SECURITIES PURCHASE AGREEMENT
Exhibit
10.3
This
Securities Purchase Agreement (the “Agreement”) is made as of March 22, 2006, by
and between The Tube Media Corp., a Delaware corporation (the “Corporation”),
and Xxxxxxxx Television Group, Inc., a Maryland corporation (the “Purchaser”
).
Any
capitalized terms used hereunder which are not separately defined in this
Agreement shall have the meaning ascribed to such terms in the Charter
Affiliation Agreement or the Letter Agreement, each dated of even date herewith
by and between the Corporation and the Purchaser.
The
Corporation and the Purchaser hereby agrees as follows:
SECTION
1.
Authorization,
Purchase and Sale of the Stock
1.1 Authorization
of the Stock.
The
Corporation has authorized the issuance and sale to the Purchaser of (i) shares
of the Corporation’s common stock, par value $.0001 per share (the “Stock”) in
the amounts set forth in subparagraphs (a) and (b) below and (ii) warrants
to
purchase shares of Stock as set forth in subparagraphs (c) and (d) below, as
a
payment to Purchaser pursuant to the Charter Affiliation Agreement between
the
parties hereto dated of even date herewith (the “Charter Affiliation Agreement”)
and the letter agreement dated of even date herewith between the parties which
is a part of the Charter Affiliation Agreement (the “Letter
Agreement”):
(a) [XXXXX]*
shares
of the Stock to be delivered to the Purchaser within 20 days after the execution
of the Charter Affiliation Agreement.
(b) Upon
Purchaser’s transmission of the Service on Stations representing at least fifty
percent (50%) of DMAs where Purchaser owns and/or operates Broadcast Television
stations (“Affiliate
DMAs”),
Corporation shall issue to Purchaser an additional [XXXXX]* shares of common
stock of Corporation.
(c) On
or
after March 1, 2007 and
upon
Purchaser’s transmission of the Service on Stations representing at least
seventy-five percent (75%) of Affiliate DMAs, Corporation shall issue to
Purchaser an additional [XXXXX]* shares of common stock of
Corporation.
(d) Within
twenty (20) days after the execution of the Charter Affiliation Agreement,
the
Corporation shall provide a common stock purchase warrant to acquire [XXXXX]*
shares of the Stock, at a purchase price of two dollars and twenty-five cents
($2.25) per share. The warrant will be in the form attached as an exhibit to
the
Letter Agreement;
(e) On
or
after March 1, 2007 and upon Purchaser’s transmission of the Service on Stations
representing seventy-five percent (75%) of Affiliate DMAs, Purchaser shall
receive a common stock purchase warrant to acquire [XXXXX]* shares of
Corporation’s common stock, at a purchase price of two dollars and fifty cents
($2.50) per share. The warrant will be in the form attached as an exhibit to
the
Letter Agreement.
*
Filed
under an application for confidential
treatment.
1
1.2 Sale
and Purchase of the Stock.
At each
Closing (as defined herein), subject to the terms and conditions hereof and
in
reliance upon the representations, warranties and agreements contained herein,
Purchaser agrees to purchase at the Closing and the Corporation agrees to issue
to Purchaser at the Closing, that number of shares of the Stock set forth in
Section 1.1 above.
SECTION
2.
Closing,
Payment and Delivery
2.1 Closing
Date and Place of Closing.
The
purchase and sale of the Stock set forth in Section 1.1 shall take place at
the
offices of the Corporation, at the time of the closing of the Charter
Affiliation Agreement or upon the occurrence of the events set forth in
subparagraphs (b), (c), (d) and (e) of Section 1.1, or at such other time and
place as the Corporation and the Purchaser mutually agree upon orally or in
writing (each such time and place are designated as the “Closing”).
2.2 Payment
and Delivery.
Within
twenty days of each of the Closings, the Corporation will deliver to Purchaser
a
stock certificate representing the Stock to be issued arising from such closing.
The payment consideration hereunder is the non-cash consideration of Purchaser
provided pursuant to the Charter Affiliation Agreement.
2.3 Covenant
of Best Efforts and Good Faith.
The
Corporation and the Purchaser agree to use their respective best efforts and
to
act in good faith to cause to occur all conditions to Closing which are in
their
respective control.
SECTION
3.
Representations
and Warranties of the Corporation
The
Corporation hereby represents and warrants to the Purchaser that:
3.1 Incorporation.
The
Corporation is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
in each jurisdiction in which the character of its properties or the nature
of
its business requires such qualification, except where the failure to so qualify
would not have a material adverse effect upon the Corporation’s financial
condition, business, assets or results of operations (hereafter, a “Material
Adverse Effect”). The Corporation has all requisite corporate power and
authority to carry on its business as now conducted.
3.2 Authorization.
All
corporate action on the part of the Corporation, its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein has been taken. When executed and delivered by the
Corporation, this Agreement shall constitute the legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms, except (i) as limited by bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally; (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies; and (iii) to the extent the indemnification provisions contained
in
this Agreement may be limited by applicable federal or state securities laws.
The Corporation has all requisite corporate power to enter into this Agreement
and to carry out and perform its obligations under the terms of this
Agreement.
