-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fm7ZjGoSxD5CrK0OxcSmxnuFptIiTqut4CFOEfNwM5oqLRfCzgEO1CSZfldjSiRb YifdeNG8t9xGTGar4nuZQQ== 0000949459-96-000079.txt : 19960711 0000949459-96-000079.hdr.sgml : 19960711 ACCESSION NUMBER: 0000949459-96-000079 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960710 EFFECTIVENESS DATE: 19960729 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DCC COMPACT CLASSICS INC CENTRAL INDEX KEY: 0000809932 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 841046186 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-07885 FILM NUMBER: 96593050 BUSINESS ADDRESS: STREET 1: 9301 JORDON AVE STREET 2: STE 105 CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8189938822 MAIL ADDRESS: STREET 1: 200 E LAS OLAS BLVD STREET 2: C/O ATLAS PEARLMAN TROP & BORKSON CITY: FT LAUDERDALE STATE: FL ZIP: 33301 FORMER COMPANY: FORMER CONFORMED NAME: DUNHILL COMPACT CLASSICS INC DATE OF NAME CHANGE: 19900522 FORMER COMPANY: FORMER CONFORMED NAME: TOTAL CAPITAL CORP DATE OF NAME CHANGE: 19871103 S-8 1 FORM S-8 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on July 10, 1996 File No. 333-_______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ DCC COMPACT CLASSICS, INC. (Exact name of issuer as specified in its charter) Colorado 84-1046186 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 9301 Jordan Avenue Suite 105 Chatsworth, California 91311 (Address of principal executive offices) (Zip Code) ------------------ CONSULTING AND STOCK OPTION AGREEMENT WITH GARY GILLMAN COMMON STOCK PURCHASE WARRANT WITH MARSHALL BLONSTEIN (Full title of the plan) ------------------ Marshall Blonstein 9301 Jordan Avenue, Suite 105 Chatsworth, California 91311 (Name and address of agent for service) Copy to: Jim Schneider, Esq. Atlas, Pearlman, Trop & Borkson, P.A. 200 East Las Olas Boulevard, Suite 1900 Fort Lauderdale, Florida 33301 (305) 763-1200 ------------------ CALCULATION OF REGISTRATION FEE ================================================================================ Proposed Proposed maximum maximum offering aggregate Amount of Title of securities Amount to be price per offering registration to be registered registered(1) share(1) price(1) fee(2) ================================================================================ Common Stock ($.005 par value) 10,000 shares $.10 $ 1,000 $ .34 200,000 shares $.13 $ 26,000 $ 8.97 200,000 shares $.13 $ 26,000 $ 8.97 -------- $ 53,000 $100.00 ================================================================================ (1) Pursuant to Rule 457(h), the maximum offering price was calculated based upon the exercise price of the Options described herein. (2) The registration fee represents the minimum prescribed fee. ii DCC COMPACT CLASSICS, INC. CROSS REFERENCE SHEET REQUIRED BY ITEM 501(b) OF REGULATION S-K Form S-8 Item Number and Caption Caption in Prospectus -------------------- --------------------- 1. Forepart of Registration State- Facing Page of Registration ment and Outside Front Cover Statement and Cover Page of Page of Prospectus Prospectus 2. Inside Front and Outside Back Inside Cover Page of Pro- Cover Pages of Prospectus spectus and Outside Cover Page of Prospectus 3. Summary Information, Risk Fac- Not Applicable tors and Ratio of Earnings to Fixed Charges 4. Use of Proceeds Not Applicable 5. Determination of Offering Price Not Applicable 6. Dilution Not Applicable 7. Selling Security Holders Sales by Selling Security Holders 8. Plan of Distribution Cover Page of Prospectus and Sales by Selling Security Holders 9. Description of Securities to be Description of Securities; Registered Consulting and Stock Option Agreement with Gary Gillman and Warrant with Marshall Blonstein. 10. Interests of Named Experts and Not Applicable Counsel 11. Material Changes Not Applicable 12. Incorporation of Certain Infor- Incorporation of Certain mation by Reference Documents by Reference 13. Disclosure of Commission Posi- Indemnification; Undertak- tion on Indemnification for ings Securities Act Liabilities iii PROSPECTUS DCC COMPACT CLASSICS, INC. 410,000 Shares of Common Stock ($.005 par value) Issued Pursuant to Exercise of Options under the Company's Consulting and Stock Option Agreement with Gary Gillman and Warrants under the Company's Common Stock Purchase Warrant with Marshall Blonstein This Prospectus is part of a Registration Statement which registers an aggregate 410,000 shares of Common Stock ("Common Stock"), $.005 par value (such shares being referred to as the "Shares") of DCC Compact Classics, Inc. (the "Company") which may be issued upon the exercise of certain options and warrants, as set forth herein, to: (i) Gary Gillman, a consultant to and director of the Company, pursuant to a written Consulting and Stock Option Agreement dated March 8, 1996 (the "Gillman Option Agreement"), providing for the issuance of options to purchase shares of Common Stock, 10,000 of which are being registered hereby;and (ii) Marshall Blonstein, the CEO, President and a director of the Company ("Blonstein"), pursuant to a written Common Stock Purchase Warrant dated April 1, 1994, as amended (the "Blonstein Warrant"), providing for the issuance of warrants to purchase shares of Common Stock, 200,000 of which are being registered hereby. Gillman and Blonstein in their capacity as selling shareholders, may sometimes hereafter be collectively referred to as the "Selling Security Holders." The Company has been advised by the Selling Security Holders that each of them may sell all or a portion of the Shares from time to time in the over-the-counter market in negotiated transactions, directly or through brokers or otherwise, and that such shares will be sold at market prices prevailing at the time of such sales or at negotiated prices, and the Company will not receive any proceeds from such sales. No person has been authorized by the Company to give any information or to make any representation other than as contained in this Prospectus, and if given or made, such information or representation must not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any distribution of the shares of the Gillman Incentive Stock nor the Blonstein Incentive Stock issuable pursuant to the terms of the Option Agreement or the Blonstein Warrant, respectively, shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE. The date of this Prospectus is July 10, 1996. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed with the Commission can be inspected and copied at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this material can also be obtained at prescribed rates from the Public Reference Section of the Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is traded in the over-the-counter market on NASDAQ under the symbol "DCCC." The Company has filed with the Commission a Registration Statement on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), with respect to the resale of up to an aggregate of 410,000 shares of the Company's Common Stock, to be issued to a consultant and directors of the Company upon exercise of certain options and warrants pursuant to the written Gillman Option Agreement and the Blonstein Warrant. This Prospectus, which is Part I of the Registration Statement, omits certain information contained in the Registration Statement. For further information with respect to the Company and the shares of the Common Stock offered by this Prospectus, reference is made to the Registration Statement, including the exhibits thereto. Statements in this Prospectus as to any document are not necessarily complete, and where any such document is an exhibit to the Registration Statement or is incorporated by reference herein, each such statement is qualified in all respects by the provisions of such exhibit or other document, to which reference is hereby made, for a full statement of the provisions thereof. A copy of the Registration Statement, with exhibits, may be obtained from the Commission's office in Washington, D.C. (at the above address) upon payment of the fees prescribed by the rules and regulations of the Commission, or examined there without charge. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are incorporated herein by reference and made a part hereof: 1. The Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994. 2. The Company's Form 10-QSB Quarterly Report for the quarterly period ended March 31, 1995. 