SUBSCRIPTION AGREEMENT
THIS
SUBSCRIPTION AGREEMENT
(this
“Agreement”),
dated
as of August 4, 2006, by and among Oxford Media, Inc. (formerly known as
Becoming Art Inc.), a Nevada corporation (the “Company”),
and
Palisades Master Fund, LP (the Subscriber”Subscriber”).
WHEREAS,
the
Company and the Subscriber are executing and delivering this Agreement in
reliance upon an exemption from securities registration afforded by the
provisions of Section 4(2) and/or Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission (the
“Commission”)
under
the Securities Act of 1933, as amended (the “1933
Act”);
and
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Subscriber, as provided herein,
and the Subscriber, in the aggregate, shall purchase up to ONE MILLION DOLLARS
($1,000,000) (the “Purchase
Price”)
of
principal amount of eighteen percent (18%) promissory notes of the Company
(“Note”
or
“Notes”)
in the
form annexed hereto as Exhibit
A. The
Notes
are sometimes collectively referred to herein as the “Securities”.
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscriber hereby agree as follows:
1. Closing.
Subject
to the satisfaction or waiver of the terms and conditions of this Agreement,
on
the Closing
Date,
the
Subscriber shall purchase and the Company shall sell to the Subscriber a Note
in
the principal amount of the Purchase Price. The Closing Date shall be August
4,
2006 (“Closing
Date”).
2. Security
Interest.
The
Subscriber will be granted a second lien security interest in all assets of
the
Company and Subsidiaries (as defined in Section 4(a) of this Agreement),
including ownership of the Subsidiaries, to be memorialized in a “Security
Agreement”,
a form
of which is annexed hereto as Exhibit
B.
Each
Subsidiary will execute and deliver to the Subscriber a form of “Guaranty”
annexed
hereto as Exhibit
C.
The
Company will execute such other agreements, documents, and financing statements
reasonably requested by Subscriber, which will be filed at the Company’s expense
with such jurisdictions, states and counties designated by the Subscriber.
The
Company will also execute all such documents reasonably necessary in the opinion
of Subscriber to memorialize and further protect the security interest described
herein. The Subscriber will appoint a Collateral Agent to represent them
collectively in connection with the security interest to be granted to the
Subscriber. The appointment will be pursuant to a “Collateral
Agent Agreement”,
a form
of which is annexed hereto as Exhibit
D.
3. Subscriber’s
Representations and Warranties.
The
Subscriber hereby represents and warrants to and agrees with the Company
that:
(a) Organization
and Standing of the Subscriber.
If the
Subscriber is an entity, such Subscriber is a corporation, partnership or other
entity duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
has
the requisite corporate power to own its assets and to carry on its
business.
(b) Authorization
and Power.
The
Subscriber has the requisite power and authority to enter into and perform
this
Agreement and to purchase the Securities being sold to it hereunder. The
execution, delivery and performance of this Agreement by such Subscriber and
the
consummation by it of the transactions contemplated hereby and thereby have
been
duly authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Subscriber or its Board of Directors,
stockholders, partners, members, as the case may be, is required. This Agreement
has been duly authorized, executed, and delivered by such Subscriber and
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Subscriber enforceable against the Subscriber in
accordance with the terms thereof.
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(c) No
Conflicts.
The
execution, delivery and performance of this Agreement and the consummation
by
the Subscriber of the transactions contemplated hereby or relating hereto do
not
and will not (i) result in a violation of such Subscriber’s charter documents or
bylaws or other organizational documents or (ii) conflict with, or constitute
a
default (or an event which with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument or
obligation to which such Subscriber is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation,
or
any order, judgment or decree of any court or governmental agency applicable
to
such Subscriber or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on such Subscriber). Such Subscriber is not required to obtain
any consent, authorization or order of, or make any filing or registration
with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or to purchase the Notes in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.
(d) Information
on Company.
The
Subscriber has been furnished with or has had access at the XXXXX Website of
the
Commission to the Company’s Form 10-KSB for the year ended December 31, 2005 and
all periodic reports filed with the Commission thereafter, but not later than
five business days before the Closing Date (hereinafter referred to as the
“Reports”). In addition, the Subscriber has received in writing from the Company
such other information concerning its operations, financial condition and other
matters as the Subscriber has requested in writing (such other information
is
collectively, the “Other Written Information”), and considered all factors the
Subscriber deems material in deciding on the advisability of investing in the
Securities.
