EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of July
___, 2001, by and among XXXXXXX MEDIA INTERNATIONAL INC., a Nevada corporation,
with headquarters located at 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxx,
XX 00000 (the "Company"), and the Buyers listed on Schedule I attached hereto
(individually, a "Buyer" or collectively "Buyers").
WITNESSETH:
WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
WHEREAS, the Company has authorized the following new series of its
preferred stock, no par value per share (the "Preferred Stock"): the Company's
Series B Convertible Preferred Stock, par value $0.001 per share (the "Series B
Preferred Shares"), which shall be convertible into shares of the Company's
Common Stock, par value $0.001 per share (the "Common Stock") (as converted, the
"Conversion Shares"), in accordance with the terms of the Company's Certificate
of Designations Designating the Series B Preferred Shares, substantially in the
form attached hereto as Exhibit A (the "Certificate of Designations");
WHEREAS, the Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of 100 Series B Preferred Shares in the
respective amounts set forth opposite each Buyer's name on Schedule I and at a
purchase price of $10,000 per Series B Preferred Share (the "Purchase Price");
and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit B (the "Investor
Registration Rights Agreement") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws; and
WHEREAS, the Series B Preferred Shares are being offered through The May
Xxxxx Group, Inc. (the "Placement Agent"), as the Company's exclusive placement
agent for the offering; and
WHEREAS, the aggregate proceeds of the sale of the Series B Preferred
Shares contemplated hereby shall be held in escrow pursuant to the terms of an
escrow agreement substantially in the form of the Escrow Agreement attached
hereto as Exhibit C.
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s) hereby agree
as follows:
1. PURCHASE AND SALE OF SERIES B PREFERRED SHARES.
(a) Purchase of Series B Preferred Shares. Subject to the
satisfaction (or waiver) of the terms and conditions of this Agreement,
each Buyer agrees, severally and not jointly, to purchase at Closing (as
defined herein below) and the Company agrees to sell and issue to each
Buyer, severally and not jointly, at Closing, Series B Preferred Shares
in amounts corresponding with the Subscription Amount set forth opposite
each Buyer's name on Schedule I hereto. Upon execution hereof by a
Buyer, the Buyer shall wire transfer the Subscription Amount set forth
opposite his name on Schedule I in same-day funds or a check payable to
"First Union National Bank, as Escrow Agent for Xxxxxxx Media
International Inc./The May Xxxxx Group, Inc.", which Subscription Amount
shall be held in escrow pursuant to the terms of the Escrow Agreement
(as hereinafter defined) and disbursed in accordance therewith.
Notwithstanding the foregoing, a Buyer may withdraw his Subscription
Amount and terminate this Agreement as to such Buyer at any time after
the execution hereof and prior to Closing (as hereinafter defined).
(b) Closing Date. The closing of the purchase and sale of the
Series B Preferred Shares (the "Closing") shall take place at 10:00 a.m.
Eastern Standard Time on the fifth (5th) business day ("Closing Date")
following the date hereof, subject to notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and
the Buyers). The Closing shall occur on the Closing Date at the offices
of Xxxxxx Xxxxxxxx, LLP, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxx, XX
00000 (or such other place as is mutually agreed to by the Company and
the Buyers).
(c) Escrow Arrangements; Form of Payment. Upon execution hereof
by Buyer(s) and pending Closing, the aggregate proceeds of the sale of
the Series B Preferred Shares to Buyer(s) pursuant hereto, plus the fees
and expenses of the Placement Agent, shall be deposited in a
non-interest bearing escrow account with First Union National Bank, as
escrow agent ("Escrow Agent"), pursuant to the terms of an escrow
agreement between the Company, the Placement Agent and the Escrow Agent
in the form attached hereto as Exhibit C (the "Escrow Agreement").
Subject to the satisfaction of the terms and conditions of this
Agreement, on the Closing Date, (i) the Escrow Agent shall deliver to
the Company in accordance with the terms of the Escrow Agreement such
aggregate gross proceeds for the Series B Preferred Shares to be issued
and sold to such Buyer(s) at the Closing minus the fees and expenses of
the Placement Agent, by wire transfer of immediately available funds in
accordance with the Company's written wire instructions, and (ii) the
Company shall deliver to each Buyer, Series B Preferred Shares which
such Buyer(s) is purchasing in amounts indicated opposite such Buyer's
name on Schedule I, duly executed on behalf of the Company.