2 3. The Company's Form 10-QSB Quarterly Report for the quarterly period ended June 30, 1995. 4. The Company's Form 10-QSB Quarterly Report for the quarterly period ended September 30, 1995. 5. The Company's Form 10-KSB Annual Report for the year ended December 31, 1995. All reports and documents filed by the Company pursuant to Section 13, 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the respective date of filing of such documents. Any statement incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. The Company hereby undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of the Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents. Written requests for such copies should be directed to Corporate Secretary, DCC Compact Classics, Inc., 9301 Jordan Avenue, Suite 105, Chatsworth, California 91311, Telephone (818) 993-8822. 3 THE COMPANY DCC Compact Classics, Inc. (the "Company") was incorporated as a Colorado corporation on February 20, 1986, and on October 19, 1987, completed the acquisition of Dunhill Compact Classics, Inc., a privately-held California corporation. The focus of the Company's operations following such acquisition was to establish a specialized niche in the then-emerging market for compact discs ("CDs"). The emergence of compact disc technology in the early 1980's led to segments of the consuming public replacing their collections of vinyl and audio cassettes with the superior quality and convenience of compact discs. Classical music listeners were the first segment to accept compact disc technology and the initial discs made available were comprised of classical albums. Since that time there has been substantial acceptance of compact discs for all types of music, including classical, jazz, rock and oldies. Sales of compact discs are growing rapidly and by the end of 1994 represented in excess of 70% of all music sales in the $12 billion record industry. A predominant portion of the Company's manufacturing process utilizes a coating of 24K gold and a proprietary vintage vacuum tube system which are considered by various audiophiles to have a superior phonic quality compared with standard CDs, and thereby can be sold at a premium in excess of the incremental manufacturing costs. The Company is presently one of the industry leaders in the sale of 24K gold CDs and has license rights to the exclusive exportation of 24K gold CDs albums by such artists as Frank Sinatra, Ray Charles, Bob Dylan, The Doors, The Eagles, Paul McCartney, Cream, Miles Davis, Creedence Clearwater Revival, Joni Mitchell, The Steve Miller Bank and Bob Seger. The Company has successfully exploited the consumer demand for reissues and compilations of music originally issued on vinyl and audio cassettes. This has been achieved through the purchase, exploitation and sale of catalogs of music masters and by licensing rights from others to music masters for exploitation. The Company's basic concept has been to provide the listening public a compact disc line that specializes in contemporary music which includes jazz, classical and oldies and the 24K gold limited edition series. In addition, the Company has developed "Collection" series which features the best of a certain performance era or type of music. Since formation of the Company in February 1986, the Company has entered into licensing agreements with major record labels throughout the industry, including Sony, MCA, Warner, Elektra, Atlantic, Arista, Capitol and Polygram among others. Typically, licensing agreements range from three to five years in term with possible renewal options. Royalties are paid to the licensor at between $.55 to $6.00 per unit sold for the term of the agreement. The licensing agreements grant the Company the exclusive or non-exclusive right to take master 4 recordings of many top artists for the purpose of enhancing the sound quality through digital sound recording process and then to market under the Company's trade label the individual recordings or compilations in the form of a compact disc. At the present time, most of the major music recording companies are not seeking to develop this specialized niche on a proprietary basis and rely on specialty operations such as the Company for the development of the reissue market. The Company follows the normal practice for independent record labels, which entails subcontracting manufacturing, field sales, physical distribution, billing and collections to specialized entities providing the services. Commencing in 1994, the Company formed a strategic alliance with Romance Alive Audio, Inc. to enter into the emerging market for audio books with a focus on romance novels. Romance Alive Audio operates out of the same facilities as the Company, specializes in publishing romance novels on audio cassettes and markets such audio cassettes through chain stores, supermarkets and traditional book outlets. The Company has completed signings with numerous well-known authors in this field and has the potential to become a recognized publisher of women's romance novels on audio cassettes in the United States. The Company's offices are located at 9301 Jordan Avenue, Suite 105, Chatsworth, California 91311, the telephone number of the Company is (818) 993-8822. CONSULTING AND STOCK OPTION AGREEMENT WITH GARY GILLMAN On November 21, 1991, the Company entered into an oral Consulting and Stock Option Agreement with Gary Gillman (reduced to writing on March 8, 1996) to which the Company agreed to issue to the Consultant options (the "Options") to purchase 25,000 Shares in consideration for certain financial, administrative and accounting services to be provided to the Company on an as-needed basis. Mr. Gillman has also served as a director of the Company since 1993. The Options are exercisable at $.10 per share of Common Stock on or prior to November 20, 1996. At this time the Company is registering 10,000 of the 25,000 shares of Common Stock underlying the Options issued by the Company to Mr. Gillman. COMMON STOCK PURCHASE WARRANT WITH MARSHALL BLONSTEIN On April 15, 1994, the Company issued a Common Stock Purchase Warrant to Marshall Blonstein, the President and Chief Executive Officer and a director of the Company, a warrant to purchase up to 225,000 shares of Common Stock, exercisable at any time on or before April 15, 1999. On May 24, 1995, the board of directors of the Company modified the exercise price of the Warrants from $.25 per Share to $.13 per Share. The Company is registering hereby 200,000 of the 225,000 Shares underlying the Warrants issued by the Company to Mr. Blonstein. 5 Federal Income Tax Effects An option or warrant holder does not recognize taxable income on the date of the grant of the Options or Warrants, which is a non-statutory option and warrant, but recognizes ordinary income generally at the date of exercise in the amount of the difference between the Option or Warrant exercise price and the fair market value of the Common Stock on the date of exercise. However, if the holder is subject to the restrictions on resale of common stock under Section 16 of the Securities Exchange Act of 1934, such person generally recognizes ordinary income at the end of the six-month period following the date of exercise in the amount of the difference between the Option or Warrant exercise price and the fair market value of the common stock at the end of the six-month period. Nevertheless, such holder may elect, within 30 days after the date of exercise, to recognize ordinary income as of the date of exercise. The amount of ordinary income recognized by the option or warrant holder is deductible by the Company in the year that income is recognized. Restrictions Under Securities Laws The sale of any shares of Common Stock acquired upon the exercise of the Options and Warrants must be made in compliance with federal and state securities laws. Officers, directors and 10% or greater stockholders of the Company, as well as certain other persons or parties who may be deemed to be "affiliates" of the Company under the Federal Securities Laws, should be aware that resales by affiliates can only be made pursuant to an effective Registration Statement, Rule 144 or any other applicable exemption. Officers, directors and 10% and greater stockholders are also subject to the "short swing" profit rule of Section 16(b) of the Securities Exchange Act of 1934. Section 16(b) of the Exchange Act generally provides that if an officer, director or 10% and greater stockholder sold any