(e) Information
on Subscriber.
The
Subscriber is, and will be at the time of the conversion of the Notes, an
“accredited investor”, as such term is defined in Regulation D promulgated by
the Commission under the 1933 Act, is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements
in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the Subscriber to utilize
the information made available by the Company to evaluate the merits and risks
of and to make an informed investment decision with respect to the proposed
purchase of the Securities, which represents a speculative investment. The
Subscriber has the authority and is duly and legally qualified to purchase
and
own the Securities. The Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof. The information
set forth on the signature page hereto regarding the Subscriber is
accurate.
(f)
Purchase
of Notes.
On the
Closing Date, the Subscriber will purchase the Notes as principal for its own
account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof, but Subscriber
does not agree to hold the Securities for any minimum amount of
time.
(g) Compliance
with Securities Act.
The
Subscriber understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the 1933
Act
(based in part on the accuracy of the representations and warranties of
Subscriber contained herein), and that such Securities must be held indefinitely
unless a subsequent disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such registration.
Notwithstanding anything to the contrary contained in this Agreement, such
Subscriber may transfer (without restriction and without the need for an opinion
of counsel) the Securities to its Affiliates (as defined below) provided that
each such Affiliate is an “accredited investor” under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement.
For
the purposes of this Agreement, an “Affiliate” of any person or entity means any
other person or entity directly or indirectly controlling, controlled by or
under direct or indirect common control with such person or entity. Affiliate
when employed in connection with the Company includes each Subsidiary [as
defined in Section 5(a)] of the Company. For purposes of this definition,
“control” means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
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(h) Note
Legend.
The
Note shall bear the following legend:
“THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS
NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO OXFORD MEDIA, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.”
(i)
Communication
of Offer.
The
offer to sell the Securities was directly communicated to the Subscriber by
the
Company. At no time was the Subscriber presented with or solicited by any
leaflet, newspaper or magazine article, radio or television advertisement,
or
any other form of general advertising or solicited or invited to attend a
promotional meeting otherwise than in connection and concurrently with such
communicated offer.
(j)
Authority;
Enforceability.
This
Agreement and other agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed and delivered by the
Subscriber and are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights generally and to general principles of equity;
and Subscriber has full corporate power and authority necessary to enter into
this Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by the Subscriber relating
hereto.
(k) No
Governmental Review.
The
Subscriber understands that no United States federal or state agency or any
other governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities, and that no such authorities have passed upon or endorsed the merits
of the offering of the Securities.
(l)
Pending
Transactions.
The
Subscriber acknowledges that it is fully aware of and understands that the
Company is prepared to close the following transactions: (i) the acquisition
of
the issued and outstanding shares of stock of SVI Hotel Corporation (the “SVI
Acquisition”); (ii) a financing transaction in order finance the SVI Acquisition
(the “Financing Transaction”); and, (iii) the transactions related to the
Financing Acquisition involving existing holders of debt or equity of the
Company (the “Related Transactions”). The SVI Acquisition, Financing
Transaction, and Related Transactions are collectively referred to herein as
the
“SVI Related Transactions”.
(m) Correctness
of Representations.
The
Subscriber represents that the foregoing representations and warranties are
true
and correct as of the date hereof and, unless a Subscriber otherwise notifies
the Company prior to the Closing Date, shall be true and correct as of the
Closing Date.
(n) Survival.
The
foregoing representations and warranties shall survive the Closing Date until
three years after the Closing Date.
3
4. Company
Representations and Warranties.
The
Company represents and warrants to and agrees with the Subscriber that except
as
set forth in the Reports or the Other Written Information and as otherwise
qualified in the Transaction Documents:
(a) Due
Incorporation.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power to own its properties and to carry on its business is disclosed
in the Reports.
The
Company is duly qualified as a foreign corporation to do business and is in
good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a “Material
Adverse Effect”
shall
mean a material adverse effect on the financial condition, results of
operations, properties, or business of the Company taken individually, or in
the
aggregate, as a whole. For purposes of this Agreement, “Subsidiary”
means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 50% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association,
joint venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned
or
controlled directly or indirectly through one or more intermediaries, by such
entity. All the Company’s Subsidiaries as of the Closing Date are set forth on
Schedule
4(a)
hereto.