2
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants, severally and not jointly,
that:
(a) Investment Purpose. Each Buyer is acquiring the Series B
Preferred Shares and, upon conversion of Series B Preferred Shares , the
Buyer will acquire the Conversion Shares then issuable for its own
account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Buyer reserves
the right to dispose of the Conversion Shares at any time in accordance
with or pursuant to an effective registration statement covering such
Conversion Shares or an available exemption under the 1933 Act.
(b) Accredited Investor Status. Each Buyer is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. Each Buyer understands that the
Series B Preferred Shares are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to
acquire such securities.
(d) Information. Each Buyer and its advisors (and his or its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information he
deemed material to making an informed investment decision regarding his
purchase of the Series B Preferred Shares and the Conversion Shares,
which have been requested by such Buyer. Each Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the Company
and its management. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely
on the Company's representations and warranties contained in Section 3
below. Each Buyer understands that its investment in the Series B
Preferred Shares and the Conversion Shares involves a high degree of
risk. Each Buyer is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining power,
enabled and enables such Buyer to obtain information from the Company in
order to evaluate the merits and risks of this investment. Each Buyer
has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Series B Preferred Shares and the Conversion Shares.
(e) No Governmental Review. Each Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or
3
made any recommendation or endorsement of the Series B Preferred Shares
or the Conversion Shares, or the fairness or suitability of the
investment in the Series B Preferred Shares or the Conversion Shares,
nor have such authorities passed upon or endorsed the merits of the
offering of the Series B Preferred Shares or the Conversion Shares.
(f) Transfer or Resale. Each Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Series B
Preferred Shares have not been and are not being registered under the
1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered
thereunder, or (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that
such securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration
requirements; (ii) any sale of such securities made in reliance on Rule
144 under the 1933 Act (or a successor rule thereto) ("Rule 144") may be
made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of such securities under circumstances
in which the seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the 0000 Xxx)
may require compliance with some other exemption under the 1933 Act or
the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder. The Company
reserves the right to place stop transfer instructions against the
shares and certificates for the Conversion Shares.
(g) Legends. Each Buyer understands that the certificates or
other instruments representing the Series B Preferred Shares and or the
Conversion Shares shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against transfer
of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
4
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Conversion Shares
upon which it is stamped, if, unless otherwise required by state
securities laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the 1933 Act or (ii) in
connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in form acceptable to the Company and its
counsel, to the effect that a public sale, assignment or transfer of the
Conversion Shares may be made without registration under the 1933 Act.
(h) Authorization, Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(i) Receipt of Documents. Each Buyer and his or its counsel has
received and read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein, the Investor
Registration Rights Agreement, and the Escrow Agreement; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; (iii)
the Company's Form 10-KSB, as amended,for the fiscal year ended
September 30, 2000; (iv) the Company's Form 10-QSB for the fiscal
quarter ended December 31, 2000 and March 2001; and (v) answers to all
questions the Buyer submitted to the Company regarding an investment in
the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents, literature,
memorandum or prospectus.
(j) Due Formation of Corporate and Other Buyers. If the Buyer(s)
is a corporation, trust, partnership or other entity that is not an
individual person, it has been formed and validly exists and has not
been organized for the specific purpose of purchasing the Series B
Preferred Shares and is not prohibited from doing so.
(k) Due Authorization of Fiduciary Buyers. If the Buyer(s) is
purchasing the Series B Preferred Shares in a fiduciary capacity for
another person or entity, including, without limitation, a corporation,
partnership, trust or any other entity, the Buyer(s) has been duly
authorized and empowered to execute this Agreement and such other person
fulfills all the requirements for purchase of the Series B Preferred
Shares and agrees to be bound by the obligations, representations,
warranties, and covenants contained herein. Upon request of the Company,
the Buyer(s) will provide true, complete and current copies of all
relevant documents creating the Buyers, authorizing its investment in
the Company and/or evidencing the satisfaction of the foregoing.