Common Stock of the Company acquired pursuant to the exercise of a stock option or warrant, he would generally be required to pay to the Company any "profits" resulting from the sale of the stock and receipt of the stock option. Section 16(b) exempts all option exercises from being treated as purchases and, instead, treats an option grant as a purchase of the underlying security, which grant/purchase may be matched with any sale of the underlying security within six months of the date of grant. SALES BY SELLING SECURITY HOLDER The following table sets forth the name of the Selling Security Holder, the amount of shares of Common Stock held directly or indirectly, the maximum amount of shares of Common Stock to be offered by the Selling Security Holder, the amount of Common Stock to be owned by the Selling Security Holder following the sale of such shares of Common Stock and the percentage of shares of Common Stock to be owned by the Selling Security Holder following completion of such 6 offering (based on 6,696,725 shares of Common Stock of the Company outstanding at June 17, 1996). Percentage Shares to be to be Owned Name of Selling Number of Shares to Owned After After Security Holder Shares Owned be Offered Offering Offering - --------------- ------------ ---------- -------- -------- Gary Gillman 25,000(1) 10,000 15,000 (2)% Marshall Blonstein 2,936,440(4) 200,000 2,736,440 40.86% - -------------------- (1) Includes options to purchase 25,000 shares of Common Stock at $.10 per share. (2) Less than 1%. DESCRIPTION OF SECURITIES Authorized Capital Stock The Certificate of Incorporation of the Company authorizes the Company to issue up to 10,000,000 shares of Common Stock, par value $.005 per share, of which 6,696,725 shares were outstanding at June 17, 1996. No shares of Preferred Stock are authorized by the Company's Certificate of Incorporation. Common Stock The Company's authorized Common Stock consists of 10,000,000 shares par value $.005 per share, of which 6,696,725 shares were outstanding at June 17, 1996. Each holder of record of Common Stock is entitled to one vote for each outstanding share of Common Stock owned by him on every matter properly submitted to such stockholder for his vote. The Restated Certificate of Incorporation of the Company does not authorize cumulative voting for the election of directors. The holders of Common Stock are entitled to such dividends as may be declared by the Board of Directors out of funds legally available therefor and, in the event of liquidation, dissolution or winding up of the affairs of the Company, such holders are entitled to receive ratably the net assets of the Company available for distribution to holders of Common Stock. No holder of any shares of Common Stock has any preemptive right to subscribe for any securities of the Company. Transfer Agent The transfer agent for the Common Stock is Corporate Stock Transfer Company, 370 17th Street, Suite 2350, Denver, Colorado 80202-4614. 7 LEGAL MATTERS Certain legal matters in connection with the securities being offered hereby will be passed upon for the Company by Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. EXPERTS On April 22, 1996, Henson & Company, the Company's independent auditors, chose not to continue as the Company's independent auditor based on its desire to discontinue providing auditing services to publicly-traded companies. The Company and Henson & Company did not have any disagreements during the two fiscal years ending December 31, 1994 or any subsequent interim period with respect to matters of accounting principles or practices, financial statement disclosure or auditing scope, or procedure which, if not resolved to Henson & Company's satisfaction, would have caused it to make reference to the subject matter of such disagreement in its reports. In connection with the termination of such relationship, the Company decided to engage Winter, Scheifley & Associates, P.C., Certified Public Accountants, as the Company's accountants to audit the Company's financial statements for the fiscal year ending December 31, 1995. INDEMNIFICATION Article XII of the Articles of Incorporation of the Company provides as follows: "The Corporation shall indemnify any and all of its directors, officers, employees, authorized agents or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them to the fullest extent permitted under Colorado Corporate Code, in connection with the defense of any action, suit or proceeding in which they or any of them, are made parties, or a party, by reason of being or having been directors or officers of the Corporation, or of such other corporation, except in relation to matters to which any such director or officer or former director or person shall be adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any By-Law agreement, vote of shareholders or otherwise. 8 In addition, no officer, director, employee or authorized agent shall be personally liable for any injury to person or property arising out of a tort committed by an employee unless such officer or director was personally involved in the situation giving rise to the litigation or unless such officer or director committed a criminal offense. The protection afforded hereby shall not restrict the Corporation's right to eliminate or limit the personal liability of a director to the Corporation or to its shareholders for monetary damages for breach of fiduciary duty as a director, and the personal liability of directors to the Corporation and to its shareholders for monetary damages shall be eliminated or limited, to the full extent permitted by the Colorado Corporation Code, except for monetary damages for: any breach of the director's duty of loyalty to the Corporation or to its shareholders; acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; acts specified in Section 7-5-114 of the Colorado Corporation Code; or any transaction from which the director derived an improper personal benefit. Nor shall the liability of a director of the Corporation be eliminated or limited to the Corporation or to its shareholders for monetary damages for any act or omission occurring prior to the effective date of this Article." 9 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference - ------- --------------------------------------- The documents listed in (a) through (f) below are incorporated by reference in the Registration Statement. All documents subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in the Registration Statement and to be part thereof from the date of filing of such documents. (a) The Registrant's latest annual report filed pursuant to Section 13(a) or 15(d) of the Exchange Act, or, in the case of the Registrant, either (1) the latest prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Act"), that contains audited financial statements for the Registrant's latest fiscal year for which such statements have been filed or (3) the Registrant's effective Registration Statement on Form 10 or 30F filed under the Exchange Act containing audited financial statements for the Registrant's latest fiscal year. (b) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1995. (c) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1995. (d) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1995. (e) The Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1995. (f) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Registrant's document referred to in (a) above. (g) The description of the Common Stock of the Company which is contained in a Registration Statement filed under the Exchange Act, including any amendment or report filed for the purpose of updating such description. 