STOCK PURCHASE
AGREEMENT
THIS AGREEMENT
made and entered into as of the 29th day of March, 2006, by and
between Dimensional Visions Incorporated, a Delaware corporation
(hereinafter called “DVSO”), and Studio One
Entertainment, Inc., an Arizona corporation (hereinafter called
“SOE”).
WITNESSETH THAT:
|
|
|
DVSO is a
publicly traded company.
|
B. SOE is a private company based in Scottsdale,
Arizona that is engaged in the design and manufacturing of a
proprietary, self contained interactive audio/video recording and
conferencing studio designed for installation in shopping malls and
other high traffic public areas. The Studio One Kiosk will enable
the public, for a fee, to record their video and voice images in a
portable state-of-the-art recording studio environment and enter
their performances in music, modeling and other talent related
contests.
B. Subject to the approval of the Board of
Directors of DVSO and SOE and the consent of a majority of the
shareholders of DVSO and SOE, DVSO and SOE shall enter into an
Agreement of Exchange (hereinafter called the “Exchange
Agreement”) in substantially the form attached hereto and
made apart hereof as Exhibit A, which provides, among other things,
for the issuance by DVSO of approximately six million five hundred
thousand (6,500,000) of its common stock shares to the shareholders
of SOE (the “Exchange”).
C. Following the Exchange under the Exchange
Agreement, SOE will be a wholly-owned subsidiary of
DVSO.
D. It is intended that the transactions
contemplated by this Agreement shall constitute an exchange
conforming to the provisions of Section 368(a)(2) of the Internal
Revenue Code of 1954.
NOW THEREFORE, in consideration of the mutual
covenants and agreements and the benefits to be realized by each of
the parties, the following transactions are hereby agreed to,
subject to the conditions hereinafter stated:
(a) In accordance with the Exchange Agreement, on
the Closing Date hereinafter referred to, and in exchange for all
of the then issued and outstanding shares of capital stock of SOE
(the “SOE Common Stock”), DVSO shall issue the number
of fully paid and nonassessable shares of voting DVSO common stock
(hereinafter called “DVSO Common Stock”) in order to
permit the Exchange to be effected in accordance with the terms of
the Exchange Agreement, on the basis of one (1) share of DVSO
Common Stock for each one (1) share of SOE Common Stock.
If between the date hereof and the Closing Date,
DVSO shall effect any reclassification, recapitalization,
subdivision, combination or exchange of shares, in respect of the
outstanding shares of common stock of DVSO or a stock dividend
thereon shall be declared with a record date within said period,
the per share amounts of DVSO Common Stock to be issued and
delivered in the Exchange shall be appropriately
adjusted.
(b) DVSO shall issue and deliver as and when
required by the Exchange Agreement, certificates representing the
shares of DVSO Common Stock for which the shares of SOE Common
Stock outstanding immediately prior to the effective time of the
Exchange shall have been exchanged as provided in the Exchange
Agreement.
(c) SOE shall submit this Agreement and the
Exchange Agreement to its shareholders for approval, in accordance
with Arizona General Corporation Law, at a meeting called and held
on the date to be fixed by its Board of Directors. SOE shall use
its best efforts to obtain the affirmative vote of shareholders
required to approve this Agreement, the Exchange Agreement and the
transactions contemplated herein and therein.
(d) DVSO shall use it best efforts to obtain the
affirmative consent of shareholders required to approve the issues
set forth in paragraph 14(e) below at a meeting or by written
consent.
(e) Following the approval of the Exchange
Agreement by the stockholders of DVSO and SOE, and upon execution
of the Exchange Agreement by the officers of DVSO and SOE, a
Certificate of Exchange containing the information required by the
corporate law of Delaware and Arizona shall be executed by the
appropriate officers of DVSO and SOE.
(a) The closing of the transaction contemplated
hereby (herein called the “Closing” or the
“Closing Date”) shall take place at the offices of DVSO
in Arizona at 9:00 a.m. on a date within five (5) business days
after all of the conditions described in paragraphs 12 and 13
hereof have been satisfied or, to the extent permitted in paragraph
15 hereof, their satisfaction has been waived. DVSO and SOE will
use their best efforts to obtain the approvals specified in
paragraph 6 hereof and any other of the consents, waivers or
approvals necessary or desirable to accomplish the transactions
contemplated by this Agreement and the Exchange Agreement. All
documents required to be delivered by each of the parties shall be
duly delivered to the respective recipient thereof at or prior to
the Closing. In no event shall the Closing Date be later than June
30, 2007, and if it is delayed beyond said date then either party
shall have the right to terminate this Agreement upon notice to
that effect.
