6.2 Conditions to the Obligations of Super Stage. In addition to the
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conditions specified in Section 6.1, the obligation of Super Stage to sell the
Initial Shares hereunder is subject to the satisfaction, at or prior to the
Closing Date, of the following condition:
(a) The representations and warranties of Liquid Audio contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date and Liquid Audio shall have
performed and complied in all material respects with all agreements required by
this Agreement to be performed or complied with by Liquid Audio at or prior to
the Closing Date, and, if requested by Super Stage, Liquid Audio shall have
delivered to Super Stage a certificate, dated the Closing Date, certifying that
this condition has been satisfied.
6.3 Conditions to the Obligations of Liquid Audio. In addition to the
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conditions specified in Section 6.1, the obligation of Liquid Audio to purchase
the Shares hereunder is subject to the satisfaction, at or prior to the Closing
Date, of the following condition:
(a) The representations and warranties of Super Stage contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date and Super Stage shall have
performed and complied in all material respects with all agreements required by
this Agreement to be performed or complied with by Super Stage at or prior to
the Closing Date, and, if requested by Liquid Audio, Super Stage shall have
delivered to Liquid Audio a certificate, dated the Closing Date, certifying that
this condition has been satisfied.
ARTICLE VII
LIQUID AUDIO OPTION
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7.1 Liquid Audio Call Option. (a) Super Stage hereby grants Liquid Audio
an option, exercisable at any time before December 31, 2003 by written notice to
Super Stage, whether in one exercise or a series of exercises, to purchase any
number of Shares at the Relevant Per Share Price from Super Stage as long as the
Pro Rata Share of Liquid Audio immediately after the exercise of such option is
not more than [*] (the "Option Shares"). In no event will the number of Option
Shares be less than [*] Shares. For purposes of this Section 7.1(a), the
following terms shall have the following meanings:
(i) "Relevant Per Share Price" shall mean, with respect to any Option
Share, a purchase price equal to
* Certain information in this Exhibit has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
(A) (Yen) [*] per Share for the number of Option Shares up to
[*] Shares; and
(B) for every additional Option Share thereafter, the per Share
price paid by Super Stage for the then most recent purchase of Shares
by Super Stage.
(ii) "Pro Rata Share of Liquid Audio" shall mean the percentage
interest that Liquid Audio holds in LAJ, on a fully diluted basis, by
virtue of those Shares owned by Liquid Audio; provided, in any event that
(A) The Initial Shares and any previously purchased Option Shares
shall always be deemed to be "owned by Liquid Audio" for purposes of
such calculation, regardless of whether or not such Shares are
subsequently transferred by Liquid Audio at any time after the
Closing; and
(B) If Liquid Audio does not fully exercise its preemptive rights
to purchase all of the Shares to which it is entitled at the time of
any particular offering of Shares to Holders (as defined in the
Shareholder Agreement) in accordance with Section 2.4 of the
Shareholder Agreement, then the total number of additional Shares
issued to Holders as a result of such particular offering will not be
included in calculating the percentage interest that Liquid Audio
holds in LAJ (unless all Holders waive their preemptive rights, in
which case the additional Shares will be included).
(b) Within 10 days after Liquid Audio has sent a written notice of exercise
of its right under Section 7.1(a), Liquid Audio shall pay in cash or other
immediately available funds the aggregate purchase price for the Option Shares,
subject to receiving from Super Stage the certificate or certificates for the
Option Shares. Super Stage represents that Liquid Audio will acquire good and
marketable title to the Option Shares purchased upon the exercise of the option
under Section 7.1 (a), free and clear of any liens, charges, security interests
or encumbrances, or any other limitation or restriction, except for those
specified in the Shareholder Agreement.
7.2 Liquid Audio Put Option. (a) Conversion of Exclusive Rights of
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Distribution. At any time within 180 days after the exclusive rights of
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distribution granted to LAJ under the Reseller Agreement are converted to a non-
exclusive basis (the "Conversion Date"), Liquid Audio shall have the one-time
right to cause Super Stage to purchase all or a portion of the Shares then held
by Liquid Audio at the "Fair Market Value" (as defined in Section 7.2(b) below)
of such Shares, exercisable by written notice to Super Stage. Such notice shall
state the number of Shares which shall be purchased by Super Stage.