10 Item 4. Description of Securities - ------ ------------------------- A description of the Registrant's securities is set forth in the Prospectus incorporated as a part of this Registration Statement. Item 5. Interests of Named Experts and Counsel - ------ -------------------------------------- Not Applicable. Item 6. Indemnification of Directors and Officers - ------ ----------------------------------------- Article XII of the Articles of Incorporation of the Company provides as follows: "The Corporation shall indemnify any and all of its directors, officers, employees, authorized agents or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them to the fullest extent permitted under Colorado Corporate Code, in connection with the defense of any action, suit or proceeding in which they or any of them, are made parties, or a party, by reason of being or having been directors or officers of the Corporation, or of such other corporation, except in relation to matters to which any such director or officer or former director or person shall be adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any By-Law agreement, vote of shareholders or otherwise. In addition, no officer, director, employee or authorized agent shall be personally liable for any injury to person or property arising out of a tort committed by an employee unless such officer or director was personally involved in the situation giving rise to the litigation or unless such officer or director committed a criminal offense. The protection afforded hereby shall not restrict the Corporation's right to eliminate or limit the personal liability of a director to the Corporation or to its shareholders for monetary damages for breach of fiduciary duty as a director, and the personal liability of directors to the Corporation and to its shareholders for monetary damages shall be eliminated or limited, to the full extent permitted by the Colorado Corporation Code, except for monetary 11 damages for: any breach of the director's duty of loyalty to the Corporation or to its shareholders; acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; acts specified in Section 7-5-114 of the Colorado Corporation Code; or any transaction from which the director derived an improper personal benefit. Nor shall the liability of a director of the Corporation be eliminated or limited to the Corporation or to its shareholders for monetary damages for any act or omission occurring prior to the effective date of this Article." Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 7. Exemption from Registration Claimed - ------ ----------------------------------- Inasmuch as the consultant that received the Incentive Stock of the Registrant was knowledgeable, sophisticated and had access to comprehensive information relevant to the Registrant, such transaction was undertaken in reliance on the exemption from registration provided by Section 4(2) of the Act. As a condition precedent to such grant, the Consultant was required to express an investment intent and consent to the imprinting of a restrictive legend on each stock certificate to be received from the Registrant except upon sale of the underlying shares of Common Stock pursuant to a registration statement. 12 Item 8. Exhibits - ------ -------- Exhibit Description - ------- ----------- (4.1) Consulting and Stock Option Agreement with Gary Gillman. (4.2) Common Stock Purchase Warrant with Marshall Blonstein. (4.3) Resolution dated May 24, 1995 modifying the exercise price of Common Stock Purchase Warrants. (5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. relating to the issuance of shares of securities pursuant to the above Option Agreement (23.1) Consent of Atlas, Pearlman, Trop & Borkson, P.A. included in the opinion filed as exhibit (5) hereto (23.2.1) Consent of independent certified public accountants - Henson and Company for the period ended December 31, 1994. (23.2.2) Consent of independent certified public accountants - Scheifley & Associates, P.C. Item 9. Undertakings - ------- ------------ (1) The undersigned Registrant hereby undertakes: (a) To file, during any period in which offerings or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (b) That, for the purposes of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (2) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference 13 in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 14 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S- 8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chatsworth and the State of California, on the 10th day of July, 1996. DCC COMPACT CLASSICS, INC. By: /s/Marshall Blonstein ------------------------------ Marshall Blonstein President and Principal Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- President, Principal Executive Officer, Principal Financial Officer and Director and Principal Accounting /s/ Marshall Blonstein Officer July 10, 1996 - -------------------------- Marshall Blonstein /s/ Robert Siner Director July 10, 1996 - -------------------------- Robert Siner /s/ Gary Gillman Director July 10, 1996 - -------------------------- Gary Gillman EX-4 2 EXHIBIT (4.1) Consulting and Stock Option Agreement with Gary Gillman CONSULTING AND STOCK OPTION AGREEMENT ------------------------------------- THIS CONSULTING AND STOCK OPTION AGREEMENT (the "Agreement") dated as of the 8th day of March, 1996, but effective as of November 21, 1991 (the "Effective/Grant Date") is made and entered into by and between DCC COMPACT CLASSICS, INC., a Colorado corporation with its principal offices located at 903 Jordan Avenue, Suite 105, Chatsworth, California 91311 (the "Company") and Gary Gillman, ("Gillman") whose address is 6345 Balboa Boulevard, Suite 145, Encino, California 91316. W I T N E S S E T H: WHEREAS, Gillman is knowledgeable in all material aspects of accounting and particularly in the accounting practices of the Company; and WHEREAS, from time to Gillman will provide certain accounting and financial services to the Company, on an as needed basis; and WHEREAS, in consideration for the services to be provided by Gillman to the Company, Gillman shall be granted the option for certain shares of common stock, par value $.005 per share ("Common Stock") of the Company as described herein, subject to the terms and conditions of this Agreement; and WHEREAS, Gillman desires to accept the grant of such option in consideration for his providing certain accounting and financial services to the Company, subject to the terms and conditions of this Agreement. NOW, THEREFORE, the Company and Gillman hereby agree as follows: Section 1. Services of Gillman. Gillman shall provide such administrative, --------- -------------------- financial and accounting services to the Company as may be required by the Company from time to time, and particularly, to provide such services as may be required of a chief financial officer of the Company. Section 2. Grant of Option. Subject to the provisions of this Agreement, --------- ---------------- in consideration for the services to be provided by Gillman on behalf of the Company as described in Section 1, the Company hereby grants to Gillman an option (the "Option") to purchase from the Company at any time and from time to time, up to 25,000 shares of Common Stock (the "Option Shares") of the Company at $.10 per share (the "Exercise Price"), subject to the terms of this Agreement. Section 3. Exercise of Option. The Option may be exercised in whole or in --------- ------------------ part in accordance with the provisions of this Agreement by Gillman's tendering the Exercise Price (or a proportionate part thereof if the Option is partially exercised), in cash equal in value to the Exercise Price to the Company together with a written notice specifying the number of the Option Shares Gillman wishes to purchase pursuant to the terms of the Option. Optionee shall not, however, purchase fewer than One Hundred (100) of the Option Shares at any one time unless such lesser number of shares constitutes the remaining Option Shares subject to the Option. Section 3. Share Certificates. Upon receipt of payment in full of the --------- ------------------- Exercise Price, and after taking such steps as it deems necessary to satisfy 2 any withholding tax obligations imposed upon it by any level of government, the Company will cause one or more stock certificates evidencing Gillman's ownership of the Option Shares so purchased by Gillman to be issued to Gillman. Section 4. Termination of Options. The options shall terminate on --------- ----------------------- November 20, 1996, at 12:00 midnight. Section 5. Restrictions. The Option and the Option Shares have not been --------- ------------- registered under the Securities Act of 1933, as amended (the "Act"). The Company may, in its sole discretion , register all or a portion of the Option Shares underlying the Option but it shall have no obligation to do so. All shares acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and Gillman has furnished the Company with an opinion of counsel satisfactory in form and substance to Company's counsel that such registration is not required. Section 6. Share Adjustments. If there is any