*
Filed
under an application for confidential
treatment.
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3.3 Valid
Issuance of the Stock.
The
Stock being issued to the Purchaser hereunder will, upon issuance pursuant
to
the terms hereof, be duly authorized and validly issued, fully paid,
nonassessable and free of any liens or encumbrances created by the Corporation
and will, assuming the accuracy of the representations and warranties made
by
the Purchaser to the Corporation, be in compliance with applicable state and
federal securities laws.
3.4 Consents.
All
consents, approval, orders, authorizations, registrations, qualifications,
and
filings required on the part of the Corporation to be obtained or made prior
to
the Closing in connection with the execution, delivery or performance of this
Agreement, and the consummation of the transactions contemplated herein have
been obtained or made or will be obtained or made, prior to the
Closing.
3.5 No
Conflict.
The
execution and delivery of this Agreement by the Corporation and the consummation
of the transactions contemplated hereby will not conflict with or result in
any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or to a loss of a material benefit or give rise to an event
which
results in the creation of any lien, charge or encumbrance upon any of the
Corporation’s properties or assets under (i) any provision of the Certificate or
Bylaws of the Corporation or (ii) any agreement or instrument, permit,
franchise, license, judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Corporation or its respective properties or
assets.
3.6 Brokers
or Finders.
The
Corporation has not dealt with any broker or finder in connection with the
transactions contemplated by this Agreement, and the Corporation has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders’ fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated
hereby.
SECTION
4.
Representations
and Warranties of the Purchaser
Purchaser
hereby represents, warrants and covenants to the Corporation that:
4.1 Authorization.
The
Purchaser has full right, power and authority to enter into this Agreement,
and
such agreement constitutes its valid and legally binding obligation, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies, and (iii) to the extent the indemnification provisions
contained in this Agreement may be limited by applicable federal or state
securities laws.
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4.2 Purchase
Entirely for Own Account.
This
Agreement is made with the Purchaser in reliance upon such Purchaser’s
representation to the Corporation, which by such Purchaser’s execution of this
Agreement the Purchaser hereby confirms, that the Stock to be received by such
Purchaser will be acquired for investment for the Purchaser’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of
any
part thereof, and that the Purchaser has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that such Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Stock.
4.3 Disclosure
of Information.
The
Purchaser, individually or through its investment advisor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Stock. The Purchaser further represents that,
individually or through its investment advisor it has had an opportunity to
ask
questions and receive answers from the Corporation regarding the terms and
conditions of the offering of the Stock and the business, properties, prospects
and financial condition of the Corporation.
4.4 Investment
Experience.
The
Purchaser acknowledges that it can bear the economic risk of its investment,
and
has, individually or through its investment advisor such knowledge and
experience in financial or business matters that it is capable of evaluating
the
merits and risks of the investment in the Stock. The Purchaser also represents
it has not been organized for the purpose of acquiring the Stock.
4.5 Accredited
Investor.
The
Investor is an “accredited investor” within the meaning of SEC Rule 501 of
Regulation D as presently in effect.
4.6 Restricted
Securities.
The
Purchaser understands that the Stock it is acquiring constitutes “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Corporation in a transaction not involving a public offering
and that under such laws and applicable regulations such Securities may be
resold without registration under the Act only in certain limited circumstances.
In the absence of an effective registration statement covering the Stock or
an
available exemption from registration under the Act, the Stock must be held
indefinitely. In this connection, such Purchaser represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act, including without limitation the
Rule 144 condition that current information about the Corporation be available
to the public.
4.7 Transfer
Restrictions.
(a) The
Stock, Warrants, and Stock acquired on the exercise of the Warrants may only
be
disposed of in compliance with state and federal securities laws. In connection
with any transfer of Stock, Warrants, and Stock acquired on the exercise of
the
Warrants other than pursuant to an effective registration statement, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company,
the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of
such
transferred Securities under the Securities Act. As a condition of transfer,
any
such transferee shall agree in writing to be bound by the terms of this
Agreement and the Registration Rights Agreement and shall have the rights of
a
Purchaser under this Agreement and the Registration Rights Agreement, provided,
that the foregoing shall not apply to a transfer of Securities pursuant to
an
effective registration statement.
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(b) The
Purchaser agrees to the imprinting, so long as is required by
applicable federal and state securities laws, of
a
legend on any of the Stock, Warrants or Stock acquired upon the exercise of
the
Warrants in the following form:
With
respect to certificates representing Common Stock (including Warrant
Shares):
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION,
OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
With
respect to the Warrants:
THE
EXERCISE OF THIS WARRANT HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THIS WARRANT
MAY
ONLY BE EXERCISED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND APPLICABLE
SECURITIES LAWS. AS A CONDITION PRECEDENT TO THE EXERCISE OF THIS WARRANT,
THE
COMPANY MAY REQUIRE SUCH CERTIFICATES AND OPINIONS OF COUNSEL AS IT DEEMS
NECESSARY FROM THE PERSON EXERCISING THIS WARRANT TO ESTABLISH THE EXISTENCE
OF
SUCH EXEMPTIONS.