(b) Outstanding
Stock.
All
issued and outstanding shares of capital stock of the Company and each of its
subsidiaries have been duly authorized and validly issued and are fully paid
and
nonassessable.
(c) Authority;
Enforceability.
This
Agreement, the Notes, the Security Agreement, the Collateral Agent Agreement,
the Guaranty, and any other agreements delivered together with this Agreement
or
in connection herewith (collectively “Transaction
Documents”)
have
been duly authorized, executed and delivered by the Company and Subsidiaries
(as
the case may be) and are valid and binding agreements enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights generally and to general principles of equity.
The Company and Subsidiaries have full corporate power and authority necessary
to enter into and deliver the Transaction Documents and to perform their
obligations thereunder.
(d) Additional
Issuances.
There
are
no outstanding agreements or preemptive or similar rights affecting the
Company’s common stock or equity and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
Subsidiaries of the Company except as provided for under the SVI Related
Transactions or as described on Schedule
4(d).
The
Common stock of the Company on a fully diluted basis outstanding as of the
last
trading day preceding the Closing Date is set forth on Schedule
4(d).
(e) Consents.
No
consent, approval, authorization or order of any court, governmental agency
or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin
Board”)
nor
the Company’s shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation,
the
issuance and sale of the Securities. The Transaction Documents and the Company’s
performance of its obligations thereunder have been approved unanimously by
the
Company’s directors.
4
(f)
No
Violation or Conflict.
Assuming the representations and warranties of the Subscriber in Section 3
are
true and correct, neither the issuance and sale of the Securities nor the
performance of the Company’s obligations under this Agreement and all other
agreements entered into by the Company relating thereto by the Company
will:
(i) violate,
conflict with, result in a breach of, or constitute a default (or an event
which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company’s knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or any of its subsidiaries
or
over the properties or assets of the Company or any of its Affiliates, (C)
the
terms of any bond, debenture, note or any other evidence of indebtedness, or
any
agreement, stock option or other similar plan, indenture, lease, mortgage,
deed
of trust or other instrument to which the Company or any of its Affiliates
or
subsidiaries is a party, by which the Company or any of its Affiliates or
subsidiaries is bound, or to which any of the properties of the Company or
any
of its Affiliates or subsidiaries is subject, or (D) the terms of any “lock-up”
or similar provision of any underwriting or similar agreement to which the
Company, or any of its Affiliates or subsidiaries is a party except the
violation, conflict, breach, or default of which would not have a Material
Adverse Effect on the Company; or
(ii) result
in
the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company, its subsidiaries or any of
its
Affiliates; or
(iii) result
in
the activation of any anti-dilution rights or a reset or repricing of any debt
or security instrument of any other creditor or equity holder of the Company,
nor result in the acceleration of the due date of any obligation of the Company;
or
(iv)
result
in
the activation of any piggy-back registration rights of any person or entity
holding securities of the Company or having the right to receive securities
of
the Company.
(g) The
Securities.
The
Securities upon issuance:
(i) are,
or
will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and
any
applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the date of conversion
of
the Notes will be duly and validly issued, fully paid and nonassessable and,
if
registered pursuant to the 1933 Act and resold pursuant to an effective
registration statement, will be free trading and unrestricted;
(iii)
will
not
have been issued or sold in violation of any preemptive or other similar rights
of the holders of any securities of the Company;
(iv)
will
not
subject the holders thereof to personal liability by reason of being such
holders provided Subscriber’s representations herein are true and accurate and
Subscriber takes no actions or fails to take any actions required for their
purchase of the Securities to be in compliance with all applicable laws and
regulations; and
(v)
will
have
been issued in reliance upon an exemption from the registration requirements
of
and will not result in a violation of Section 5 under the 1933 Act.
5
(h) Litigation.
Other
than as described in the Reports, there is no pending or, to the best knowledge
of the Company, threatened action, suit, proceeding or investigation before
any
court, governmental agency or body, or arbitrator having jurisdiction over
the
Company, or any of its Affiliates that would affect the execution by the Company
or the performance by the Company of its obligations under the Transaction
Documents. Except as disclosed in the Reports, there is no pending or, to the
best knowledge of the Company, basis for or threatened action, suit, proceeding
or investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company, or any of its Affiliates which litigation
if adversely determined would have a Material Adverse Effect.