change in the number of --------- ------------------ shares of Common Stock on account of the declaration of stock dividends, recapitalization resulting in stock split-ups, or combinations or exchanges of shares of Common Stock, or otherwise, the number of Option Shares available 3 for purchase by the exercise of the Option, and the Exercise Price, shall be proportionately adjusted by the Company. Section 7. Miscellaneous Provisions. --------- ------------------------ (a) Notices. Unless otherwise specifically provided herein, all notices to ------- be given hereunder shall be in writing and sent to the parties by certified mail, return receipt requested, which shall be addressed to each party's respective address, as set forth in the first paragraph of this Agreement, or to such other address as such party shall give to the other party hereto by a notice given in accordance with this Section and, except as otherwise provided in this Agreement, shall be effective when deposited in the United States mails properly addressed and postage prepaid. If such notice is sent other than by the United States mail, such notice shall be effective when actually received by the party being noticed. (b) Assignment. This Agreement and the rights granted hereunder may not be ---------- assigned in whole or in part by Optionee except by will or the laws of descent and distribution, and the Option is exercisable during Optionee's lifetime only by Optionee. This Agreement may be assigned by the Company without the consent of Gillman. (c) Further Assurances. Both parties hereto shall execute and deliver ------------------ such other instruments and do such other acts as may be necessary to carry out the intent and purposes of this Agreement. 4 (d) Gender. Whenever the context may require, any pronouns used herein ------ shall include the corresponding masculine, feminine or neuter forms and the singular form of nouns and pronouns shall include the plural and vice versa. (e) Captions. The captions contained in this Agreement are inserted only -------- as a matter of convenience and in no way define, limit, extend or prescribe the scope of this Agreement or the intent of any of the provisions hereof. (f) Completeness and Modification. This Agreement and the Option Plan ------------------------------- constitute the entire understanding between the parties hereto superseding all prior and contemporaneous agreements or understandings among the parties hereto concerning the grant of stock options to Gillman. This Agreement shall not be terminated, except in accordance with its terms, or amended in a writing executed by all of the parties hereto. (g) Waiver. The waiver of a breach of any term or condition of this ------ Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition. (h) Severability. The invalidity or unenforceability, in whole or in part, ------------ of any covenant, promise or undertaking, or any section, subsection, paragraph, sentence, clause, phrase or word or of any provision of this Agreement shall not affect the validity or enforceability of the remaining portions thereof. 5 (i) Binding Effect. This Agreement shall be binding upon and inure to the -------------- benefit of the heirs, successors, estate and personal representatives of Gillman and upon the successors and assigns of the Company. (j) Cancellation of Existing Options. Optionee hereby acknowledges that --------------------------------- upon receipt of this Option, 25,000 options representing the right to purchase 25,000 shares, exercisable at a price of $.10 per share, are in all respects cancelled and of no further effect. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth in the first paragraph of this Agreement above. DCC COMPACT CLASSICS, INC. a Colorado corporation. By: /s/Marshall Blonstein ---------------------------- Marshall Blonstein, President GILLMAN: /s/Gary Gillman ---------------------------- Gary Gillman 6 EX-4 3 EXHIBIT (4.2) Common Stock Purchase Warrant with Marshall Blonstein COMMON STOCK PURCHASE WARRANT 200,000 Common Shares DCC Compact Classics, Inc. (a Colorado corporation) Dated: April 15,1994 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT BE SOLD, TRANSFERRED, DISPOSED OF, PLEDGED OR HYPOTHECATED IN ANY MANNER WHATSOEVER UNLESS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR, IF IN THE OPINION OF THE COMPANY COUNSEL AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS IS IN FACT APPLICABLE TO SAID SECURITIES. THIS CERTIFIES THAT MARSHALL BLONSTEIN (hereinafter called the "Holder") is entitled to purchase from DCC Compact Classics, Inc., a Colorado corporation (hereinafter called the "Company"), during a period hereinafter specified, 200,000 shares (the shares of Common Stock underlying the Warrants being hereinafter referred to, in part or in whole, as the "Shares") of the Company's common stock, par value $0.001 per share ("Com non Stock"), at an exercise price of $0.25 per Share (the "Exercise Price"). The right to purchase the Shares under this Warrant is exercisable, in part or in whole, by the Holder hereof commencing on the date hereof and shall expire on April 15, 1999, and the Holder shall have no further right to purchase any of such Shares, effective 5:00 p.m. on April 15, 1999. 1. EXERCISE RIGHTS. The right to purchase the Shares under this Warrant is exercisable in part or in whole commencing on the date hereof. 2. EXERCISE OF WARRANTS. The rights represented by this Warrant may be exercised at any time within the period above specified, in whole or in part, by (i) the surrender of this Warrant (with the purchase form at the end hereof properly executed) at the principal executive office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company); and (ii) payment to the Company of the Exercise Price then in effect for the number of Shares specified in the above-mentioned purchase form. This Warrant shall be deemed to have been exercised, in whole or in part to the extent specified, immediately prior to the close of business on the date this Warrant is surrendered any payment is made in accordance with the foregoing provisions of this Warrant, and the person or persons in whose name or names the certificates for Shares shall be issuable upon such exercise shall become the holder or holders of record of such Shares at that time and date. The certificates for the Shares so purchased shall be delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised. 3. RESTRICTED SECURITIES. Unless the Shares shall have been registered with the Securities and Exchange Commission, as hereinafter provided, all Shares acquired upon the exercise of the Warrant shall be "restricted Securities" as that term is defined in Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act"). In such event, the certificate(s) representing the Shares shall bear an appropriate legend restricting their transfer and such Shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Company has been furnished with an opinion of counsel satisfactorily in for and substance to it that such registration is not required. 4. TRANSFER OF WARRANT. This Warrant may be sold, transferred, assigned, or otherwise disposed of at any time by the Holder providing that the Company shall be furnished with an opinion of counsel in form and substance satisfactorily to it that such sale, transfer, assignment or other disposition does not require registration under the Act and a valid exemption is available under applicable federal and state securities laws. Upon any such disposition, the right to accelerate the lapsing of the Company's right to repurchase through obtaining the aforementioned financing's shall be effected by the Holder (i) completing and executing the form of assignment, attached hereto, and (ii) surrendering this Warrant with such duly completed and executed assignment form for cancellation, accompanied by funds sufficient to pay any transfer tax, at the principal executive office of the Company, accompanied by a written representation from each such assignee addressed to the Company stating that such assignee agrees to be bound by the terms of this Warrant; whereupon the Company shall issue, in the name or names specified by the Holder (including the Holder) a new Warrant or Warrants of like tenor with appropriate legends restricting transfer under the Act and reciting the Company s right to repurchase and representing in the aggregate rights to purchase the same number of Shares as are purchasable hereunder. 