(b) At the Closing, DVSO and SOE shall jointly
direct that the Certificate of Exchange be duly filed, and it shall
in accordance with such direction be filed, if required, in the
office of the Secretary of State of the State of Delaware and the
Arizona Corporation Commission so that the Exchange shall be
effective on the Closing Date.
3.
Investigation by the
Parties
DVSO and SOE each may, prior to the Closing
Date, make or cause to be made such investigation of the properties
of the other and its subsidiaries and of its financial and legal
condition as the party making such investigation deems necessary or
advisable to familiarize itself with such properties and other
matters, provided, that such shall not interfere with normal
operations. DVSO and SOE each agrees to permit the other and its
authorized agents or representatives to have, after the date of
execution hereof, full access to its premises and to all of its
books and records at reasonable hours, and its subsidiaries and
officers will furnish the party making such investigation with such
financial and operating data and other information with respect to
the business and properties of its and its subsidiaries as the
party making such investigation shall from time to time reasonably
request. No investigation by DVSO or SOE shall affect the
representations and warranties of the other and each such
representation and warranty shall survive any such investigation.
Each party further agrees that in the event that the transactions
contemplated by this Agreement shall not be consummated it and its
officers, employees, accountants, attorneys, engineers and other
representatives will not disclose or make available to any other
person or use for any purpose unrelated to the consummation of this
Agreement any information, whether written or oral, with respect to
the other party and its subsidiaries or their business which it
obtained pursuant to this Agreement. Such information shall remain
the property of the party providing it and shall not be reproduced
or copied without the consent of such party. In the event that the
transaction contemplated by this Agreement shall not be
consummated, all such written information shall be returned to the
party providing it.
DVSO and SOE will each take such steps as may be
necessary on their respective parts to comply with any state
securities or so-called Blue Sky laws applicable to the action to
be taken by them in connection with the Exchange and the delivery
by DVSO to SOE shareholders of the DVSO Common Stock pursuant to
this Agreement and the Exchange Agreement.
5.
Business Pending the
Closing
(a) From the date of this Agreement to and
including the Closing Date, except as may be first approved by SOE
or as is otherwise permitted or contemplated by this Agreement or
in furtherance of the objectives of this Agreement: (i) DVSO (which
term shall, where applicable in this paragraph 5, also refer to the
subsidiaries of DVSO specified in paragraph 9 hereof) shall conduct
its business only in the usual and ordinary course without the
creation of any additional indebtedness; (ii) no change shall be
made in the authorized capitalization of DVSO except as
contemplated by this Agreement; (iii) no shares of capital stock of
DVSO shall be authorized for issuance or issued and no agreement or
commitment for the issuance thereof shall be entered into in excess
of the number of shares set forth for DVSO in the Exchange
Agreement; (iv) no rights or elections shall be created or granted
to purchase stock under any employee stock bonus, thrift or
purchase plan or otherwise, to the extent such rights shall result
in the commitment for the issuance of shares in excess of the
number set forth for DVSO in the Exchange Agreement; (v) no
amendment shall be made to DVSO’s Articles of Incorporation
or Bylaws, except as contemplated by this Agreement; (vi) no
modifications shall be made in DVSO’s present employee
benefit programs or in is present policies in regard to the payment
of salaries or compensation to its personnel and no increase shall
be made in the compensation of its personnel; (vii) no contract or
commitment shall be entered into by or on behalf of DVSO and no
sale or purchase of assets shall be made except in the ordinary
course of business; (viii) DVSO will use all reasonable and proper
efforts to preserve its business organization intact, to keep
available the services of its present employees and to maintain
satisfactory relationships between DVSO and its suppliers,
customers, regulatory agencies, and others having business
relations with it; (ix) DVSO shall make no amendments or
contributions to any profit sharing plans; and (x) the Board of
Directors of DVSO will not declare any dividends on, or otherwise
make any distributions in respect of, its outstanding shares of
capital stock;
(b) From the date of this Agreement to and
including the Closing Date, except as may be first approved by DVSO
or as is otherwise permitted or contemplated by this Agreement: (i)
SOE (which term shall, where applicable in this paragraph 5, also
refer to the subsidiaries of SOE specified in paragraph 10 hereof)
shall conduct its business only in the usual and ordinary course
without the creation of any additional indebtedness exceeding