(l) Further Representations by Foreign Buyers. If the Buyer(s)
is not a U.S. Person (as defined below), such Buyer hereby represents
that such Buyer(s) is satisfied as to full observance of the laws of
such Buyer's jurisdiction in connection with any
5
invitation to subscribe for the securities or any use of this Agreement,
including: (i) the legal requirements of such Buyer's jurisdiction for
the purchase of the securities, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents
that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, which may be relevant to the purchase, holding,
redemption, sale, or transfer of the securities. Such Buyer's
subscription and payment for, and such Buyer's continued beneficial
ownership of, the securities will not violate any applicable securities
or other laws of such Buyer's jurisdiction. The term "U.S. Person" as
used herein shall mean any person who is a citizen or resident of the
United States or Canada, or any state, territory or possession thereof,
including, but not limited to, any estate of any such person, or any
corporation, partnership, trust or other entity created or existing
under the laws thereof, or any entity controlled or owned by any of the
foregoing.
(m) No Legal Advice From the Company. Each Buyer acknowledges,
that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors. Each Buyer is relying solely on
such counsel and advisors and not on any statements or representations
of the Company or any of its representatives or agents for legal, tax or
investment advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
(n) No General Solicitation. Neither the Buyers, nor any of its
affiliates, nor 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 Series B Preferred Shares or the Conversion Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
(a) Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. The
Company is not qualified as a foreign corporation in California due to
name restrictions, however, it's subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. The Company
has provided to the Buyers copies of all material documents related to
the transactions with Unisat Inc., and MNS Eagle Equity Group I Inc.
(the "Reorganization")
6
(b) Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Investor
Registration Rights Agreement and any related agreements, and to issue
the Series B Preferred Shares and the Conversion Shares in accordance
with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and any related
agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the
issuance of the Series B Preferred Shares the Conversion Shares and the
reservation for issuance and the issuance of the Conversion Shares
issuable upon conversion or exercise thereof, have been duly authorized
by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement and the Investor Registration Rights
Agreement and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Investor Registration
Rights Agreement and any related agreements constitute the valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors'
rights and remedies and (v) prior to the Closing Date, the Certificate
of Designations substantially in the form attached hereto as Exhibit A
has been filed with the Secretary of State of the State of Nevada and
will be in full force and effect, enforceable against the Company in
accordance with its terms.
(c) Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock $0.001 par value, and
100,000,000 shares of Preferred Stock, $0.0011 par value. As of July
23, 2001, the Company had 62,167,450 shares of Common Stock outstanding
excluding 60,000 shares of Common Stock in its treasury which are being
cancelled, the Company filed a Certificate of Designations authorizing
600,000 shares of Series B Convertible Redeemable Preferred Stock par
value $0.001 per share (the "Series B Stock") in connection with a
proposed transaction with Xxxxxxxx Media and Communications Ltd. Such
transaction was not consummated and no shares of the Series A Stock were
issued in connection therewith. There are no shares of Preferred Stock
issued and outstanding except for the transactions of the reorganized
entities preceding the Reorganizations, for which the Company has relied
on third party representations, all of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as disclosed
in the SEC Documents (as defined in Section 3(f)) as amended, no shares
of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in the SEC Document, as of the date of
this Agreement, (i) there are no outstanding options, warrants, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any
of its subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of
7
any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of
its subsidiaries, (ii) there are no outstanding debt securities and
(iii) there are no agreements or arrangements under which the Company or
any of its subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except pursuant to the Registration
Rights Agreement). There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of the Series B Preferred Shares as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), the
Company's By-laws, as in effect on the date hereof (the "By-laws"), and
the terms of all securities convertible into or exercisable for Common
Stock and the material rights of the holders thereof in respect thereto
other than stock options issued to employees and consultants.
(d) Issuance of Securities. The Series B Preferred Shares are
duly authorized and, upon issuance in accordance with the terms hereof,
shall be duly issued, fully paid and nonassessable, are free from all
taxes, liens and charges with respect to the issue thereof and are
entitled to the rights and preferences set forth in the Certificate of
Designations for the Series B Preferred Shares. The Conversion Shares
issuable upon conversion of the Series B Preferred Shares will be duly
authorized and reserved for issuance. Upon conversion or exercise in
accordance with the Certificate of Designations the Conversion Shares
will be duly issued, fully paid and nonassessable.