(i)
Reporting
Company.
The
Company is a publicly-held company subject to reporting obligations pursuant
to
Section 13 of the Securities Exchange Act of 1934, as amended (the “1934
Act”)
and
has a class of common shares registered pursuant to Section 12(g) of the 1934
Act. Pursuant to the provisions of the 1934 Act, the Company has timely filed
all reports and other materials required to be filed thereunder with the
Commission during the preceding twenty-four months.
(j) No
Market Manipulation.
The
Company has not taken, and will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Stock of the Company
to
facilitate the sale or resale of the Securities or affect the price at which
the
Securities may be issued or resold.
(k) Information
Concerning Company.
The
Reports contain all material information relating to the Company and its
operations and financial condition as of their respective dates and all the
information required to be disclosed therein. Since the last day of the fiscal
year of the most recent audited financial statements included in the Reports
(“Latest
Financial Date”),
and
except as modified in the Other Written Information or in the Schedules hereto,
there has been no Material Adverse Event relating to the Company’s business,
financial condition or affairs not disclosed in the Reports. The Reports do
not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances when made. The Company has not provided
to the Subscriber any material non-public information.
(l) Stop
Transfer.
The
Securities, when issued, will be restricted securities. The Company will not
issue any stop transfer order or other order impeding the sale, resale or
delivery of any of the Securities, except as may be required by any applicable
federal or state securities laws and unless contemporaneous notice of such
instruction is given to the Subscriber.
(m) Defaults.
The
Company is not in violation of its articles of incorporation or bylaws. The
Company is (i) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under
any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (ii) to its knowledge not in violation of
any
statute, rule or regulation of any governmental authority which violation would
have a Material Adverse Effect on the Company.
(n) No
Integrated Offering.
Neither
the Company, nor any of its Affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would cause
the offer of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the Bulletin Board. Nor will the Company or any of its
Affiliates or subsidiaries take any action or steps that would cause the offer
or issuance of the Securities to be integrated with other offerings. The Company
will not conduct any offering other than the transactions contemplated hereby
that will be integrated with the offer or issuance of the
Securities.
6
(o) No
General Solicitation.
Neither
the Company, nor any of its Affiliates, nor to its knowledge, any person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 0000 Xxx)
in
connection with the offer or sale of the Securities.
(p) Listing.
The
Company’s common stock is quoted on the Bulletin Board under the symbol OXMI.
The Company has not received any oral or written notice that its common stock
is
not eligible nor will become ineligible for quotation on the Bulletin Board
nor
that its common stock does not meet all requirements for the continuation of
such quotation. The Company satisfies all the requirements for the continued
quotation of its common stock on the Bulletin Board.
(q) No
Undisclosed Liabilities.
The
Company has no liabilities or obligations which are material, individually
or in
the aggregate, which are not disclosed in the Reports and Other Written
Information, other than those incurred in the ordinary course of the Company’s
businesses since December 31, 2005 and which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect other than as
provided for under the SVI Related Transactions or as set forth in Schedule
4(q).
(r) No
Undisclosed Events or Circumstances.
Since
December 31, 2005, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure
or
announcement prior to the date hereof by the Company but which has not been
so
publicly announced or disclosed in the Reports or otherwise provided for under
the SVI Related Transactions.
(s) Capitalization.
The
authorized and outstanding capital stock of the Company and Subsidiaries as
of
the date of this Agreement and the Closing Date (not including the Securities)
are set forth on Schedule
4(d).
Except
as provided for under the SVI Related Transactions or as set forth on
Schedule
4(d),
there
are no options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company or any of its
Subsidiaries. All of the outstanding shares of Common Stock of the Company
have
been duly and validly authorized and issued and are fully paid and
nonassessable.
(t) Dilution.
The
Company’s executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders
of
the Company’s equity or rights to receive equity of the Company. The board of
directors of the Company has unanimously concluded, in its good faith business
judgment, that the issuance of the Securities is in the best interests of the
Company.
(u) No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
formerly or presently employed by the Company, including but not limited to
disputes or conflicts over payment owed to such accountants and
lawyers.
(v) DTC
Status/Transfer Agent.
The
Company’s transfer agent is eligible to participate in and the Common Stock is
eligible for transfer pursuant to the Depository Trust Company Automated
Securities Transfer Programs. The name, address, telephone number, fax number,
contact person and email address of the Company transfer agent are set forth
on
Schedule
4(v)
hereto.
