Exhibit 10.1
NOTE AND WARRANT PURCHASE AGREEMENT
This Note and Warrant Purchase Agreement (this "Agreement") is dated
as of June __, 2004, among Americana Publishing, Inc., a Colorado corporation
(the "Company"), and the purchasers identified on the signature pages
hereto (each, including its successors and assigns, a "Purchaser" and
collectively the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company
desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of the Company as
more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Convertible Notes (as defined herein), and
(b) the following terms have the meanings indicated in this Section
1.1:
"Affiliate" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule
144 under the Securities Act.
"Closing" means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.
"Closing Date" means the Trading Day when all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) each Purchaser's obligations to pay
the Subscription Amount have been satisfied or waived (ii) and the Company's
obligations to deliver the Securities have been satisfied or waived.
"Common Stock" means the common stock of the Company, par
value $0.001 per share, and any securities into which such common stock shall
hereinafter have been reclassified into.
"Common Stock Equivalents" means any securities of the
Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
"Convertible Notes" means the 10% Convertible Notes, issued
by the Company to the Purchasers hereunder.
"Effective Date" means the date that the initial Registration
Statement filed by the Company pursuant to Section 4.11 is first
declared effective by the Securities and Exchange Commission.
"Escrow Agent" shall mean Xxxxxxxxxx & Xxxxx LLP as set
forth in the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement in
substantially the form of Exhibit A hereto executed and delivered
contemporaneously with this Agreement.
"Exempt Issuances" shall mean the issuance of (a) restricted
stock without registration rights, (b) securities upon the exercise of or
conversion of any securities issued hereunder, (c) convertible securities,
options or warrants issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date of this
Agreement to increase the number of such securities, (d) securities issued to
Xxxxxxxxxx & Xxxxx LLP, or its assigns, in consideration for legal services
rendered, (e) securities issued to Done! Ventures LLC, or its assigns, for
consulting services rendered, or (f) issuance of up to 5,000,000 shares of stock
registered under a Form S-8 to consultants or advisors not fitting in the
foregoing categories.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Market Price" shall mean the most recent closing bid price
per share of the Common Stock on the Trading Market on which the Common Stock is
then listed or quoted.
"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"Registration Statemen" means a registration statement
meeting the requirements set forth in
Section 4.11 hereof and covering the resale of the Underlying Shares by each Purchaser.
"Required Minimum" means, as of any date, the maximum
aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying
Shares issuable upon exercise or conversion in full of all Warrants and
Convertible Notes (including Underlying Shares issuable as payment of interest).
"Securities" means the Convertible Notes, the Warrants and
the Underlying Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Subscription Amount" means, as to each Purchaser, the
aggregate amount to be paid for Convertible Notes and Warrants purchased
hereunder as specified below such Purchaser's name on the signature page of this
Agreement and next to the heading "Subscription Amount", in United States
Dollars and in immediately available funds.
"Subsequent Financing" shall have the meaning ascribed to
such term in Section 4.09.
"Trading Day" means any day during which the Trading Market
shall be open for business.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed
or quoted for trading on the date in question: OTC Bulletin Board, the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Convertible
Notes, the Warrants, the Escrow
Agreement and any other documents or agreements executed in connection with the transactions contemplated
hereunder.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of the Convertible Notes, if any, and upon exercise of the
Warrants.
"Warrants" means collectively the Common Stock purchase
warrants delivered to the Purchasers at the Closing in accordance with
Section 2.2 hereof, which Warrants shall be exercisable
immediately and for a term of two years.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, the Subscription
Amount of the Convertible Notes. Each Purchaser shall deliver to the Escrow
Agent via wire transfer or a certified check for immediately available funds
equal to their respective Subscription Amount and the Company shall deliver to
each Purchaser their respective Convertible Note and Warrants as determined
pursuant to Section 2.2(a) and the other items set forth in
Section 2.2 issuable at the Closing. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at
the offices of the Escrow Agent or such other location as the Company and
Purchaser shall mutually agree.