(e) No Conflicts. Except as disclosed in SEC Documents, and
assuming shareholder approval for an increase of the Company's Common
Stock the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations of any
outstanding series of preferred stock of the Company or the By-laws 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 to which the
Company or any of its subsidiaries is a party, or result in a violation
of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and
regulations of the Nasdaq Stock Market Inc.'s OTC Bulletin Board on
which the Common Stock is quoted) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries is bound or affected. Except as disclosed in the SEC
Documents, neither the Company nor its subsidiaries is in violation of
any term of or in default under its Certificate of Incorporation or
By-laws or their organizational charter or by-laws, respectively, or any
material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or regulation of
8
any governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable state
securities laws, the Company 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 or contemplated by this Agreement
or the Registration Rights Agreement in accordance with the terms hereof
or thereof. Except as disclosed in the SEC Documents, all consents,
authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof. The Company and its
subsidiaries are unaware of any facts or circumstance, which might give
rise to any of the foregoing.
(f) SEC Documents: Financial Statements. Except as set forth on
Schedule 3(f) attached hereto, since April 2000 the Company has filed
all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred
to as the "SEC Documents"). The Company has delivered to the Buyers or
their representatives, or made available through the SEC's website at
xxxx://xxx.xxx.xxx., true and complete copies of the SEC Documents. As
of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial Statements") complied as
to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such
Financial Statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on
behalf of the Company to the Buyer which is not included in the SEC
Documents, including, without limitation, information referred to in
Section 2(d) and (i) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) 10(b)-5. The SEC Documents do not include any untrue
statements of material fact, nor do they omit to state any material fact
required to be stated therein necessary to make the statements made, in
light of the circumstances under which they were made, not misleading.
(h) Absence of Litigation. Except as disclosed in the SEC
Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or
9
affecting the Company, the Common Stock or any of the Company's
subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a material adverse effect on the transactions contemplated
hereby (ii) adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under,
this Agreement or any of the documents contemplated herein, or (iii)
except as expressly disclosed in the SEC Documents, have a material
adverse effect on the business, operations, properties, financial
condition or results of operation of the Company and its subsidiaries
taken as a whole.
(i) Acknowledgment Regarding Buyer's Purchase of the Series B
Preferred Shares. The Company acknowledges and agrees that the Buyer(s)
is acting solely in the capacity of an arm's length purchaser with
respect to this Agreement and the transactions contemplated hereby. The
Company further acknowledges that the Buyer(s) is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer(s) or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Series B Preferred Shares or the Conversion
Shares. The Company further represents to the Buyer that the Company's
decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor 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 Series B Preferred Shares or the Conversion Shares.
(k) 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 require
registration of the Series B Preferred Shares or the Conversion Shares
under the 1933 Act or cause this offering of the Series B Preferred
Shares or the Conversion Shares to be integrated with prior offerings by
the Company for purposes of the 1933 Act.
(l) Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of
the Company or any of its subsidiaries, is any such dispute threatened.
None of the Company's or its subsidiaries' employees is a member of a
union and the Company and its subsidiaries believe that their relations
with their employees are good.
(m) Intellectual Property Rights. The Company and its
subsidiaries have made no filings what so ever with respect to any
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, trade
secrets, know-how, designs, proprietary rights, processes, works of
authorship or
10
other intellectual property rights (collectively referred to as
"Intellectual Property"). The Company has all rights necessary to use
the Intellectual Property it currently uses. The Company and its
subsidiaries do not have any knowledge of any infringement by the
Company or its subsidiaries with respect to Intellectual Property , and,
to the knowledge of the Company there is no claim, action or proceeding
being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding
Intellectual Property and the Company and its subsidiaries are unaware
of any facts or circumstances which might give rise to any of the
foregoing.
(n) Environmental Laws. The Company and its subsidiaries are (i)
in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such
permit, license or approval.
(o) Title. Any real property and facilities held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries.
(p) Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any
such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
(q) Regulatory Permits. The Company and its subsidiaries possess
all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
(r) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, and
(iii) the recorded amounts for assets is compared
11
with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(r) No Material Adverse Breaches, etc. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Company's officers has or is expected in the future to have a material
adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. Neither the Company nor any of its subsidiaries is in
breach of any contract or agreement which breach, in the judgment of the
Company's officers, has or is expected to have a material adverse effect
on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.
(s) Tax Status. The Company and each of its subsidiaries has
made, filed, or has current extensions for all federal and state income
and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent
that the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations, except those being contested
in good faith and has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of
no basis for any such claim.
