SECURITIES PURCHASE AGREEMENT
EXHIBIT 10.2
This Securities Purchase Agreement (this “Agreement”), dated as of May 14, 2008, is entered
into by and between iMedia International, Inc., a Delaware corporation (the “Company”), and the
purchaser identified on the signature page hereto (the “Purchaser”).
Section 1. Subscription of the Purchaser.
1.1 Purchase of Securities. The Purchaser hereby agrees to purchase from the Company,
and the Company hereby agrees to sell to the Purchaser, for an aggregate purchase price of $300,000
(the “Purchase Price”), (i) 2,000,000 shares (the “Shares”) of common stock of the Company, par
value $0.001 per share (“Common Stock”), and (ii) a warrant, in the form attached hereto as
Exhibit A, to purchase 400,000 minimum shares of Common Stock at an exercise price of
$0.225 per share (the “Warrant”), pursuant to the terms of this Agreement. The Shares, the Warrant
and the shares issuable upon exercise of the Warrant (the “Warrant Shares”) are sometimes referred
to collectively herein as the “Securities.”
1.2 Offering. This offering of the Shares and the Warrant (the “Offering”) is being
made to the Purchaser in reliance upon the Purchaser’s representation to the Company herein that
the Purchaser is an “accredited investor” as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser acknowledges that the
Company is relying upon the accuracy and completeness of the information contained herein in
complying with its obligations under federal and state securities and other applicable laws. There
is no minimum amount required to close the Offering, and the Company shall be entitled to accept
any and all Offering proceeds when and as any investments are made. The minimum subscription
amount is $100,000.
Section 2. The Closing.
2.1 The closing of the sale of the Shares and the Warrant to the Purchaser (the “Closing”)
shall take place simultaneously with the execution and delivery of this Agreement at the offices of
the Company or at such later date and time as the Company and the Purchaser shall agree. The date
on which the Closing occurs shall be referred to herein as the “Closing Date.”
2.2 At the Closing, the Company shall (i) issue instructions to the Company’s transfer agent
to deliver to the Purchaser at the address provided herein a stock certificate representing
2,000,000 shares of Common Stock and (ii) deliver to the Purchaser the Warrant duly executed by the
Company against receipt by the Company of a check or wire transfer in an amount equal to the
Purchase Price and the Agreement duly executed by Purchaser.
Section 3. Representations, Warranties and Covenants of the Company.
The Company hereby represents and warrants to the Purchaser and agrees as follows:
3.1 Organization. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to conduct its business as a
foreign corporation in each jurisdiction where the failure to be so qualified would have a material
adverse effect on the Company.
3.2 Authorization of Agreement, Enforcement. The execution, delivery and performance
by the Company of this Agreement, the Warrant and each other document or instrument contemplated
hereby or thereby (collectively, the “Financing Documents”) have been duly authorized by all
requisite corporate action by the Company; and this Agreement and the other Financing Documents
have been duly executed and delivered by the Company. Each of the Financing Documents, when
executed and delivered by the Company, will constitute the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors’ rights and remedies generally, and subject as to enforceability to general
principles of equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
3.3 Use of Proceeds. The Company will use the net proceeds from the sale of the
Shares and the Warrant hereunder for working capital purposes.
3.4 Reservation of Shares. So long as the Warrant remains outstanding, the Company
shall take all action necessary to at all times have authorized and reserved for issuance no less
than one hundred percent (100%) of the aggregate number of shares of Common Stock underlying the
unexercised portion of the Warrant.
3.5 Issuance of Shares. The issuances of the Securities have been duly authorized by
all necessary corporate action by the Company. The Shares, when paid for and issued in accordance
with the terms hereof, will be validly issued and outstanding, fully paid and nonassessable. When
the Warrant Shares are paid for and issued in accordance with the terms of the Warrant, such shares
will be validly issued and outstanding, fully paid and nonassessable, and the holder shall be
entitled to all rights accorded to a holder of Common Stock.