5. REGISTRATION RIGHTS. Through April 15, 1999, the Holder shall have piggyback registration rights for all Shares underlying this Warrant in connection with any registration statement filed through such dates by the Company to register securities of the Company for sale to the public (except a registration statement filed in connection with an exchange offering or a registration statement filed to register securities in connection with a Company employee benefit plan). The Company shall give prompt written notice to Holder 2 of any such proposed registration, and Holder shall inform the Company, within 20 days after receipt of such notice, if it wished to register any of its Shares in the Company's registration statement. If Holder does not so inform the Company, the Company shall have the right to assume that Holder does not wish to register any of its Shares in the Company's registration statement. The Company shall pay all costs and expenses of such registration, excluding fees and expenses of counsel for Holder and underwriting discounts, commissions or expenses of Holder with respect to the sale of its Shares. The Company shall also register Holder's Shares in one (1) jurisdiction; provided, however, that the Company shall not be required to qualify to do business in such jurisdiction as a condition to the registration of the sale of the Shares in such jurisdiction or commit to a general consent to service of process within the jurisdiction. Subject to the right of Holder to sell its Shares under Rule 144 (as set forth below), Holder agrees to restrict the public sale of its Shares under any such registration (which agreement shall not affect any other shares of Common Stock or other securities of the Company which Holder may own) to the extent requested by an underwriter of the Company's offering of securities; provided, however, that Holder shall no be required to lock up its Shares for a period exceeding six months from the effective date of the Company's registration statement. Notwithstanding anything herein to the contrary, Holder may sell shares of the Common Stock which it owns (including the shares as to which it has registration rights) in the public marketplace pursuant to Rule 144 under the Act, to the extent that the provisions of the rule are satisfied. The Company shall use its best efforts to make any such registration effective. In the case of each registration pursuant to this Section 6, the Company (i) will keep Holder advised in writing as to the initiation and progress of proceedings for such registration and as to the completion thereof, and (ii) at its expense, subject to the limitations as provided above, will keep such registration effective for a period of at least nine months from the latter of the initial effective date of the registration or the underwriter's restrictive lock up period. Holder agrees to provide such information to the Company as is reasonably requested by the Company which the Company believes is necessary in order to allow the Company to register Holder's Shares. 6. STATUS OF SHARES. The Company covenants and agrees that all Shares purchased hereunder will, upon issuance, be duly and validly issued, fully paid and nonassessable and no personal liability will attach to the Holder thereof. The Company further covenants and agrees that during the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for the issuance of this Warrant. 7. NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company, either at law or 3 in equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 8. ADJUSTMENTS. The initial per share exercise price of $0.25 per share and/or the number of Shares issuable upon exercise of each Warrant shall be subject to adjustment from time to time as follows: (a) In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock, or (iv) issue by reclassification of its shares of Common Stock of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the surviving corporation), the number of Shares purchasable upon exercise of each Warrant immediately prior thereto shall be adjusted so that the holder of each Warrant shall be entitled to receive the kind and number of Shares or other securities of the Company which he would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrants been exercised immediately prior to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this paragraph (a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. Such adjustment shall be made successively whenever any event listed above shall occur. (b) In case the Company shall issue rights, options or warrants to all holders of its outstanding Common Stock, without any charge to such holders, entitling them (for a period within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share which is lower at the record date mentioned below than either the Per Share Exercise Price in effect immediately prior thereto or the then current market price per share of Common Stock (as defined in paragraph (i) below) the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable upon exercise of each Warrant by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, option or warrants plus the number of shares which the aggregated offering price of the total number of shares of Common Stock so offered would purchase at the higher of the Per Share Exercise Price in effect immediately prior thereto or the current market price per share of Common Stock at such 4 record date. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination or stockholders entitled to receive such rights, options or warrants. (c) In case the Company shall distribute to all holders of its shares of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) evidences of its indebtedness or assets (excluding cash dividends or distributions payable out of consolidated earnings or earned surplus and dividends or distributions or distributions referred to in paragraph (b) above or in the paragraph immediately following this paragraph) or rights, options or warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock (excluding those referred to in paragraph (b) above), then in each case the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable upon the exercise of each warrant by a fraction, of which the numerator shall be the then current market price per share of Common Stock on the date of such distribution, and of which the denominator shall be the then currently market price per share of Common Stock less the fair value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or such convertible or exchangeable securities applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. In the event the Company shall distribute to all holders of its shares of Common Stock, stock of a subsidiary of securities convertible into or exercisable for such stock, then in lieu of an adjustment in the number of Shares purchasable upon the exercise of each Warrant, the holder of each Warrant, upon the exercise thereof at any time after such distribution, shall be entitled to receive from the Company, such subsidiary or both, as the Company shall determine, the stock or other securities to which such holder would have been entitled if such holder had exercised such Warrant immediately prior thereto, all subject to further adjustment as provided in this paragraph (c); provided, however, that no adjustment in respect of dividends or interest on such stock or other securities shall be made during the term of a Warrant or upon the exercise of a Warrant. (d) In case the Company shall issue shares of its Common Stock, or rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock (excluding shares 5 issued (i) in any of the transactions described in paragraphs (a), (b) and (c) above, or (ii) to stockholders of any corporation is acquired by, merged into or becomes part of the Company in an arm's length transaction) for a consideration per share less than either the Per Share Exercise Price in effect immediately prior thereto or the current market price per share on the date the Company fixes the offering price of such additional shares, then in each case the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable by a fraction, of which the numerator shall be the number of Shares of Common Stock outstanding immediately after the issuance of such additional shares, and of which the denominator shall be the total