(t) Certain Transactions. Except as set forth in the SEC
Documents and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no
less favorable than the Company could obtain from third parties and
other than the grant of stock options disclosed in the SEC Documents,
none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company (other than for
services as employees, officers and directors), 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 corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director,
trustee or partner.
(u) Fees and Rights of First Refusal. The Company is not
obligated to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company, underwriters,
brokers, agents or other third parties.
12
(v) Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the
Series B Preferred Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Series B Preferred Shares in accordance
with this Agreement and the Certificate of Designations and the Series B
Preferred Shares is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests
of other stockholders of the Company.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) Form D. The Company agrees to file a Form D with respect to
the Conversion Shares as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Conversion
Shares, or obtain an exemption for the Conversion Shares for sale to the
Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date.
(c) Reporting Status. Until the earlier of (i) the date as of
which the Investor(s) (as that term is defined in the Registration
Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Buyer(s) shall
have sold all the Conversion Shares and (B) none of the Series B
Preferred Shares are outstanding (the "Registration Period"), the
Company shall use its commercially reasonable efforts to file in a
timely manner all reports required to be filed with the SEC pursuant to
the 1934 Act and the regulations of the SEC there under, and the Company
shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations
there under would otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the
sale of the Series B Preferred Shares for general corporate purposes.
(e) Reservation of Shares. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for
the purpose of issuance, such number of shares of Common Stock as shall
be necessary to effect the issuance of the Conversion Shares. If at any
time the Company does not have available such shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of
the Conversion Shares of the Company shall call and hold a special
meeting of the shareholders within sixty (60) days of such occurrence,
for the sole purpose of increasing the number of shares authorized. The
Company's management shall recommend to the shareholders to vote in
favor of increasing the number of shares of
13
Common Stock authorized. Management shall also vote all of its shares in
favor of increasing the number of authorized shares of Common Stock .
(f) Listings or Quotation. The Company shall promptly secure the
listing or quotation of the Conversion Shares upon each national
securities exchange, automated quotation system or Over-The-Counter
Bulletin Board or other market, if any, upon which shares of Common
Stock are then listed or quoted (subject to official notice of issuance)
and shall use its best efforts to maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable under the terms of this Agreement. The
Company shall maintain the Common Stock's authorization for quotation in
the over-the counter market
(g) Expenses. Each of the Company and the Buyer(s) shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreement. The costs and expenses
of the Placement Agent and its counsel, shall be paid for by the Company
at Closing in accordance with the terms of the Placement Agent Agreement
between the Company and the Placement Agent, dated July ___, 2001.
(h) Corporate Existence. So long as any of the Series B
Preferred Shares remain outstanding, the Company shall not directly or
indirectly consummate any merger, reorganization, restructuring,
consolidation, sale of all or substantially all of the Company's assets
or any similar transaction or related transactions (each such
transaction, a "Sale of the Company") unless, prior to the consummation
of a Sale of the Company, the Company makes appropriate provision to
insure that, upon the consummation of such Sale of the Company, each of
the holders of the Series B Preferred Shares will thereafter have the
right to acquire and receive such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Series B Preferred
Shares had such Sale of the Company not taken place. In any such case,
the Company will make appropriate provision with respect to such
holders' rights and interests to insure that the provisions of this
Section 4(h) will thereafter be applicable to the Series B Preferred
Shares.
(i) Transactions With Affiliates. So long as any Series B
Preferred Shares are outstanding, the Company shall not, and shall cause
each of its subsidiaries not to, enter into, amend, modify or
supplement, or permit any subsidiary to enter into, amend, modify or
supplement any agreement, transaction, commitment, or arrangement with
any of its or any subsidiary's officers, directors, persons who were
officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the
Common Stock, or Affiliates (as defined below) or with any individual
related by blood, marriage, or adoption to any such individual or with
any entity in which any such entity or individual owns a five percent
(5%) or more beneficial interest (each a "Related Party"), except for
(a) customary employment arrangements and benefit programs on reasonable
terms, (b) any investment in an Affiliate of the Company, (c) any
agreement, transaction, commitment, or arrangement on an arms-length
basis on
14
terms no less favorable than terms which would have been obtainable from
a person other than such Related Party, (d) any agreement transaction,
commitment, or arrangement which is approved by a majority of the
disinterested directors of the Company, for purposes hereof, any
director who is also an officer of the Company or any subsidiary of the
Company shall not be a disinterested director with respect to any such
agreement, transaction, commitment, or arrangement. "Affiliate" for
purposes hereof means, with respect to any person or entity, another
person or entity that, directly or indirectly, (i) has a ten percent
(10%) or more equity interest in that person or entity, (ii) has ten
percent (10%) or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with that
person or entity. "Control" or "controls" for purposes hereof means that
a person or entity has the power, whether direct or indirect, to conduct
or govern the policies of another person or entity.
