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Exhibit 10.1
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:
A. 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.
C. 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”).
D. Following
the Exchange under the Exchange Agreement, SOE will be a
wholly-owned subsidiary of DVSO.
E. 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:
1. The
Exchange
(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.
1. The
Exchange - continued
(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.
2. Closing
(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.
5. Business
Pending the Closing - continued
(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.
8. No
Tax Ruling
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.
9. Representations
of DVSO - continued
(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 subs idiaries 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 due (other than
any still payable without penalty) upon DVSO and its
subsidiaries or upon any of their properties or assets, have
been paid. All amounts which have been reflected as
liabilities on the books of DVSO and its subsidiaries in
respect of taxes are considered adequate and DVSO does not
know of any actual or proposed additional assessments in
respect of taxes, against either it or its
subsidiaries.
(e)
Subsequent to December 31, 2005, DVSO has not declared
or pa
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