number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares plus the number of shares of Common Stock which the aggregate consideration received (determined as provided in paragraph (g) below) for the issuance of such additional shares would purchase at the higher of the Per Share Exercise Price in effect immediately prior thereto or such current market price per share of Common Stock. Such adjustment shall be made successively whenever such issuance is made. (e) In case the Company shall issue any securities convertible into or exchangeable for its Common Stock (excluding securities issued in transaction described above) for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities (determined as provided in paragraph (g) below) less than either the Per Share Exercise Price or the current market price per share, in either case, as in effect immediately prior to the issuance of such securities, then in each case the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable by a fraction, of which the numerator shall be the number of Shares of Common Stock out standing immediately prior to such issuance plus the maximum number of shares of Common Stock of the Company deliverable upon conversion or exchange price or rate, and of which the denominator shall be the number of shares of Common Stock which the aggregate consideration received (determined as provided in paragraph (g) below) for such securities would purchase at the higher on such Per Share Exercise Price or such current market price per share of Common Stock. Such adjustment shall be made successively whenever such issuance is made. (f) In case the Company shall issue shares of its Common Stock under a dividend reinvestment plan at a price per share less than the current market price per share of the Common Stock, then in each case the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable by a fraction, of which the numerator shall be the number of Shares of Common Stock outstanding 6 immediately after the issuance of such additional shares, and of which the denominator shall be the total number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares plus the number of shares of Common Stock which the aggregate consideration for the total number of shares issued under the dividend reinvestment plan would purchase at such current market price. Such adjustment shall be made successively whenever such an issuance is made. (g) For purposes of any computation respecting consideration received pursuant to paragraphs (d), (e) and (f) above, the following shall apply: (i) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no cash shall any deduction be made for any commission, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith; (ii) in the case of this issuance of shares of Common Stock for a consideration in whole or in part other than cash (including, to the extent permitted by applicable law, property and services rendered), the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof), whose determination shall be conclusive; and (iii) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this paragraph (g)). (h) For the purpose of any computation under paragraphs (b), (c), (d), (e) and (f)of this Section 8, the current market price per share of Common Stock at any date shall be the average of the daily closing prices for 20 consecutive trading days commencing 30 trading days before the date of such computation. The closing price for each day shall be the last such reported sales price regular way or, in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case on the principal national securities exchange on which the shares of Com non Stock are listed or admitted to trading or, if not listed or admitted to trading, the last sales price regular way for the Common Stock or closing price published in the National Association of Securities Dealers Automated 7 Quotation System ("NASDAQ"), or if such last sales price is not so published by NASDAQ or if no such sale takes place on such day, the average of the closing bid and asked prices of the Common Stock as reported by NASDAQ or any comparable system, the average of the closing bid and asked prices as furnished by two members of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose. (i) No adjustment in the number of Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least on percent (1%) in the number of Shares purchasable upon the exercise of each Warrant; provided, however, that any adjustments which by reason of this paragraph (i) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one-thousandth of a share. (j) Whenever the number of Shares purchasable upon the exercise of each Warrant is adjusted, as herein provided, the Per Share Exercise Price payable upon the exercise of each Warrant shall be adjusted by multiplying such Per Share Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Shares purchasable upon the exercise of each Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Share purchasable immediately thereafter. Notwithstanding the foregoing, the Per Share Exercise Price shall not be less than the par value per Share. (k) No adjustment in the number of shares purchasable upon the exercise of each Warrant need be made under the paragraphs (b) and (c) if the Company issues or distributes to each holder of Warrants the rights, options, warrants or convertible or exchangeable securities, or evidences of indebtedness or assets referred to in those paragraphs which each Holder of Warrants would have been entitled to received had the Warrants been exercised prior to the happening of such event or the record date with resect thereto. No adjustment need be made for a change in the par value of the Shares, provided that the Company shall not increase the par value per share of Common Stock so long as this Certificate is outstanding. (l) For the purpose of this Section 8, the term "shares of Common Stock" shall mean (i) the class of stock designated as the Common Stock of the Company at the date of this Agreement, or (ii) any other class of stock resulting from successive changes or reclassification of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to paragraph (a) above, the holders shall become entitled to purchase any securities of the Company other than shares of common stock, thereafter, the number of such other shares so purchasable upon exercise 8 of each Warrant and the Warrant Price of such shares shall be subject to adjustment from time to time in a manner and with respect to the Shares contained in paragraphs (a) through (j), inclusive, above, and the provisions of this Certificate with respect to the Shares shall apply on like terms to any such other securities. (m) Upon the expiration of any rights, options, warrants or conversion or exchange privileges, if any thereof shall not have been exercised, the Warrant price and the number of shares of Common Stock purchasable upon the exercise of each Warrant shall, upon such expiration, be readjusted and shall thereafter be such as it would have been had it been originally adjusted (or had the original adjustment not been require, as the case may be) as if (A) the only shares of Common Stock so issued were the shares of Common Stock, if any, actually issued or sold upon the exercise rights, options, warrants or conversion or exchange rights, and (B) such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange rights whether or not exercised; provided, further, that no such readjustment shall have the effect of increasing the Warrant Price or decreasing the number of share of Common Stock purchasable upon the exercise of each Warrant by an amount in excess of the amount of the adjustment initially made in resect to the issuance, sale or grant of such rights, options, warrants or conversion or exchange rights. (n) Whenever the number of Shares purchasable upon the exercise of each Warrant or the Per Share Exercise Price of such Shares is adjusted, as herein provided, the Company shall promptly mail by first class, postage prepaid, to each holder notice of such adjustment or adjustments and a certificate (a "Certificate of Adjustment") of the Chief Financial Officer of the Company setting forth (i) the number of Shares purchasable upon the exercise of each Warrant and the Per Share Exercise Price of such Shares after such adjustment, (ii) a brief statement of the facts requiring such adjustment, and (iii) the computation by which such adjustment was made. The Certificate of Adjustment shall be conclusive evidence of the correctness of such adjustment unless within thirty (30) days after receipt of such notice a holder requests that a Certificate of Adjustment be rendered by a firm of independent public accountants selected by the Board of Directors of the Company (who may be the regular accountants employed by the Company), in which case the Company shall cause such a Certificate of Adjustment to be surrendered and promptly mailed to each holder. Any Certificate of Adjustment of such accountants shall be conclusive evidence of the correctness of the adjustment as set forth therein. (o) Except as provided in this Section 8, no adjustment in respect of any dividends shall be made during the term of a Warrant or upon the exercise of a Warrant. 