(w) Investment
Company.
Neither
the Company nor any Affiliate is an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.
7
(x) Subsidiary
Representations.
The
Company makes each of the representations contained in Sections 4(a), (b),
(d),
(e), (f), (h), (k), (m), (q), (r), (s), (u) and (w) of this Agreement, as same
relate to each Subsidiary of the Company, with the same qualifications to each
such representation.
(y) Correctness
of Representations.
The
Company represents that the foregoing representations and warranties are true
and correct as of the date hereof in all material respects, and, unless the
Company otherwise notifies the Subscriber prior to the Closing Date, shall
be
true and correct in all material respects as of the Closing Date.
(z) Survival.
The
foregoing representations and warranties shall survive until three years after
the Closing Date.
5. Regulation
D Offering.
The
offer and issuance of the Securities to the Subscriber is being made pursuant
to
the exemption from the registration provisions of the 1933 Act afforded by
Section 4(2) of the 1933 Act and/or Rule 506 of Regulation D promulgated
thereunder. On the Closing Date, the Company will provide an opinion reasonably
acceptable to Subscriber from the Company’s legal counsel opining on the
availability of an exemption from registration under the 1933 Act as it relates
to the offer and issuance of the Securities and other matters reasonably
requested by Subscriber. A form of the legal opinion is annexed hereto as
Exhibit
E.
6.1. Covenants
of the Company.
The
Company covenants and agrees with the Subscriber as follows:
(a) Stop
Orders.
The
Company will advise the Subscriber, within two hours after the Company receives
notice of issuance by the Commission, any state securities commission or any
other regulatory authority of any stop order or of any order preventing or
suspending any offering of any securities of the Company, or of the suspension
of the qualification of the Common Stock of the Company for offering or sale
in
any jurisdiction, or the initiation of any proceeding for any such
purpose.
(b) Listing.
The
Company will maintain the listing of its Common Stock on the American Stock
Exchange, Nasdaq SmallCap Market, Nasdaq National Market System, Bulletin Board,
or New York Stock Exchange (whichever of the foregoing is at the time the
principal trading exchange or market for the Common Stock (the “Principal
Market”)),
and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscriber copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common
Stock
from any Principal Market. As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal Market.
(c) Market
Regulations.
The
Company shall notify the Commission, the Principal Market and applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the Subscriber
and promptly provide copies thereof to Subscriber.
(d) Reporting
Requirements.
From
the date of this Agreement and until the Note is paid-in-full, without regard
to
volume limitation, the Company will (v) cause its Common Stock to continue
to be
registered under Section 12(b) or 12(g) of the 1934 Act, (x) comply in all
respects with its reporting and filing obligations under the 1934 Act, (y)
comply with all reporting requirements that are applicable to an issuer with
a
class of shares registered pursuant to Section 12(b) or 12(g) of the 1934 Act,
as applicable, and (z) comply with all requirements related to any registration
statement filed pursuant to this Agreement. The Company will use its best
efforts not to take any action or file any document (whether or not permitted
by
the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said acts until the Note is paid-in-full. Until the Note
has
been paid-in-full, the Company will use its best efforts to continue the listing
or quotation of the Common Stock on the Principal Market, and will comply in
all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the Principal Market. The Company agrees to timely file
a
Form D with respect to the Securities if required under Regulation D and to
provide a copy thereof to the Subscriber promptly after such
filing.
8
(e) Use
of
Proceeds.
The
proceeds of the Offering will be employed by the Company for the purposes set
forth on Schedule
6.1(e)
hereto.
Except as set forth on Schedule
6.1(e),
the
Purchase Price may not and will not be used for accrued and unpaid officer
and
director salaries, payment of financing related debt, redemption of outstanding
notes or equity instruments of the Company, litigation related expenses or
settlements, brokerage fees, nor non-trade obligations outstanding on a Closing
Date. For so long as any Notes are outstanding, the Company will not prepay
any
financing related debt obligations, nor redeem any equity instruments of the
Company without the express written consent of Subscriber.
(f)
Taxes.
From
the date of this Agreement and until the sooner of (i) two (2) years after
the
Closing Date, or (ii) until all the Warrant Shares have been resold or
transferred by all the Subscriber pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company will
promptly pay and discharge, or cause to be paid and discharged, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company; provided,
however, that any such tax, assessment, charge or levy need not be paid if
the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Company will
pay
all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security
therefore.