2.2 Conditions to Closing. The Closing shall be subject to the
following conditions and deliveries being met on the Closing Date:
(a) At or prior to the Closing, unless otherwise indicated below, the
Company shall deliver or cause to be delivered to the Escrow Agent with
respect to each Purchaser the following:
(i) a Convertible Note with a principal amount equal to such
Purchaser's Subscription Amount, registered in the name of such
Purchaser;
(ii) a Warrant registered in the name of such Purchaser to
purchase up to a number of shares of Common Stock equal to the product
of the Purchaser's Subscription Amount multiplied by 120, with an
exercise price equal to $0.011 per share, subject to adjustment
therein;
(iii) a Warrant registered in the name of such Purchaser to
purchase up to a number of shares of Common Stock equal to the product
of the Purchaser's Subscription Amount multiplied by 40, with an
exercise price equal to $0.02 per share, subject to adjustment
therein;
(iv) a Warrant registered in the name of such Purchaser to
purchase up to a number of shares of Common Stock equal to the product
of the Purchaser's Subscription Amount multiplied by 40, with an
exercise price equal to $0.04 per share, subject to adjustment
therein; and
(v) this Agreement, duly executed by the Company.
(b) At or prior to the Closing, each Purchaser shall deliver or cause
to be delivered to the Escrow Agent the following:
(i) such Purchaser's Subscription Amount;
(ii) this Agreement, duly executed by such Purchaser;
(iii) such Purchaser's Subscription Agreement; and
(iv) the Warrants, duly executed by such Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
hereby makes the representations and warranties set forth below to each
Purchaser.
(a) Organization and Qualification. The Company is an entity
duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with the
requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted. The Company is not in
violation of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. The Company is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not, individually or in the
aggregate: (i) adversely affect the legality, validity or enforceability of
any Transaction Document, (ii) have or result in or be reasonably likely to
have or result in a material adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the
Company taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the
Transaction Documents.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder or thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby or
thereby have been duly authorized by all necessary action on the part of
the Company and no further consent or action is required by the Company.
Each of the Transaction Documents has been (or upon delivery will be) duly
executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and general principles of equity.
(c) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby do not and will not: (i)
conflict with or violate any provision of the Company's certificate or
articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that
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 (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which the Company is a party
or by which any property or asset of the Company is bound or affected, or
(iii) result, in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not, individually or in the aggregate, have or
result in a material adverse effect on the Company.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. If such Purchaser is an entity, it
is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations thereunder. The purchase by such Purchaser of the
Securities hereunder has been duly authorized by all necessary action on
the part of such Purchaser. This Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation of
such Purchaser, enforceable against it in accordance with its terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
(b) Investment Representation. Such Purchaser is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of
this Agreement, at all times to sell or otherwise dispose of all or any
part of such Securities pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and
in compliance with applicable Federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such
Purchaser to hold Securities for any period of time or limit such
Purchaser's right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws. Such Purchaser is acquiring the Securities hereunder in
the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities. All of the representations, warranties
and information of Purchaser provided in the Subscription Application are
incorporated herein, and made a part hereof by this reference.
(c) Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is, and on each date on
which it exercises any Warrants or converts any Convertible Notes it will
be, an "accredited investor" as defined in Rule 501(a) under the Securities
Act. Such Purchaser has not been formed solely for the purpose of acquiring
the Securities. Such Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act.
(d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(e) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine
or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
(f) Due Diligence. Purchaser (i) has been provided with
sufficient information with respect to the business of the Company for the
Purchaser to determine the suitability of making an investment in the
Company and such documents relating to the Company as the Purchaser has
requested and the Purchaser has carefully reviewed the same, (ii) has been
provided with such additional information with respect to the Company and
its business and financial condition as the Purchaser, or the Purchaser's
agent or attorney, has requested, (iii) has had access to management of the
Company and the opportunity to discuss the information provided by
management of the Company and any questions that the Purchaser had with
respect thereto have been answered to the full satisfaction of the
Purchaser, and has reviewed the Company's public reports filed with the
Securities and Exchange Commission under the Securities Act and the
Exchange Act.
(g) No Prior Short Selling. Purchaser represents and warrants
to the Company that at no time prior to the date of this Agreement has
Purchaser, its agents, representatives or affiliates engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) "short
sale" (as such term is defined in Rule 3b-3 of the 0000 Xxx) of the Common
Stock or (ii) hedging transaction, which establishes a net short position
with respect to the Common Stock.