$10,000 for money borrowed maturing in more than one year, except
for the lease of capital equipment pursuant to leasing company
commitments outstanding prior to the date of this Agreement; (ii)
no change shall be made in the authorized capitalization of SOE
except as contemplated by this Agreement; (iii) no shares of
capital stock of SOE shall be authorized for issuance or issued and
no agreement or commitment for the issuance thereof shall be
entered into in excess of the number of shares set forth for SOE in
the Exchange Agreement; (iv) no rights or elections shall be
created or granted to purchase stock under any employee stock
bonus, thrift or purchase plan or otherwise; (v) no amendment shall
be made to SOE’s Articles of Incorporation or Bylaws, except
as contemplated by this Agreement; (vi) no modifications shall be
made in SOE’s present employee benefit programs or in is
present policies in regard to the payment of salaries or
compensation to its personnel and no increase shall be made in the
compensation of its personnel and no increase shall be made in the
compensation of its personnel, provided that nothing herein shall
preclude (1) the continuation of SOE’s present practices of
periodically reviewing the salaries of its personnel and granting
normal increases in such salaries or compensation to such
personnel, or (2) the hiring of new personnel at a salary or
compensation deemed reasonable in the ordinary course of business;
(vii) no contract or commitment shall be entered into by or on
behalf of SOE and no sale or purchase of assets shall be made
except in the ordinary course of business; (viii) SOE will use all
reasonable and proper efforts to preserve its business organization
intact, to keep available the services of its present employees and
to maintain satisfactory relationships between SOE and its
suppliers, customers, regulatory agencies, and others having
business relations with it; (ix) SOE shall make no amendments or
contributions to any profit sharing plans; and (x) the Board of
Directors of SOE will not declare any dividends on, or otherwise
make any distributions in respect of, its outstanding shares of
capital stock.
(c) The parties hereto agree that SOE is extending
to DVSO an exclusive option to purchase the shares of SOE. As such,
SOE agrees not to solicit or entertain offers to purchase its
shares or assets from a third party prior to the Closing or
termination of this Agreement. As consideration for this
exclusivity, subsequent to the date of this Agreement but prior to
Closing, SOE shall continue its research and development program
relating to the entertainment Kiosk. SOE agrees that all
intellectual property that may be protected by patents, copyrights
and trademarks will become the subject of patent applications filed
with the U.S. Patent and Trademark office, together with
appropriate assignments to SOE of all rights by any persons
claiming or who may have the right to claim status of an inventor
or creator of the intellectual property being the subject of each
such application. All intellectual property of SOE shall remain
unencumbered and free of any liens or claims of whatsoever nature
prior to the Closing. Except as set forth in formal patents,
copyrights and trademarks, or applications for same, SOE makes no
representations or warranties with respect to its intellectual
property. DVSO understands and agrees that it will conduct its own
independent investigations with respect to the assets and
liabilities of SOE, including but not limited to items of
intellectual property of SOE. Provided DVSO shall not have
theretofore issued written notice of termination of this Agreement,
as provided herein, DVSO will advance or reimburse all costs
incurred by SOE in connection with the kiosk development program
including, but not limited to, consulting fees, professional fees,
prototype construction costs, engineering and design fees, and
administrative and overhead expenses. Such costs will be either
paid directly by DVOS or remitted to SOE upon written invoice
therefore. In the event this transaction shall fail to close, for
any reason whatsoever, SOE shall be liable to DVSO for all monies
theretofore advanced to or for the benefit of the SOE research and
development program and shall execute and deliver to DVSO a
promissory note in such principal amount evidencing such
indebtedness. Such Promissory Note shall (i) provide for a maturity
date two years from the date it is executed, (ii) bear interest at
the rate of three percent over the prime rate as set by Bank of
America from time to time, and (iii) permit repayment at any time
without penalty. The principal of the note, together with all
accrued interest, shall be due and payable at maturity. Upon
execution and delivery of the aforementioned promissory note, DVSO
(i) shall have no rights, liens against the intellectual property
of SOE or any other claims against SOE except as provided in the
promissory note, and (ii) shall not be entitled to reimbursement of
any monies advanced, paid or remitted to or on behalf of SOE to any
person or entity pursuant to this Agreement except as provided in
the promissory note. All intellectual property developed or created
by SOE prior to this Agreement or during the term hereof, shall
remain the property of SOE.