9 9. GOVERNING LAWS. This Warrant shall be governed by and in accordance with the laws of the State of Florida and may not be amended other than by written instrument executed by the parties hereto. IN WITNESS WHEREOF, DCC Compact Classics, Inc. has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated as of April 15, 1994. DCC COMPACT CLASSICS, INC. By:/s/MILTON H. BARBAROSH, PRESIDENT --------------------------------- Authorized Officer Attest: ACCEPTED AND AGREED: 1-26-95 By:/s/MARSHALL BLONSTEIN - ---------------------------- -------------------------------- Secretary Marshall Blonstein 10 EX-4 4 EXHIBIT (4.3) Resolutions Modifying Exercise Price of Common Stock Purchase Warrants MINUTES OF MEETING OF THE BOARD OF DIRECTORS OF DCC COMPACT CLASSICS, INC. May 24, 1995 A regular meeting of the Board of Directors of DCC Compact Classics, Inc. (the "Company"), a Colorado Corporation, was held at 11:00 a.m. on May 24, 1995 in the Company offices at 9301 Jordan Avenue, Suite 105, Chatsforth, California. Those present were: Marshall Blonstein, Milton Barbarosh, Stan Layton, and Gary Gillman constituting all the members of the Board of Directors. Mr. Milton Barbarosh acted as Chairman of the meeting and Marcia McGovern, as Secretary of the Company, was present to record the minutes. The first topic for the meeting was the approval and ratification of the minutes of the November 18, 1994 Annual Meeting of Stockholders. After discussion, upon motion duly made and seconded, the following motion was unanimously approved: RESOLVED, that the minutes of the meeting of the Board of Directors held on November 18, 1994 are hereby approved and ratified. As each member had previously examined the 1994 audited financials and tax returns, the following motion was unanimously approved: RESOLVED, that the Board approve the 1994 10-KSB, hereby attached as Exhibit "A". The next topic of discussion was the selection of new legal counsel for the company. Upon motion clearly made and seconded, the following motion was unanimously approved: RESOLVED, that Atlas, Pearlman, Trop & Borkson be appointed as the Company's legal counsel for any corporate matters and to review and update Forms 3 and 4 with the Security and Exchange Commission. Also, upon motion clearly made and seconded, the following motion was unanimously approved: RESOLVED, that Winter, Scheifley & Associates be appointed as the Company auditor. After discussion of various dates, it was moved and seconded unanimously to approve the following: RESOLVED, that the Annual Meeting of Stockholders be held on Monday, November 20, 1995 in the corporate offices of DCC Compact Classics, Inc. at 9:00 a.m. PST. The next topic of discussion was the subject of venture capital. Upon motion duly made and seconded, the following motion was unanimously approved: RESOLVED, to authorize Marshall Blonstein and Milton Barbarosh to raise three to five million dollars for the Company. Additionally, it was resolved to authorize Marshall Blonstein to pursue the acquisition of Yesterday's Radio & Video. After discussion of Romance Alive Audio, ("Romance") a motion was made by Milton Barbarosh to continue to further finance Romance up to an additional $50,000, for up to an additional 10% equity; and that Gary Gillman will work to structure an equitable transaction with the Company to be approved by the board. With Marshall Blonstein abstaining, the motion was seconded, and approved. A Compensation Committee was appointed, its members being Marshall Blonstein, Gary Gillman, and Milton Barbarosh. An Audit Committee was appointed, its members being Gary Gillman and Stan Layton. After discussion, a motion was made and approved to issue to Marshall Blonstein and Milton Barbarosh a stock option at 13(cent) for 200,000 shares each; and to Stan Layton and Gary Gillman a stock option at 13(cent) for 50,000 shares each. Further, it was approved that the prior stock options issued to Marshall Blonstein and Milton Barbarosh will be repriced to 13(cent)/share. This motion being unanimously approved, and there being no further business to come before the meeting, upon motion duly made, seconded and unanimously carried, the meeting was adjourned. /s/Marshall Blonstein /s/Marcia McGovern - ------------------------------ --------------------------- Marshall Blonstein, Chairman Marcia McGovern, Secretary 2 EX-5 5 EXHIBIT (5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. relating to the issuance of shares of securities pursuant to the above Option Agreement ATLAS, PEARLMAN, TROP & BORKSON, P.A. 200 EAST LAS OLAS BOULEVARD, SUITE 1900 FORT LAUDERDALE, FLORIDA 33301 Direct Line: (954) 766-7858 July 10, 1996 DCC Compact Classics, Inc. 903 Jordan Avenue Chatsworth, California Re: Registration Statement on Form S-8, Consulting and Stock Option Agreement with Gary Gillman, and Common Stock Purchase Warrant with Marshall Blonstein. Gentlemen: This opinion is submitted pursuant to the applicable rules of the Securities and Exchange Commission with respect to the registration by DCC Compact Classics, Inc. (the "Company") of up to 210,000 shares of Common Stock, par value $.005 per share (the "Common Stock") to be issued pursuant to (i) a Stock Consulting and Stock Option Agreement with Gary Gillman (the "Option Agreement"), and (ii) a Common Stock Purchase Warrant, as modified, with Marshall Blonstein (the "Blonstein Warrant"). In our capacity as counsel to the Company, we have examined the original, certified, conformed, photostat or other copies of the Option Agreement, the Blonstein Warrant, the Company's Articles of Incorporation, By-Laws and corporate resolutions provided to us by the Company. In all such examinations, we have assumed the genuineness of all signatures on original documents, and the conformity to originals or certified documents of all copies submitted to us as conformed, photostat or other copies. In passing upon certain corporate records and documents of the Company, we have necessarily assumed the correctness and completeness of the statements made or included therein by the Company and we express no opinion thereon. Based upon and in reliance of the foregoing, we are of the opinion that the Common Stock, when issued in accordance with the terms of the Option Agreement and the Blonstein Warrant, will be validly issued, fully paid and non-assessable. We hereby consent to the use of this opinion in the Registration Statement on Form S-8 to be filed with the Commission. Very truly yours, /s/Atlas, Pearlman, Trop & Borkson, P.A. ----------------------------------------- ATLAS, PEARLMAN, TROP & BORKSON, P.A. GEC/jz 4194.01 EX-23 6 EXHIBIT (23.2.1) Consent of independent certified public accountants (Henson & Company) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- The Board of Directors DCC Compact Classics, Inc. We consent to the incorporation by reference, included herein, of our report dated March 31, 1995, and to the reference to our firm as experts under the heading "Experts". HENSON & COMPANY By:/s/Elizabeth Henson PASADENA, CA ------------------------ July 2, 1996 Elizabeth R. Henson, CPA EX-23 7 EXHIBIT (23.2.2) EXHIBIT (23.2.2) Consent of independent certified public accountants (Winter, Scheifley & Associates, P.C.). CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of DCC Compact Classics, Inc. of our report dated February 22, 1996, relating to the financial statements of DCC Compact Classics, Inc. as of December 31, 1995. /s/Winter, Scheifley & Associates, P.C. --------------------------------------- Winter, Scheifley & Associates, P.C. Certified Public Accountants July 8, 1996 Englewood, Colorado -----END PRIVACY-ENHANCED MESSAGE-----