3.4 U.S.A. Patriot Act Representations
(a) Purchaser represents, warrants and covenants that Purchaser:
(i)(a) is subscribing for the Securities for Purchaser's own
account, own risk and own beneficial interest, (b) is not acting as an
agent, representative, intermediary, nominee or in a similar capacity
for any other person or entity, nominee account or beneficial owner,
whether a natural person or entity (each such natural person or
entity, an "Underlying Beneficial Owner") and no Underlying Beneficial
Owner will have a beneficial or economic interest in the Securities
being purchased by Purchaser (whether directly or indirectly,
including without limitation, through any option, swap, forward or any
other hedging or derivative transaction), (c) if it is an entity,
including, without limitation, a fund-of-funds, trust, pension plan or
any other entity that is not a natural person (each, an "Entity"), has
carried out thorough due diligence as to and established the
identities of such Entity's investors, directors, officers, trustees,
beneficiaries and grantors (to the extent applicable, each a "Related
Person" of such Entity), holds the evidence of such identities, will
maintain all such evidence for at least five years from the date of
Purchaser's resale or other disposition of all the Securities, will
request such additional information as the Company may require to
verify such identities as may be required by applicable law, and will
make such information available to the Company upon its request, and
(d) does not have the intention or obligation to sell, pledge,
distribute, assign or transfer all or a portion of the Securities to
any Underlying Beneficial Owner or any other person; or (check and
initial one box)
(ii)(a) is subscribing for the Securities as a record owner and
will not have a beneficial ownership interest in the Securities, (b)
is acting as an agent, representative, intermediary, nominee or in a
similar capacity for one or more Underlying Beneficial Owners (as
defined in (A)(i)(a) above), and understands and acknowledges that the
representations, warranties and agreements made in the Financing
Documents are made by Purchaser with respect to both Purchaser and the
Underlying Beneficial Owner(s), (c) has all requisite power and
authority from the Underlying Beneficial Owner(s) to execute and
perform the obligations under the Subscription Agreement, (d) has
carried out thorough due diligence as to and established the
identities of all Underlying Beneficial Owners (and, if an Underlying
Beneficial Owner is not a natural person, the identities of such
Underlying Beneficial Owner's Related Persons (to the extent
applicable)), holds the evidence of such identities, will maintain all
such evidence for at least five years from the date of Purchaser's
resale or other disposition of all the Securities, and will make such
information available to the Company upon its request and (e) does not
have the intention or obligation to sell, pledge, distribute, assign
or transfer all or a portion of the Securities to any person other
than the Underlying Beneficial Owner(s).
(b) Purchaser hereby represents and warrants that the proposed
investment in the Company that is being made on its own behalf or, if
applicable, on behalf of any Underlying Beneficial Owners does not directly
or indirectly contravene United States federal, state, local or
international laws or regulations applicable to Purchaser, including
anti-money laundering laws (a "Prohibited Investment").
(c) Federal regulations and Executive Orders administered by the U.S.
Treasury Department's Office of Foreign Assets Control ("OFAC") prohibit,
among other things, the engagement in transactions with, and the provision
of services to, certain foreign countries, territories, entities and
individuals. The lists of OFAC prohibited countries, territories, persons
and entities can be found on the OFAC website at xxx.xxxxx.xxx/xxxx.
Purchaser hereby represents and warrants that neither Purchaser nor, if
applicable, any Underlying Beneficial Owner or Related Person, is a
country, territory, person or entity named on an OFAC list, nor is
Purchaser nor, if applicable, any Underlying Beneficial Owner or Related
Person, a natural person or entity with whom dealings are prohibited under
any OFAC regulations.
(d) Purchaser represents and warrants that neither Purchaser nor, if
applicable, any Underlying Beneficial Owner or Related Person, is a senior
foreign political figure, or any immediate family member or close associate
of a senior foreign political figure within the meaning of, and applicable
guidance issued by the Department of the Treasury concerning, the U.S. Bank
Secrecy Act (31 U.S.C. §5311 et seq.), as amended, and any regulations
promulgated thereunder.
(e) Purchaser agrees promptly to notify the Company should Purchaser
become aware of any change in the information set forth in paragraphs (A)
through (D).
