Exhibit 10.7
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of the seventh
day of May, 2002 between Student Advantage, Inc., a Delaware corporation (the
"Company"), and Xxxx Xxxxxxxxxx, an accredited investor (the "Purchaser").
In consideration of the mutual promises hereinafter set forth and other
good and valuable consideration, the receipt of which are hereby acknowledged,
the parties hereby agree as follows:
1. Purchase and Sale of the Shares.
(a) The Company agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company 1,333,336 shares (collectively,
the "Shares") of Common Stock, $.01 par value per share ("Common Stock"), of the
Company for an aggregate purchase price of $1,000,002.00 (the "Purchase Price").
(b) At the closing of the transactions contemplated hereby (the
"Closing"), which shall be held on the date hereof, the following events shall
occur:
(i) each of the Company and Purchaser shall execute and deliver to
the other party the Registration Rights Agreement in the form attached hereto as
Exhibit A (the "Registration Rights Agreement"); and
(ii) the Purchaser shall pay the Company the full amount of the
Purchase Price by wire transfer or other form of payment of immediately good
funds acceptable to the Company; and
(iii) the Company shall issue and deliver to the Purchaser as soon
as is practicable after the Closing an original stock certificate representing
the Shares.
(c) At any time prior to November 1, 2002 (but not more than once), the
Purchaser may elect to purchase (i) an additional 166,667 shares of Common Stock
at a purchase price of $0.75 per share and (ii) an additional 166,667 shares of
Common Stock at a purchase price of $1.00 per share. The Purchaser shall
exercise such right by delivery of written notice to the Company no less than
five business days prior to the date of closing of such purchase. Except as
specifically provided in the first sentence of this subsection 1(c), the terms
and conditions of such purchase shall be the same as the terms and conditions of
this agreement.
2. Representations and Warranties of the Company. The Company represents and
warrants as follows:
(a) Organization and Good Standing. The Company has been duly incorporated
and organized, and is validly existing in good standing, under the laws of the
State of Delaware. The Company has the corporate power and authority to enter
into and perform this Agreement and the Registration Rights Agreement
(collectively, the "Agreements"), to own and operate its
properties and assets and to carry on its business as currently conducted and as
presently proposed to be conducted.
(b) Authorization and Binding Nature. The execution, delivery and
performance by the Company of the Agreements and the issuance and delivery of
the Shares has been duly authorized by all requisite corporate action on the
part of the Company and the Agreements constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(c) Non-Contravention. The execution, delivery and performance by the
Company of the Agreements will not, with or without the giving of notice or the
passage of time or both, (i) violate the provisions of the certificate of
incorporation or bylaws of the Company, (ii) violate any judgment, decree, order
or award of any court, governmental body or arbitrator applicable to the
Company, or (iii) conflict with or violate any material agreement to which the
Company is a party or by which it is bound.
(d) Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of the
Company in order to enable the Company to execute, deliver and perform its
obligations under the Agreements except for such qualifications or filings under
applicable securities laws as may be required in connection with the
transactions contemplated by this Agreement. All such qualifications and filings
will, in the case of qualifications, be effective on the Closing and will, in
the case of filings, be made within the time prescribed by law.
(e) Capitalization. The authorized capital stock of the Company consists
of (i) 150,000,000 shares of Common Stock, of which, as of April 29, 2002,
47,645,560 shares are issued and outstanding, and (ii) 5,000,000 shares of
Preferred Stock, $.01 par value per share, of which no shares are issued or
outstanding. As of April 29, 2002, there were 11,011,276 shares of Common Stock
reserved for issuance upon the exercise or conversion of outstanding options,
warrants and convertible securities of the Company. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. When issued, sold and delivered against
payment therefor in accordance with the provisions of this Agreement, the Shares
will be duly and validly issued, fully paid and nonassessable and will be free
of restrictions on transfer other than restrictions under this Agreement, the
Registration Rights Agreement and applicable state and federal securities laws.
(f) SEC Reports. The Company has previously furnished or made available to
the Purchaser complete and accurate copies, as amended or supplemented, of its
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as
filed with the Securities and Exchange Commission (the "SEC"), and (ii) all
other reports filed by the Company under Section 13 or subsections (a) and (c)
of Section 14 of the Securities Exchange Act of 1934 (as amended the "Exchange
Act") with the SEC since December 31, 2001 (such reports are collectively
referred to herein as the "Reports"). The Reports constitute all of the
documents required to be filed by the Company under Section 13 or subsections
(a) and (c) of Section 14 of the Exchange Act with the SEC from April 1, 2002
through the date of this Agreement. The Reports complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
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thereunder when filed. As of their respective dates, the Company Reports did 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, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of the
Company included in the Company Reports (i) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto when filed, (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Company as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Company.