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT,
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
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THIS
WARRANT IS SUBJECT TO OTHER RESTRICTIONS ON TRANSFER AS SET FORTH IN A
SECURITIES PURCHASE AGREEMENT, THE FORM OF WHICH IS AVAILABLE FROM THE COMPANY.
(c) Certificates
evidencing the Common Stock, including Warrant Shares, shall not contain any
legend (including the legend set forth in Section 4.7 hereof): (i) following
any
sale of such Common Stock pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144, or (ii) if such Common Stock is
eligible for sale under Rule 144(k), provided that, in each case, the Purchase
provides a copy of such certificates or confirmations as the
Company reasonably
requests.
4.8 Purchaser
Counsel.
The
Purchaser acknowledges that such Purchaser and, if applicable, its advisors
has
had the opportunity to review this Agreement, the exhibits and schedules
attached hereto and the transactions contemplated by this Agreement with such
Purchaser’s own legal counsel. Purchaser is relying solely on such Purchaser’s
legal counsel and not on the Corporation’s legal counsel, for legal advice with
respect to this investment or the transactions contemplated by this
Agreement.
SECTION
5.
Conditions
to Obligations of the Purchaser
The
obligation of the Purchasers to purchase the Stock is subject to the fulfillment
on or prior to the Closing Date of each of the following
conditions:
5.1 Representations
and Warranties.
The
representations and warranties of the Corporation shall be true and correct
in
all material respects on the Closing Date as if made on such Date and the
Corporation shall have an officer provide a certificate as of the Closing Date
attesting to such fact.
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5.2 Performance.
All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by the Corporation on or prior to the Closing Date shall have
been performed or complied with in all material respects.
5.3 Legal
Issuance.
At the
time of the Closing, the issuance and purchase of the Stock shall be legally
permitted by all laws and regulations to which the Purchaser and the Corporation
are subject.
5.4 Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
hereby and all documents and instruments incident to such transactions shall
be
satisfactory in form and substance to the Purchaser and its
counsel.
SECTION
6.
Conditions
to Obligations of the Corporation
The
Corporation’s obligation to sell the Stock is subject to the fulfillment on or
prior to the Closing Date of each of the following conditions:
6.1 Representations
and Warranties .
The
representations and warranties made by the Purchaser shall be true and correct
in all material respects on the Closing Date.
6.2 Legal
Issuance.
At the
time of the Closing, the issuance and purchase of the Stock shall be legally
permitted by all laws and regulations to which the Purchaser and the Corporation
are subject.
6.3 Consideration.
The
Corporation shall concurrently receive the consideration for the Stock as
provided in the Charter Affiliation Agreement and the Letter Agreement. For
purposes hereof, the Corporation acknowledges that the value of the
consideration received hereunder arising from the purchase of the Stock by
Purchaser is equal to the fair market value of the Stock as of the date of
execution of this Agreement.
The
Corporation’s execution of this Agreement shall evidence its acknowledgement
that the foregoing conditions have been satisfied by the Purchaser.
SECTION
7.
Miscellaneous
7.1 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
7.2 Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of and be binding upon the successors and assigns of the
parties.
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7.3 Entire
Agreement; Amendment.
This
Agreement (including any Exhibits and Schedules hereto) and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged
or
terminated except by a written instrument signed by the Corporation and
Purchaser.
7.4 Notices,
etc.
All
notices and other communications required or permitted hereunder shall be mailed
by internationally recognized courier service and facsimile addressed (a) if
to
the Purchaser, as indicated below the Purchaser’s signature with a copy to the
designated entity or at such other address as the Purchaser shall have furnished
to the Corporation in writing, or (b) if to any other holder of any Stock at
the
address of such holder as shown on the records of the Corporation, or (c) if
to
the Corporation, at its address set forth below or at such other address as
the
Corporation shall have furnished to the Purchaser and each such other holder
in
writing. All such notices or communications shall be deemed given when delivered
personally by courier, by internationally recognized courier or by
facsimile.
7.5 Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any party
to this Agreement (including any holder of Stock), upon any breach or default
or
another party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default
be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
7.6 Severability.
In case
any provision of this Agreement shall be invalid, illegal or unenforceable,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
7.7 Titles
and Subtitles.
The
titles of the Sections and subsections of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
7.8 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
7.9 Fees
and Expenses.
The
parties hereto shall pay their own costs and expenses in connection
herewith.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their duly authorized officers as of the day and year first written
above.
| THE TUBE MEDIA CORP. | |||
| By: /s/ Xxxxx X. Xxxx | |||
| Name:
Xxxxx X.
Xxxx Title: President |
| Address: 0000 Xxxx Xxxxxxx Xxxxx Xxxx, | |||
|
Xxxxx
000
|
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|
Xxxx
Xxxxxxxxxx, XX 00000
|
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|
|
XXXXXXXX TELEVISION GROUP, INC | ||
|
By:
/s/
Xxxxx X.
Xxx
|
|||
|
Name: Xxxxx
X. Xxx
Title:
Chief Financial Officer
|
|||
| Address: 00000 Xxxxxx Xxx Xxxx | |||
|
Xxxx
Xxxxxx, Xxxxxxxx
00000
|