(f) Purchaser agrees to indemnify and hold harmless the Company, its
affiliates, their respective directors, officers, shareholders, employees,
agents and representatives (each, an "Indemnitee") from and against any and
all losses, liabilities, damages, penalties, costs, fees and expenses
(including legal fees and disbursements) (collectively, "Damages") which
may result, directly or indirectly, from Purchaser's misrepresentations or
misstatements contained herein or breaches hereof relating to paragraphs
(A) through (D).
(g) Purchaser understands and agrees that, notwithstanding anything to
the contrary contained in any document (including any side letters or
similar agreements), if, following Purchaser's investment in the Company,
it is discovered that the investment is or has become a Prohibited
Investment, such investment may immediately be redeemed by the Company or
otherwise be subject to the remedies required by law, and Purchaser shall
have no claim against any Indemnitee for any form of Damages as a result of
such forced redemption or other action.
(h) Upon the written request from the Company, Purchaser agrees to
provide all information to the Company to enable the Company to comply with
all applicable anti-money laundering statutes, rules, regulations and
policies, including any policies applicable to a portfolio investment held
or proposed to be held by the Company. Purchaser understands and agrees
that the Company may release confidential information about Purchaser and,
if applicable, any Underlying Beneficial Owner(s) or Related Person(s) to
any person, if the Company, in its sole discretion, determines that such
disclosure is necessary to comply with applicable statutes, rules,
regulations and policies.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state
and Federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or an exemption
therefrom, to the Company or to an Affiliate of a Purchaser, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement.
(b) The Company acknowledges and agrees that a Purchaser may from time
to time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities to a financial institution that
is an "accredited investor" as defined in Rule 501(a) under the Securities
Act and, if required under the terms of such arrangement, such Purchaser
may transfer pledged or secured Securities to the pledgees or secured
parties. Such pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee, secured party
or pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. At the appropriate Purchaser's expense,
the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
4.3 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act.
4.4 Integration. The Company shall not, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any Trading Market.
4.5 Reservation and Listing of Securities.
(a) The Company shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may be required to fulfill its obligations in full under
the Transaction Documents.
(b) If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors of the Company shall use
commercially reasonable efforts to amend the Company's certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time, as
soon as possible and in any event not later than the 60th day after such
date, or, alternatively, shall conduct a reverse stock split (as previously
authorized by the shareholders of the Company) to have the result of
increasing the number of authorized but unissued shares of Common Stock to
at least the Required Minimum on an adjusted basis.
(c) The Company shall, if applicable: (i) in the time and manner
required by the Trading Market, prepare and file with such Trading Market
an additional shares listing application covering a number of shares of
Common Stock at least equal to the Required Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common
Stock to be approved for listing on the Trading Market as soon as possible
thereafter, (iii) provide to the Purchasers evidence of such listing, and
(iv) maintain the listing of such Common Stock on any date at least equal
to the Required Minimum on such date on such Trading Market or another
Trading Market.
4.6 Conversion and Exercise Procedures. The form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Convertible Notes set forth the totality of the procedures required of
the Purchasers in order to exercise the Warrants or convert the Convertible
Notes. The Company shall honor exercises of the Warrants and conversions of the
Convertible Notes and shall deliver Underlying Shares in accordance with the
terms, conditions and time periods set forth in the Transaction Documents.
4.7 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables, capital lease obligations and accrued expenses in the ordinary course
of the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.
4.8 Indemnification. The Company will indemnify and hold the
Purchasers and their directors, officers, shareholders, partners, employees and
agents (each, a "Purchaser Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to: (a) any misrepresentation, breach
or inaccuracy, or any allegation by a third party that, if true, would
constitute a breach or inaccuracy, of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents; or (b) any cause of action, suit or claim brought or made
against such Purchaser Party and arising solely out of or solely resulting from
the execution, delivery, performance or enforcement of this Agreement or any of
the other Transaction Documents and without causation by any other activity,
obligation, condition or liability pertaining to such Purchaser and not to the
transactions contemplated by this Agreement. The Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred.