3.6 Registration Rights. If, at any time during which the Purchaser holds Shares or
Warrant Shares that are not then eligible for resale under Rule 144(k) promulgated under the
Securities Act, the Company proposes to register any of its common securities under the Securities
Act (other than on a registration statement on Form S-4 or Form S-8 or any similar successor forms
thereto), whether for its own account or for the account of one or more securityholders of the
Company, and the registration form to be used may be used for any registration of the Shares or the
Warrant Shares (a “Piggyback Registration”), the Company shall give prompt written notice to the
Purchaser of its intention to effect such a registration and shall include in such registration all
Shares and Warrant Shares with respect to which the Company has received a written request from the
Purchaser for inclusion therein within 15 days after the Purchaser’s receipt of the Company’s
notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback
Registration at any time in its sole discretion. If the SEC reduces the number of securities that
may be registered in such Piggyback Registration, such reduction shall be made on a pro-rata basis
among the Purchaser and any other selling shareholders included therein. The underwriters in any
underwritten offering by the Company shall have the right to limit, due to marketing
considerations, the number of Shares to be registered in a registration pursuant to this Section
3.6.
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Section 4. Representations, Warranties and Covenants of the Purchaser.
The Purchaser hereby represents and warrants to the Company and agrees as follows:
4.1 Authorization of the Documents. The Purchaser has all requisite power and
authority (corporate or otherwise) to execute, deliver and perform the Financing Documents and the
transactions contemplated thereby, and the execution, delivery and performance by the Purchaser of
the Financing Documents have been duly authorized by all requisite action by the Purchaser. Each
such Financing Document, when executed and delivered by the Purchaser, will constitute a valid and
binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity).
4.2 Representation of Accredited Investor Status, Investment Experience and Ability to
Bear Risk. The Purchaser acknowledges that the Securities have not been registered with the
Securities and Exchange Commission because the Company is relying on an exemption from registration
under Section 4(2) of the Securities Act and Regulation D promulgated thereunder. The Purchaser
believes that, at the time of the sale of the Shares and the Warrant to the Purchaser, the
Purchaser (or, if the Purchaser is a corporation, limited liability company or trust, each of its
equity owners) qualifies as an “accredited investor,” and has delivered to the Company a completed
Regulation D Investor Questionnaire to that effect.
4.3 U.S.A. Patriot Act Representations.
(A) The Purchaser represents, warrants and covenants that the Purchaser:
x (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 the 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 the
Purchaser’s resale or other disposition of all of 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)
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o (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 the Purchaser with respect to both the
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 Financing
Documents, (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 the Purchaser’s resale or other disposition of all of 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) The 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 the 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. The Purchaser hereby represents
and warrants that neither the 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 the
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) The Purchaser represents and warrants that neither the 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 the
U.S. Bank Secrecy Act (31 U.S.C. §5311 et seq.), as amended, and any regulations promulgated
thereunder, and applicable guidance issued by the Department of the Treasury concerning the U.S.
Bank Secrecy Act.
(E) The Purchaser agrees promptly to notify the Company should the Purchaser become aware of
any change in the information set forth in paragraphs (A) through (D).
(F) The 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,
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fees and expenses (including legal fees and disbursements) (collectively, “Damages”) that may
result, directly or indirectly, from the Purchaser’s misrepresentations or misstatements contained
herein or breaches hereof relating to paragraphs (A) through (D).
(G) The Purchaser understands and agrees that, notwithstanding anything to the contrary
contained in any document (including any side letters or similar agreements), if, following the
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 the 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 of the Company, the 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. The Purchaser understands and agrees that the Company may
release confidential information about the 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.
4.4 Risk Factors. The Purchaser understands and acknowledges that the purchase of the
Securities involves a number of significant risks, and that the Purchaser may lose the Purchaser’s
entire investment in the Securities. The Purchaser has read the Company’s filings and reports on
file and publicly available with the Securities and Exchange Commission, including the Company’s
financial statements included therein.