(j) Transfer Agent. The Company covenants and agrees that, in
the event that the Company's agency relationship with the transfer agent
should be terminated for any reason prior to a date which is two (2)
years after the Closing Date, the Company shall immediately appoint a
new transfer agent and shall require that the transfer agent execute and
agree to be bound by the terms of the Irrevocable Transfer Agent
Instructions (as defined below) to Transfer Agent.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions in the form
attached hereto as Exhibit D to its transfer agent to issue
certificates, registered in the name of the Buyer(s) or its respective
nominee(s), for the Conversion Shares representing such amounts of
Series B Preferred Shares as specified from time to time by the Buyer(s)
to the Company upon conversion of the Series B Preferred Shares (the
"Irrevocable Transfer Agent Instructions"). Prior to registration of the
Conversion Shares under the 1933 Act, all such certificates shall bear
the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares prior to registration of such shares under the 0000
Xxx) will be given by the Company to its transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement. Nothing in this Section
5 shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of Conversion
Shares. If the Buyer(s) provides the Company with an opinion of counsel,
reasonably satisfactory in form and substance to the Company, that
registration of a resale by the Buyer(s) of any of the Conversion Shares
is not required under the 1933 Act, the Company shall permit the
transfer and promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the
Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law
15
for a breach of its obligations under this Section 5 will be inadequate
and agrees, in the event of a breach or threatened breach by the Company
of the provisions of this Section 5, that the Buyer(s) shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or
other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Series B Preferred Shares to the Buyer(s) at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in
its sole discretion:
(a) Each Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) The Certificate of Designations shall have been filed with
the Secretary of State of the State of Nevada and the Company shall have
provided the Buyers a Certificate of Good Standing from the Nevada
Secretary of State.
(c) The Buyer(s) shall have delivered to the Escrow Agent the
Purchase Price for Series B Preferred Shares in respective amounts as
set forth next to each Buyer as outlined on Schedule I attached hereto
and the Escrow Agent shall have delivered such funds to the Company by
wire transfer of immediately available U.S. funds pursuant to the wire
instructions provided by the Company.
(d) The representations and warranties of the Buyer(s) shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer(s) shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the
Buyer(s) at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer(s) hereunder to purchase the Series
B Preferred Shares at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyer's sole benefit and may be waived
by the Buyer(s) at any time in its sole discretion:
(a) The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer(s).
16
(b) The Common Stock shall be authorized for quotation on The
National Association of Securities Dealers, Inc. OTC Bulletin Board,
trading in the Common Stock shall not have been suspended for any reason
and all of the Conversion Shares issuable upon conversion of the Series
B Preferred Shares shall be approved for listing or quotation on The
National Association of Securities Dealers, Inc. OTC Bulletin Board.
(c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the President of the
Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by the Buyer
including, without limitation an update as of the Closing Date regarding
the representation contained in Section 3(c) above.
(d) The Company shall have executed and delivered to the
Buyer(s) the Series B Preferred Shares in the respective amounts set
forth opposite each Buyer(s) name on Schedule I attached hereto.
(g) The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
8. INDEMNIFICATION.
(a) In consideration of the Buyer's execution and delivery of
this Agreement and acquiring the Series B Preferred Shares and the
Conversion Shares hereunder, and in addition to all of the Company's
other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer(s) and each other holder
of the Series B Preferred Shares and the Conversion Shares, and all of
their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Buyer Indemnitees")
from and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Buyer Indemnitee
is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Buyer Indemnitees or any of
them as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Series B
17
Preferred Shares or the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, (ii)
any breach of any covenant, agreement or obligation of the Company
contained in this Agreement, or the Registration Rights Agreement nor
any other certificate, instrument or document contemplated hereby or
thereby, or (iii) any cause of action, suit or claim brought or made
against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any
other instrument, document or agreement executed pursuant hereto by any
of the Indemnities, any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of
the Series B Preferred Shares nor the status of the Buyer or holder of
the Series B Preferred Shares the Conversion Shares, as a Buyer of
Series B Preferred Shares in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.