(h) Insurance.
From
the date of this Agreement and until the Note is paid-in-full, the Company
will
keep its assets which are of an insurable character insured by financially
sound
and reputable insurers against loss or damage by fire, explosion and other
risks
customarily insured against by companies in the Company’s line of business, in
amounts sufficient to prevent the Company from becoming a co-insurer and not
in
any event less than one hundred percent (100%) of the insurable value of the
property insured; and the Company will maintain, with financially sound and
reputable insurers, insurance against other hazards and risks and liability
to
persons and property to the extent and in the manner customary for companies
in
similar businesses similarly situated and to the extent available on
commercially reasonable terms.
(i)
Books
and Records.
From the
date of this Agreement and until the Note is paid-in-full, the Company will
keep
true records and books of account in which full, true, and correct entries
will
be made of all dealings or transactions in relation to its business and affairs
in accordance with generally accepted accounting principles applied on a
consistent basis.
(j)
Governmental
Authorities.
From the
date of this Agreement and until the Note is paid-in-full, the Company shall
duly observe and conform in all material respects to all valid requirements
of
governmental authorities relating to the conduct of its business or to its
properties or assets.
(k) Intellectual
Property.
From
the date of this Agreement and until the Note is paid-in-full, the Company
shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use intellectual property owned or
possessed by it and reasonably deemed to be necessary to the conduct of its
business.
(l)
Properties.
From the
date of this Agreement and until the sooner the Note is paid-in-full, the
Company will keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all necessary
and
proper repairs, renewals, replacements, additions and improvements thereto;
and
the Company will at all times comply with each provision of all leases to which
it is a party or under which it occupies property if the breach of such
provision could reasonably be expected to have a Material Adverse
Effect.
9
(m) Confidentiality/Public
Announcement.
From the
date of this Agreement and until the Note is paid-in-full, the Company agrees
that except in connection with a Form 8-K or the Registration Statement, it
will
not disclose publicly or privately the identity of the Subscriber unless
expressly agreed to in writing by a Subscriber or only to the extent required
by
law and then only upon five days prior notice to Subscriber. In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K or make
a
public announcement describing the Offering not later than the first business
day after the Closing Date. A form of the proposed Form 8-K or public
announcement is annexed hereto as Exhibit
F.
In the
Form 8-K or public announcement, the Company will specifically disclose the
amount of common stock outstanding immediately after the Closing.
(n) Non-Public
Information.
The
Company covenants and agrees that neither it nor any other person acting on
its
behalf will provide the Subscriber or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Subscriber shall have agreed in writing to receive such
information. The Company understands and confirms that the Subscriber shall
be
relying on the foregoing representations in effecting transactions in securities
of the Company. In any event, the Company will offer to the Subscriber an
opportunity to review and comment on the Registration Statement thereto between
three and five business days prior to the proposed filing date
thereof.
(o) Offering
Restrictions.
For so
long as Notes are outstanding, the Company will not enter into any equity line
of credit or similar agreement, nor issue nor agree to issue any floating or
variable priced equity linked instruments nor any of the foregoing or equity
with price reset rights.
(p) Negative
Covenants.
So long
as the Notes are outstanding, without the consent of the Subscriber, other
than
with regard to the SVI Related Transactions, the Company will not and will
not
permit any of its Subsidiaries to directly or indirectly:
(i) create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”)
upon
any of its property, whether now owned or hereafter acquired except for (i)
the
Excepted Issuances (as defined below), (ii) (a) Liens imposed by law for taxes
that are not yet due or are being contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles; (b) carriers’, warehousemen’s, mechanics’, material men’s,
repairmen’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or that are being contested in good faith and by appropriate proceedings; (c)
pledges and deposits made in the ordinary course of business in compliance
with
workers’ compensation, unemployment insurance and other social security laws or
regulations; (d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; (e) Liens created with respect to the financing of the purchase of
new
property in the ordinary course of the Company’s business up to the amount of
the purchase price of such property, or created with respect to Excepted
Issuances, provided no such lien may attach to any such assets purchased with
proceeds of the Offering; or (f) easements, zoning restrictions, rights-of-way
and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and
do
not materially detract from the value of the affected property (each of (a)
through (f), a “Permitted
Lien”)
and
(iii) indebtedness for borrowed money which is not senior or pari passu in
right
of payment to the payment of the Notes;
(ii) amend
its
certificate of incorporation, bylaws, or its charter documents so as to
adversely affect any rights of the Subscriber;
10
(iii)
repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents; or
(iv) engage
in
any transactions with any officer, director, employee or any Affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner, in each case in excess of $10,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company, and (iii)
for
other employee benefits, including stock option agreements under any stock
option plan of the Company.