4.5 Restricted Stock. The Purchaser understands and acknowledges that the Securities
have not been, and when issued will not be, registered with the Securities and Exchange Commission.
Further, the Purchaser understands and acknowledges that the certificates representing the Common
Stock and the Warrant Shares, when issued, shall bear a restrictive legend.
Section 5. Conditions at Closing.
5.1 Conditions Precedent to the Obligation of the Company to Sell the Securities. The
obligation hereunder of the Company to issue and sell the Securities to the Purchaser is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion.
(A) Accuracy of the Purchaser’s Representations and Warranties. The representations
and warranties of the Purchaser 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 are expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.
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(B) Performance by the Purchaser. The Purchaser shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Purchaser at or prior to the Closing.
(C) Delivery of Purchase Price. The Purchase Price for the Securities shall have been
delivered to the Company at the Closing.
(D) Delivery of Transaction Documents. This Agreement and the Regulation D Investor
Questionnaire shall have been duly executed and delivered to the Company by the Purchaser.
5.2 Conditions Precedent to the Obligation of the Purchaser to Purchase the
Securities. The obligation hereunder for the Purchaser to acquire and pay for the Securities
is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Purchaser’s sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(A) Accuracy of the Company’s Representations and Warranties. Each of the
representations and warranties of the Company in this Agreement 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 are expressly made as of a particular date, which
shall be true and correct in all material respects as of such date.
(B) Performance by the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing.
(C) Delivery of Transaction Documents. This Agreement shall have been duly executed
and delivered by the Company to the Purchaser.
Section 6. Brokers and Finders.
The Company shall not be obligated to pay any commission, brokerage fee or finder’s fee based
on any alleged agreement or understanding between the Purchaser and a third person in respect of
the transactions contemplated hereby. The Purchaser hereby agrees to indemnify the Company against
any claim by any third person for any commission, brokerage or finder’s fee or other payment with
respect to this Agreement or the transactions contemplated hereby based on any alleged agreement or
understanding between the Purchaser and such third person, whether express or implied from the
actions of the Purchaser.
Section 7. Indemnification.
The Purchaser hereby agrees to indemnify and defend (with counsel acceptable to the Company)
the Company and its officers, directors, employees and agents and hold them harmless from and
against any and all liability, loss, damage, cost or expense, including costs and reasonable
attorneys’ fees, incurred on account of or arising from:
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(i) Any breach of or inaccuracy in the Purchaser’s representations, warranties or agreements
herein or in the Financing Documents; and
(ii) Any action, suit or proceeding based on a claim that any of the Purchaser’s
representations and warranties in the Financing Documents were inaccurate or misleading, or
otherwise cause for obtaining damages or redress from the Company or any officer, director,
employee or agent of the Company under the Securities Act.
Section 8. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the Company, Purchaser and their
respective successors and assigns.
Section 9. Entire Agreement.
This Agreement and the other writings and agreements referred to in this Agreement or
delivered pursuant to this Agreement contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto.
Section 10. Notices.
All notices, demands and requests of any kind to be delivered to any party in connection with
this Agreement shall be in writing and shall be deemed to have been duly given if personally
delivered or if sent by internationally recognized overnight courier or by registered or certified
mail, return receipt requested and postage prepaid, addressed as follows:
if to the Company, to:
iMedia International, Inc.
0000 00xx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
0000 00xx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxx X. Post, Esq.
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxx X. Post, Esq.
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if to the Purchaser, to:
the address of the Purchaser set forth on the signature page hereto;
or to such other address as the party to whom notice is to be given may have furnished to the other
parties to this Agreement in writing in accordance with the provisions of this Section 10.
Any such notice or communication shall be deemed to have been received (i) in the case of personal
delivery, on the date of such delivery, (ii) in the case of internationally recognized overnight
courier, on the next business day after the date when sent and (iii) in the case of mailing, on the
third business day following the date on which the communication is posted.
Section 11. Amendments.
This Agreement may not be modified or amended, or any of the provisions of this Agreement
waived, except by written agreement of the Company and the Purchaser.
