PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (“Agreement”)
is made as of the 3rd day of September, 2008, by and among Sahara Media, Inc., a
Delaware corporation (the “Company”), and Xxxxxx Xxxxxxx
(“Investor”).
Recitals
A. The
Company and the Investor are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the provisions 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;
B. The
Investor wishes to purchase from the Company, and the Company wishes to sell and
issue to the Investor, upon the terms and conditions stated in this Agreement, a
debenture in the principal amount of $100,000, bearing interest at the rate of
10% per annum, in the form attached hereto as Exhibit A (the
“Debenture”); and
C. The
Company shall issue to the Investor, concurrently with the sale and issuance of
the Debenture, upon the terms and conditions of this Agreement, the Additional
Consideration Shares as described in 2(b) hereof.
In consideration of the mutual promises
made herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Additional Consideration
Shares” has the meaning set forth in Section 2(b).
“Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person.
“Business Day” means a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing” has the
meaning set forth in Section 3.
“Closing Date” has the
meaning set forth in Section 3.
1
“Control” (including
the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Debenture” has the
meaning set forth in recitals.
“Escrow Agreement”
means the escrow agreement, in the form of Exhibit B hereto, dated as of the
date hereof, among the Company, the Investor, and Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, as escrow agent (the “Escrow Agent”).
“Material Adverse
Effect” means a material adverse effect on (i) the assets, liabilities,
results of operations, condition (financial or otherwise), business, or
prospects of the Company taken as a whole, or (ii) the ability of the Company to
perform its obligations under the Transaction Documents.
“Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.
“Purchase Price” means
$100,000.
“Securities” means the
Debenture and the Additional Consideration Shares.
“Subsidiary” of any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person
“Transaction
Documents” means this Agreement and the Debenture.
“1933 Act” means the
Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.
2. Purchase and Issuance of the
Debenture and Issuance of Additional Consideration Shares.
(a) Subject
to the terms and conditions of this Agreement, on the Closing Date the Investor
shall purchase, and the Company shall sell and issue to the Investor, the
Debenture in the original principal amount of $100,000 in exchange for the
Purchase Price.
(b) Subject
to the terms and conditions of this Agreement, on the Closing Date the Company
shall issue to the Investor 50,000 shares of common stock. The issuance
described in the above shall be referred to as “Additional Consideration
Shares”. The Investor shall have piggy-back registration rights with respect to
the Additional Consideration Shares, subject to the applicable rules and
regulations and interpretations of the SEC, including, without limitation, Rule
415 under the 1933 Act, until and unless such shares may be sold pursuant to
Rule 144 under the 1933 Act.
2
3. Closing. Within
one Business Day of the date of executing this Agreement, the Investor shall
wire to the Escrow Agent in same day funds the Purchase Price and the Company
shall instruct the Escrow Agent to release the Purchase Price and make such
other payment(s) as the Company may instruct (“Closing” or “Closing Date”), and
within two days of the receipt of Purchase Price, the Company shall deliver or
cause the delivery of (a) a certificate representing the Debenture, registered
in the name of the Investor in the principal amount equal to the Purchase Price
for the Investor and (b) a certificate representing the Additional Consideration
Shares, registered in the name of the Investor. The Closing shall
occur upon confirmation that the conditions to Closing in Section 6 hereof have
been satisfied. The Closing of the purchase and sale of the Debenture
and the issuance of the Additional Consideration Shares shall take place at the
offices of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 00 Xxxxxxxx, Xxx Xxxx, XX
00000.
4. Representations and
Warranties of the Company. The Company hereby represents and
warrants to the Investor that:
4.
1 Organization, Good Standing
and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and could not
reasonably be expected to have a Material Adverse Effect. The Company
does not have any Subsidiaries.
4.2 Authorization. The
Company has full power and authority and has taken all requisite
action on the part of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of the Transaction
Documents, (ii) the authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.