(v) For
purposes of this Agreement, the term “Excepted Issuances” is defined as
(a)
full
or partial consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or assets
of
corporation or other entity, (b)
the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital which holders of such securities or debt are not
at
any time granted registration rights, (c) the Company’s issuance of Common Stock
or the issuances or grants of options to purchase Common Stock pursuant to
stock
option plans and employee stock purchase plans at prices equal to or higher
than
the closing price of the Common Stock on the issue date of any of the foregoing,
and (d) as a result of the exercise of warrants which are granted or issued
pursuant to this Agreement or that have been issued prior to the Closing Date,
the issuance of which has been disclosed in a Report filed not less than five
(5) days prior to the Closing Date.
6.2. Seniority.
Except
as otherwise provided for herein, until the Notes are fully satisfied or
converted, the Company shall not grant nor allow any security interest to be
taken in the assets of the Company or any subsidiary of the Company; nor issue
any debt, equity or other instrument which would give the holder thereof
directly or indirectly, a right in any assets of the Company or any subsidiary
of the Company, superior to any right of the holder in or to such
assets.
6.3. Mandatory
Redemption at Subscriber’s Election.
In the
event (i) of the occurrence of any Event of Default (as defined in the Note
or
in this Agreement) which continues for more than thirty (30) business days,
(ii)
a Change in Control (as defined below), or (iii) of the liquidation, dissolution
or winding up of the Company, then at the Subscriber’s election, the Company
must pay to the Subscriber ten (10) business days after request by the
Subscriber (“Calculation
Period”),
a sum
of money equal to multiplying up to the outstanding principal amount of the
Note
designated by the Subscriber by 120%, together with accrued but unpaid interest
thereon (“Mandatory
Redemption Payment”).
Upon
receipt of the Mandatory Redemption Payment, the corresponding Note principal
and interest will be deemed paid and no longer outstanding. For purposes of
this
Section 6.5, “Change
in Control”
shall
mean (i) the Company no longer having a class of shares publicly traded or
listed on a Principal Market, (ii) the Company becoming a Subsidiary of another
entity (other than a corporation formed by the Company for purposes of
reincorporation in another U.S. jurisdiction), or (iii) the sale, lease or
transfer of substantially all the assets of the Company or
Subsidiaries.
6.4.
Redemption.
The
Securities shall not be redeemable or mandatorily convertible except as
described in the Note or in this Agreement.
7. Broker.
The
Company on the one hand, and the Subscriber on the other hand, agrees to
indemnify the other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or finder’s fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby and arising out of such party’s actions. The Company
represents that there are no parties entitled to receive fees, commissions,
or
similar payments in connection with the Offering.
11
8. Legal
Fees.
Arrangements for the payment of legal fees and reimbursement for estimated
UCC
search and filing fees and credit reports will be payable on the Closing Date.
9. Covenants
of the Company and Subscriber Regarding Indemnification.
(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber,
the Subscriber’s officers, directors, agents, Affiliates, control persons, and
principal shareholders, against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by
or
imposed upon the Subscriber or any such person which results, arises out of
or
is based upon (i) any material misrepresentation by Company or breach of any
warranty by Company in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance
by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and Subscriber
relating hereto.
(b) The
Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
and each of the Company’s officers, directors, agents, Affiliates, control
persons against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon
the
Company or any such person which results, arises out of or is based upon (i)
any
material misrepresentation by such Subscriber in this Agreement or in any
Exhibits or Schedules attached hereto, or other agreement delivered pursuant
hereto; or (ii) after any applicable notice and/or cure periods, any breach
or
default in performance by such Subscriber of any covenant or undertaking to
be
performed by such Subscriber hereunder, or any other agreement entered into
by
the Company and Subscriber, relating hereto.