6.
Efforts to Obtain Approvals
and Consents
In addition to DVSO and SOE obtaining the
requisite shareholder approval as described in paragraph 1 hereof,
DVSO and SOE will use all reasonable and proper efforts to obtain
the following: (i) approval or consent of any other governmental
authorities having jurisdiction over the transactions contemplated
in this Agreement; and (ii) approval or consent of such other
persons whose consent is required to the transactions contemplated
by this Agreement.
7.
Cooperation Between
Parties
DVSO and SOE shall fully cooperate with each
other and with their respective counsel and accountants in
connection with any steps required to be taken as part of their
obligations under this Agreement, including the preparation of
financial statements and the supplying of information.
DVSO and SOE agree that they will not attempt to
obtain ruling from the United States Internal Revenue Service to
the effect that for Federal Income Tax purposes no gain or loss
will be recognized to the holders of SOE Common Stock upon the
receipt of DVSO Common Stock in exchange for their SOE shares in
accordance with the provisions of this Agreement. In lieu of such a
ruling from the Internal Revenue Service, SOE may request an
opinion of its counsel to the foregoing effects, which opinion
shall be a condition to both parties’ obligations to
consummate the Exchange.
9. Representations of
DVSO
DVSO
represents, warrants and agrees that:
(a) DVSO is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and it and its subsidiaries are duly qualified to do
business and in good standing in every jurisdiction in which the
nature of its business or the character of its properties makes
such qualification necessary. DVSO’s subsidiaries and a list
of jurisdictions in which DVSO or its subsidiaries is so qualified
is set forth in a memorandum to be prepared by DVSO and furnished
to SOE. DVSO owns 100% of the outstanding capital stock of each of
its subsidiaries.
(b) As of December 31, 2005, the capitalization of
DVSO and its subsidiaries is as set forth in the financial
statements previously furnished to SOE. The outstanding capital
stock of DVSO has been duly authorized and issued and is fully paid
and nonassessable. DVSO has no commitments to issue nor will it
issue any shares of its capital stock or any securities or
obligations convertible into or exchangeable for, or giving any
person any right to acquire from DVSO, any shares of its capital
stock, except for those shares issued in conformity with paragraph
5(a)(iii) above or otherwise described in prior filings with the
SEC.
(c) The shares of DVSO Common Stock which are to be
issued and delivered to the SOE shareholders pursuant to the terms
of this Agreement and the Exchange Agreement, when so issued and
delivered, will be validly authorized and issued and will be fully
paid and nonassessable. No stockholder of DVSO, or other person,
will have any preemptive rights in respect to the DVSO Common
Stock.
(d) DVSO has furnished SOE with copies of its 2005
Financial Statements together with the Auditors report for its
fiscal year ending June 30, 2005, consisting of the consolidated
balance sheet of DVSO and its subsidiaries as of June 30, 2005, and
related statements of consolidated income, stockholders’
equity and changes in financial position for the year then ended.
DVSO has also furnished SOE with copies of its unaudited financial
statements for the six months ending December 31, 2005, consisting
of the consolidated balance sheet of DVSO and its subsidiaries as
of December 31, 2005, and related statements of consolidated
income, stockholders’ equity and changes in financial
position for the six months then ended. All of the above-described
financial statements present fairly the consolidated financial
position of DVSO and its subsidiaries, at the periods indicated,
and the consolidated results of their operations and changes in
their financial position for the year and periods then ended in
conformity with generally accepted accounting principles applied on
a consistent basis. DVSO has no material liabilities or commitments
other than as listed or noted in the aforesaid financial
statements, or as incurred in the ordinary course of business since
the date of such financial statements Since December 31, 2005, to
the date of this Agreement, there has been no material adverse
change in the assets or liabilities or in the business or
condition, financial or otherwise, of DVSO or its subsidiaries,
except in the ordinary course of business or as contemplated by
this Agreement, nor has DVSO or its subsidiaries, except in the
ordinary course of business or as contemplated by this Agreement,
incurred any indebtedness for money borrowed. All tax returns and
reports of DVSO and its subsidiaries required by law to be filed
have been duly filed and all taxes, assessments and other
governmental charges now
|