Section 12. Governing Law; Waiver of Jury Trial.
All questions concerning the construction, interpretation and validity of this Agreement shall
be governed by and construed and enforced in accordance with the domestic laws of California
without giving effect to any choice or conflict of law provision or rule (whether in the State of
California or any other jurisdiction) that would result in the application of the laws of any
jurisdiction other than the State of California. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
Section 13. Submission to Jurisdiction.
Any legal action or proceeding with respect to this Agreement or the other Financing Documents
may be brought in the courts of the State of California and the United States of America located in
the City of Los Angeles, California, and, by execution and delivery of this Agreement, the Company
hereby accepts for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Purchaser hereby irrevocably waives, in connection with
any such action or proceeding, any objection, including, without limitation, any objection to the
venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions. The Purchaser hereby
irrevocably consents to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at its address as set forth herein.
Section 14. Severability.
It is the desire and intent of the parties that the provisions of this Agreement be enforced
to the fullest extent permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such provision in any
jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so
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as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 15. Independence of Agreements, Covenants, Representations and Warranties.
All agreements and covenants hereunder shall be given independent effect so that if a certain
action or condition constitutes a default under a certain agreement or covenant, the fact that such
action or condition is permitted by another agreement or covenant shall not affect the occurrence
of such default, unless expressly permitted under an exception to such covenant. In addition, all
representations and warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of or a breach of a representation and warranty
hereunder. The exhibit and any schedules attached hereto are hereby made part of this Agreement in
all respects.
Section 16. Counterparts.
This Agreement may be executed in any number of counterparts, and each such counterpart of
this Agreement shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement. Facsimile counterpart signatures to this Agreement shall be
acceptable and binding.
Section 17. Headings.
The section and paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
Section 18. Expenses.
The Purchaser shall pay the Purchaser’s own fees and expenses incurred in connection with the
preparation, negotiation, execution and delivery of the Financing Documents.
Section 19. Preparation of Agreement.
The Company, or its counsel, prepared this Agreement and the Warrant solely on the Company’s
behalf. Each party to this Agreement acknowledges that: (i) the party had the advice of, or
sufficient opportunity to obtain the advice of, legal counsel separate and independent of legal
counsel for any other party hereto; (ii) the terms of the transactions contemplated by this
Agreement are fair and reasonable to such party; and (iii) such party has voluntarily entered into
the transactions contemplated by this Agreement without duress or coercion. Each party further
acknowledges that such party was not represented by the legal counsel of any other party hereto in
connection with the transactions contemplated by this Agreement, nor was he or it under any belief
or understanding that such legal counsel was representing his or its interests. Each party agrees
that no conflict, omission or ambiguity in this Agreement, or the interpretation thereof, shall be
presumed, implied or otherwise construed
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against any other party to this Agreement on the basis that such party was responsible for
drafting this Agreement.
* * * * *
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IN WITNESS WHEREOF, each of the undersigned has duly executed this Securities Purchase
Agreement as of April 14, 2008.
| COMPANY: iMEDIA INTERNATIONAL, INC. |
||||
| By: | /s/ XXXXX X. XXXXXXXXXX | |||
| Name: | Xxxxx X. Xxxxxxxxxx | |||
| Title: | Chief Executive Officer | |||
| PURCHASER: Sawtooth Properties, LLLP |
||||
| By: | /s/ R. XXXXXXX XXXXX | |||
| Name: | R. Xxxxxxx Xxxxx | |||
| Title: | Managing Partner | |||
Address:
|
||
0000 Xxxxxxxxx Xxxxx |
||
Xxxxx, XX 00000 |
||
Telephone: (000) 000-0000 |
||
Facsimile: (000-000-0000 |
||
Email: xxxxxxxxxxxx@xxx.xxx |
||
Purchase Price: $300,000 |
||
Number of Shares of Common Stock: 2,000,000 |
||
Number of Warrant Shares: 400,000 |
EXHIBIT A
WARRANT