(b) In consideration of the Company's execution and delivery of
this Agreement, and in addition to all of the Buyer's other obligations
under this Agreement, the Buyer shall defend, protect, indemnify and
hold harmless the Company and all of it's officers, directors, employees
and agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Company Indemnitees") from and against any and all Indemnified
Liabilities incurred by the Indemnitees or any of them as a result of,
or arising out of, or relating to (i) any misrepresentation or breach of
any representation or warranty made by the Buyer(s) in this Agreement,
instrument or document contemplated hereby or thereby executed by the
Buyer, (ii) any breach of any covenant, agreement or obligation of the
Buyer(s) contained in this Agreement, the Investor Registration Rights
Agreement or any other certificate, instrument or document contemplated
hereby or thereby executed by the Buyer, or (iii) any cause of action,
suit or claim brought or made against such Company Indemnitee based on
material misrepresentations or due to a material breach and arising out
of or resulting from the execution, delivery, performance or enforcement
of this Agreement, the Investor Registration Rights Agreement or any
other instrument, document or agreement executed pursuant hereto by any
of the Company Indemnitees. To the extent that the foregoing undertaking
by each Buyer may be unenforceable for any reason, each Buyer shall make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. The parties further agree
that any action between them shall be heard in New York City, New York,
and expressly consent to the jurisdiction and venue of the Supreme Court
of New York and the United States District Court for the Southern
18
District of New York for the adjudication of any civil action asserted
pursuant to this Paragraph.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which 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. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within
five (5) days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation
of, this Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement, Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyer(s), the
Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company
nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
(f) Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered
(i) upon receipt, when delivered personally; (ii) upon confirmation of
receipt, when sent by facsimile; (iii) three (3) days after being sent
by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
19
If to the Company, to: Xxxxxxx Media International Inc.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Chairman and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
0000 00xx Xxxxxx
Xxxxx Xxxxxx, XX 9043
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent, to:
If to the Investor: At the address listed on Schedule A.
If to the Buyer(s), to its address and facsimile number on
Schedule I, with copies to the Buyer's counsel as set forth on Schedule
I. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
(g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors
and assigns. Neither the Company nor any Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the other party hereto.
(h) No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(i) Survival. Unless this Agreement is terminated under Section
9(l) hereof, the representations and warranties of the Company and the
Buyers contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, and the indemnification provisions set
forth in Section 8, shall survive the Closing for a period of one (1)
year following the date on which the Series B Preferred Shares are
converted in
20
full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity. The Company and the Buyer(s) shall have the right
to approve, before issuance, any press release or any other public
statement with respect to the transactions contemplated hereby made by
any party; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer(s), to issue any press release
or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Company
shall use its best efforts to consult the Buyer(s) in connection with
any such press release or other public disclosure prior to its release
and Buyer(s) shall be provided with a copy thereof upon release
thereof).
(k) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
(1) Termination. In the event that the Closing shall not have
occurred with respect to the Buyers on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the
non-breaching party's failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this
Section 9(l), the Company shall remain obligated to reimburse the
Buyer(s) for the expenses described in Section 4(g) above.
(m) Finder. The Company acknowledges that it has engaged The May
Xxxxx Group, Inc., as the placement agent in connection with the sale of
the Series B Preferred Shares. The Company shall be responsible for the
payment of any placement agent fees (which includes cash) relating to or
arising out of the transactions contemplated hereby and from the
proceeds thereof.
(n) No Strict Construction. 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.
[REMAINDER PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
XXXXXXX MEDIA INTERNATIONAL INC.
By:
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
INVESTOR:
By:
-----------------------------------------
Name: Xxxx X. Xxxxxx
22
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS
EXHIBIT B
FORM OF INVESTORS REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
ESCROW AGREEMENT
EXHIBIT D
TRANSFER AGENT INSTRUCTIONS
EXHIBIT E
FORM OF WARRANT
SCHEDULE I
SCHEDULE OF BUYERS
AMOUNT OF
NAME ADDRESS/FACSIMILE NUMBER OF BUYER SUBSCRIPTION
-------- --------------------------------- ------------ --------------