(g) Nasdaq Compliance. Except for notification specifying that the Company
is not in compliance with Marketplace Rule 4450(a)(5), the Company has not
received any written notice from the NASD regarding non-compliance with the
continued listing requirements for the Nasdaq National Market.
(h) Absence of Material Adverse Change. Except as disclosed in the Reports
and except for the transactions contemplated by Section 4 hereof, since
April 1, 2002 the Company has not received a material adverse change in its
financial condition or results of operation.
3. Representations and Warranties of the Purchaser. The Purchaser represents and
warrants as follows:
(a) Investment. The Purchaser is acquiring the Shares for its own account
for investment, not for resale to any other person and not with a view to or in
connection with any resale or distribution. The Purchaser understands that,
except as provided in the Registration Rights Agreement, the Shares have not
been registered under the securities laws of the United States or any other
jurisdiction and cannot be transferred or resold except as permitted pursuant to
a valid registration statement or an applicable exemption from registration. The
Purchaser acknowledges that the Company has not made any representations with
respect to registration of the Shares under applicable securities laws, that
there can be no assurance that there will be any market for the Common Stock in
the foreseeable future and that, as a result, the Purchaser must be prepared to
bear the economic risk of its investment for an indefinite period of time. The
Purchaser understands that the certificate representing the Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of unless and until such securities are registered under
such Act or an opinion of counsel satisfactory to the issuer is
obtained to the effect that such registration is not required."
The foregoing legend shall be removed and the Company shall issue a
certificate without such legend to the holder of any of the Shares upon which it
is stamped, if, unless otherwise required by state securities laws, (i) the sale
of such Shares is registered under the Securities Act of
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1933, as amended (the "Securities Act"), or (ii) the Shares become eligible for
resale pursuant to Rule 144 of the Securities Act.
(b) Authorization and Binding Nature. The execution, delivery and
performance by the Purchaser of this Agreement has been duly authorized by all
requisite corporate action on the part of the Purchaser and this Agreement
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
(c) Non-Contravention. The execution, delivery and performance by the
Purchaser of this Agreement will not, with or without the giving of notice or
the passage of time or both, (i) violate the provisions of the charter documents
of the Purchaser, (ii) violate any judgment, decree, order or award of any
court, governmental body or arbitrator applicable to the Purchaser, or (iii)
conflict with or violate any material agreement to which the Purchaser is a
party or by which it is bound.
(d) Access to Information. The Purchaser has substantial knowledge and
experience in making investment decisions of this type and is capable of
evaluating the merits and risks of its investment in the Company. The Company
has made available to the Purchaser all documents and other information
necessary for the Purchaser to evaluate the merits and risks of its investment
in the Company. The Company has made available to the Purchaser all documents
requested and has provided answers to all of its questions relating to an
investment in the Company. In evaluating the suitability of an investment in the
Company, the Purchaser has not relied upon any representations (whether oral or
written) other than as set forth herein. The Purchaser has had an opportunity to
discuss this investment with representatives of the Company and to ask questions
of them. The Purchaser understands that an investment in the Company involves
significant risks. The Purchaser is an "accredited investor," as defined in Rule
501 under the Securities Act.
4. Covenant of the Company. Not later than two business days after the date of
the Closing, the Company will have entered into an agreement providing for the
sale of its events and promotions business.
5. Notices. Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telecopy or via a
reputable express courier, with charges prepaid, to the address set forth below
or to such other address of which the parties may have given notice. Unless
otherwise specified herein, such notices or other communications shall be deemed
received one business day after personal delivery or delivery by telecopy, or
three business days after being sent, if sent by reputable express courier.
If to the Company:
Student Advantage, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: CEO
with a copy to:
Student Advantage, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
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If to the Purchaser:
Xxxx Xxxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
6. Successors and Assigns. No party may assign its rights or obligations
hereunder without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Any assignment in
contravention of this provision shall be void.
7. Survival of Warranties. The representations, warranties and covenants of the
Company and the Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Purchaser, its counsel or the Company, as the case may be.
8. Entire Agreement. This Agreement, including the exhibits attached hereto,
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior oral and
written and all contemporaneous oral negotiations, commitments and
understandings between such parties. The parties may amend or modify this
Agreement, in such manner as may be agreed upon, only by a written instrument
executed by the parties hereto.
9. Expenses. Each party shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware in the United States, without
reference to conflict of laws principles, and the parties hereby consent to the
jurisdiction of the courts of the State of Delaware.
11. Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
12. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
13. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall be one
and the same document.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
STUDENT ADVANTAGE, INC.
By: Xxxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive Officer
XXXX XXXXXXXXXX
By: /s/ Xxxx Xxxxxxxxxx
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