(b) Fair Market Value. Fair Market Value per share under this Section 7.2
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shall be determined as follows:
(i) If the Shares are publicly traded on a national securities
exchange or the Japanese OTC market, the value shall be deemed to be the average
of the closing prices of the Shares on such exchange or market, as the case may
be,
* Certain information in this Exhibit has been omitted and filed seperately
with the Commission. Confidential treatmenthas been requested with respect
to the omitted portions.
similar overnight courier service, or by registered or certified mail, postage
prepaid, or by facsimile, addressed to the Party for whom such notice intended
at its address set forth above, or at such other address or facsimile number as
the intended recipient previously shall have designated by written notice to the
other Party. All notices delivered in person shall be deemed to have been
delivered to and received by the addressee and shall be effective on the date of
personal delivery. All notices delivered by express mail or any other similar
overnight courier, or by registered or certified mail, or by facsimile, shall be
effective upon receipt.
8.5 Counterparts. This Agreement may be executed in any number of English
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language counterparts or duplicate originals, and each such counterpart or
duplicate original shall constitute an original instrument, but all such
separate counterparts or duplicate originals shall constitute one and the same
instrument.
8.6 Written Agreement to Govern. This Agreement sets forth the entire
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understanding and supersede all prior and contemporaneous agreements and
discussions among the Parties relating to the subject matter contained herein
and therein, and no Party shall be bound by any definition, condition,
representation, warranty, covenant or provision other than as expressly stated
in or contemplated herein or therein or as subsequently shall be set forth in
writing and executed by a duly authorized representative of the Party to be
bound thereby.
8.7 No Waiver of Rights. All waivers hereunder must be made in writing,
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and failure at any time to require another Party's performance of any obligation
under this Agreement shall not affect the right subsequently to require
performance of that obligation. No waiver of any breach of any provision of this
Agreement shall be construed as a waiver of any continuing or succeeding breach
of such provision or a waiver or modification of such provision.
8.8 Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement should be prohibited or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement. In such event, the
Parties agree to negotiate, in good faith, a valid, legal and enforceable
substitute provision which most nearly effects the Parties' intent in entering
into this Agreement.
8.9 Subject Headings. The subject headings of the Sections of this
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Agreement are included for the purposes of convenience only, and shall not
affect the construction or interpretations of any of its provisions.
8.10 Further Assurances. The Parties shall each perform such acts, execute
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and deliver such instruments and documents, and do all such other things as may
be reasonably necessary to accomplish the transactions contemplated in this
Agreement.
8.11 Expenses and Finder's Fees. The Parties shall each bear their own
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costs and expenses (including attorneys' fees) incurred in connection with the
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated hereby. Each Party shall indemnify the other against
any claim for brokerage or finder's fees arising out of the transactions
contemplated herein by any Person claiming to have been engaged by the
indemnifying party
based upon any action or communication, or any alleged action or communication,
by the indemnifying Party or any of its officers or employees.
8.12 Taxes. Super Stage shall be responsible for any securities
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transaction taxes, capital gain taxes and any other taxes which may be imposed
by the Japanese Government upon Super Stage in relation to the sale of the
Initial Shares or the Option Shares by Super Stage to Liquid Audio hereunder.
Liquid Audio shall be responsible for any securities transaction taxes, capital
gain taxes and any other taxes which may be imposed by the Japanese Government
upon Liquid Audio in relation to the sale of Shares by Liquid Audio to Super
Stage pursuant to Section 7.2.
8.13 Language. This Agreement is in the English language only, which
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language shall be controlling in all respects, and all versions hereof in any
other language shall be for accommodation only and shall not be binding upon the
parties hereto. All communications and notices to be made or given pursuant to
this Agreement shall be in the English language.
8.14 Assignment. This Agreement shall inure to benefit of, and shall be
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binding upon the Parties and their respective successors and assigns. No Party
may assign or delegate this Agreement or any of its rights or duties under this
Agreement without the prior written consent of the other Parties or to a Person
into which it has merged or which has otherwise succeeded to all or
substantially all of the assets of the assignor, and which has assumed in
writing or by operation of law the assignor's obligations under this Agreement.
IN WITNESS WHEREOF, Liquid Audio and Super Stage caused this Agreement to
be duly executed in their respective corporate names by their respective
officers, each of whom is duly and validly authorized and empowered, all on and
as of the day and year first above written.
SUPER STAGE, INC.
By: /s/ SIGNATURE IN JAPANESE
___________________________
Name: Masahiro Kuroki
Title: President & CEO
LIQUID AUDIO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: VP Business Development