(c) In
no
event shall the liability of the Subscriber or permitted successor hereunder
or
under any other agreement delivered in connection herewith be greater in amount
than the dollar amount of the net proceeds actually received by such Subscriber
upon the sale of Registrable Securities (as defined herein).
10.
Miscellaneous.
(a) Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Oxford Media, Inc., Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx X, Xxxxxx, XX 00000, Attn: Xxxxx Xxxxx, President
and
CEO, telecopier: (000) 000-0000, with a copy by telecopier only to: Xxxxx X.
Xxxxxxxxx, Esq., Spectrum Law Group, LLP, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx,
XX 00000, telecopier: (000) 000-0000, and (ii) if to the Subscriber, to: the
one
or more addresses and telecopier numbers indicated on the signature pages
hereto, with an additional copy by telecopier only to the legal counsel to
the
Subscriber.
(b) Entire
Agreement; Assignment.
This
Agreement and other documents delivered in connection herewith represent the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by both parties. Neither
the Company nor the Subscriber have relied on any representations not contained
or referred to in this Agreement and the documents delivered herewith. No right
or obligation of the Company shall be assigned without prior notice to and
the
written consent of the Subscriber.
12
(c) Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
(d) Law
Governing this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
New
York or in the federal courts located in the state of New York. The
parties and the individuals executing this Agreement and other agreements
referred to herein or delivered in connection herewith on behalf of the Company
agree to submit to the jurisdiction of such courts and waive trial by
jury.
The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid
or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
(e) Specific
Enforcement, Consent to Jurisdiction.
The
Company and Subscriber acknowledge and agree that irreparable damage would
occur
in the event that any of the provisions of this Agreement were not performed
in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
Subject to Section 13(d) hereof, each of the Company, Subscriber and any
signator hereto in his personal capacity hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction in New York of such court, that the suit, action
or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
(f)
Consent.
As used
in the Agreement, “consent of the Subscriber” or similar language means the
consent of holders of not less than 70% of the outstanding Note principal owned
by Subscriber on the date consent is requested.
(g) Equal
Treatment.
No
consideration shall be offered or paid to any person to amend or consent to
a
waiver or modification of any provision of the Transaction Documents unless
the
same consideration is also offered and paid to all the parties to the
Transaction Documents.
13
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.
|
a
Nevada corporation
|
|
|
By:________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
Dated:
August 4, 2006
|
|
SUBSCRIBER
|
PURCHASE
PRICE
|
|
Palisades
Master Fund, LP
Fax:
000-000-0000
_______________________________________
(Signature)
|
$1,000,000.00
|
LIST
OF EXHIBITS AND SCHEDULES
|
Exhibit
A
|
Form
of Note
|
|
Exhibit
B
|
Form
of Security Agreement
|
|
Exhibit
C
|
Form
of Guaranty
|
|
Exhibit
D
|
Form
of Collateral Agent Agreement
|
|
Exhibit
E
|
Form
of Legal Opinion
|
|
Exhibit
F
|
Form
of Form 8-K or Public Announcement
|
|
Schedule
4(a)
|
Subsidiaries
|
|
Schedule
4(d)
|
Additional
Issuances / Capitalization
|
|
Schedule
4(q)
|
Undisclosed
Liabilities
|
|
Schedule
4(v)
|
Transfer
Agent
|
|
Schedule
9(e)
|
Use
of Proceeds
|
EXHIBIT
4(a) TO THE SUBSCRIPTION AGREEMENT
Subsidiaries
Oxford
Media Corp.
Creative
Business Concepts, Inc.
EXHIBIT
4(d) TO THE SUBSCRIPTION AGREEMENT
Cap
Table
EXHIBIT
4(q) TO THE SUBSCRIPTION AGREEMENT
Undisclosed
Liabilities
None.
EXHIBIT
4(v) TO THE SUBSCRIPTION AGREEMENT
Transfer
Agent
Xx.
Xxxxxxx Xxxx
INTERWEST
TRANSFER CO., INC.
0000
Xxxx
0000 Xxxxx
Xxxxx
000
Xxxx
Xxxx
Xxxx, XX 00000
Tel:
(000)000-0000
Fax:
000-000-0000
EXHIBIT
6.1(e) TO THE SUBSCRIPTION AGREEMENT
Use
of Proceeds
The
entire amount of the Purchase Price shall be used in connection with the SVI
Related Transaction.