4.9 Prohibition on Further Issuances of Stock. From the date hereof
until the later of 6 months after the Closing or 3 months after the Effective
Date, other than as contemplated by this Agreement, the Company shall not issue
or sell any Common Stock or Common Stock Equivalents registered under the
Securities Act, or with rights of registration under the Securities Act
applicable to the registration statement contemplated herein. Notwithstanding
anything to the contrary herein, this Section 4.9 shall not apply
to any Exempt Issuance. Additionally, in additional to the limitations set forth
herein, from the date hereof until such time as no Purchaser holds any of the
Securities, the Company shall be prohibited from effecting or enter into an
agreement to effect any Subsequent Financing involving a "Variable Rate
Transaction" or an "MFN Transaction" (each as defined below) without
the consent of a majority of the Purchasers hereunder (calculated based upon
initial Subscription Amount). The term "Variable Rate Transaction" shall
mean a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock. The
term "MFN Transaction" shall mean a transaction in which the Company
issues or sells any securities in a capital raising transaction or series of
related transactions which grants to an investor the right to receive additional
shares based upon future transactions of the Company on terms more favorable
than those granted to such investor in such offering.
4.10 Registration Rights. The Company shall, at its expense, use its
best efforts to cause a Form SB-2 Registration Statement, or other applicable
registration statement under the Securities Act, to be filed within forty-five
(45) days after the Closing and naming each Purchaser as a "selling stockholder"
thereunder with respect to the number of Underlying Shares calculated assuming a
Conversion Price (as defined in the Convertible Note) equal to the initial
Conversion Floor of $0.005 per share.
4.11 No Short Sales or Hedging Transactions. The Purchaser agrees
that beginning on the date of this Agreement and ending at such time all
Securities purchased hereunder are sold, neither Purchaser nor its agents,
representatives and affiliates shall in any manner whatsoever enter into or
effect, directly or indirectly, any (i) "short sale" (as such term is defined in
Rule 3b-3 of the Exchange Act) of the Common Stock or (ii) hedging transaction,
which establishes a net short position with respect to the Common Stock.
ARTICLE V
MISCELLANEOUS
5.1 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.2 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile or
email (if designated) prior to 4:30 p.m. (Los Angeles local time) on a Trading
Day with electronic confirmation of delivery, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
or email (if designated) on a day that is not a Trading Day or later than 4:30
p.m. (Los Angeles local time) on any Trading Day, (c) one Trading Day following
the date of overnight delivery, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given (or actual delivery to such person's address of record).
The addresses for such notices and communications are those set forth on the
signature pages hereof, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
5.3 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Purchasers or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.
5.4 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.
5.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section
4.8.
5.7 Governing Law; Venue; Waiver of Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of California, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and Federal courts sitting in the City of Los Angeles. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of Los Angeles for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
The parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys' fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
5.8 Survival. The representations and warranties contained herein
shall survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable for the applicable statue of limitations.
5.9 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) such document with the same force and effect as if such facsimile
signature page were an original thereof.
5.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.11 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.
5.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.13 Fees and Expenses. Each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the issuance of any Securities.
5.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through Xxxxxxxxxx & Xxxxx LLP.
Xxxxxxxxxx & Xxxxx LLP does not represent any of the Purchasers in connection
with this transaction. Certain attorney members of Xxxxxxxxxx & Xxxxx LLP may be
Purchasers hereunder. The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.
IN WITNESS WHEREOF, the parties hereto have caused this Note and Warrant
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
AMERICANA PUBLISHING, INC. Address for Notice:
By:__________________________________________ 303 San Mateo NE
Xxxxxx Xxxxxx, Xx. Suite 104A
Chief Executive Officer Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to (which shall not constitute notice): Xxxxxxxxxx & Xxxxx, LLP
00000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Addison X. Xxxxx, Esq.
Facsimile: (000) 000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO AMERICANA NOTE AND WARRANT PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Note and Warrant
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of Purchaser: _______________________________________________________________
Signature of Authorized Signatory of Purchaser: ________________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Entity:________________________________________________
Address for Notice of Purchaser:
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
Address for Delivery of Securities for Purchaser (if not same as above):
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
Subscription Amount: $_____________________________
Warrant Shares: ______________________________ (200 times Subscription Amount)
EIN/SSN: ______________________________
[SIGNATURE PAGES CONTINUE]
Exhibit A
Escrow Agreement
(see attached)