4.3 Valid
Issuance. The Debenture and the Additional Consideration
Shares have been duly and validly authorized and, when issued and paid for
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and shall be free and clear of all encumbrances and restrictions
(other than those created by the Investor), except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities
laws. The Company has shall reserved a
sufficient number of shares for issuance of the Additional Consideration Shares,
free and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws.
4.4 Use of
Proceeds. The net proceeds of the sale of the Debenture
hereunder shall be used by the Company for working capital.
4.5 No Conflict, Breach,
Violation or Default. The execution, delivery and performance
of the Transaction Documents by the Company and the issuance and sale of the
Securities will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (i) the Company’s
Articles of Incorporation or the Company’s Bylaws, both as in effect on the date
hereof, or (ii) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any of its assets or properties.
3
4.6 Brokers and
Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, or the Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than a commission in the amount of
10% of the Purchase Price, and a non-accountable expense allowance in the amount
of 3% of the Purchase Price, to be paid to Xxxx Xxxxxx Financial,
Inc.
4.7 No Directed Selling Efforts
or General Solicitation. Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.
4.8 Private
Placement. The offer and sale of the Securities to the
Investor as contemplated hereby is exempt from the registration requirements of
the 1933 Act.
5. Representations and
Warranties of the Investor. The Investor hereby represents and
warrants to the Company that:
5.1 Organization and
Existence. Investor is a validly existing corporation, limited
partnership or limited liability company and has all requisite corporate,
partnership or limited liability company power and authority to invest in the
Securities pursuant to this Agreement.
5.2 Authorization. The
execution, delivery and performance by Investor of the Transaction Documents to
which Investor is a party have been duly authorized and will each constitute the
valid and legally binding obligation of such Investor, enforceable against
Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights
generally.
5.3 Purchase Entirely for Own
Account. The Securities to be received by Investor hereunder
will be acquired for Investor’s own account, not as nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
the 1933 Act, and such Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same in violation of the
1933 Act without prejudice, however, to such
Investor’s right at all times to sell or otherwise dispose of all or any part of
such Securities in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Securities for any
period of time. Investor is not a broker-dealer registered
with the SEC or an entity engaged in a business that would require it to be so
registered.
5.4 Investment
Experience. Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.
5.5 Disclosure of
Information. Investor has had an opportunity to receive all
information related to the Company requested by it and to ask questions of and
receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, amend or affect Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.
5.6 Restricted
Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company 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 1933 Act only in
certain limited circumstances. Such Investor understands that the Company is
under no obligation to register any of the Securities under the 1933 Act other
than as set forth in Section 2(b) of this Agreement.
4
5.7 Legends. It
is understood that, except as provided below, certificates evidencing the
Securities may bear the following or any similar legend:
(a) “The
securities represented hereby may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933 or qualification under applicable state securities
laws. Notwithstanding the foregoing, the securities may be pledged in
connection with a bona fide margin account secured by the
securities.”
(b) If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.
5.8 Accredited
Investor. Investor is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, under the 0000 Xxx.
5.9 No General
Advertisement. Investor did not learn of the investment in the
Securities as a result of any public advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television, radio or internet or presented at
any seminar or other general advertisement.
5.10 Brokers and
Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company or the Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor, except as set forth in Section
4.6.
5.11 Patriot
Act. Neither Investor nor any of its Affiliates has been
designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. None of the cash used to fund any
portion of the Purchase Price has been derived from any activity that could
cause the Company to be in violation of the United States Bank Secrecy Act, the
United States International Money Laundering Control Act of 1986 or the United
States International Money Laundering Abatement and Anti-Terrorist Financing Act
of 2001.
6. Conditions to
Closing.
6.1 Conditions to the Investor’s
Obligations. The obligation of Investor to purchase the Debenture at the
Closing is subject to the fulfillment to Investor’s satisfaction, on or prior to
the Closing Date, of the following conditions, any of which may be waived by
Investor:
(a) The
representations and warranties made by the Company in Section 4 hereof qualified
as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.
5
(b) The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.
(c) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.
(d) The
Company shall have entered into the Debenture and the Company and the Escrow
Agent shall have entered into the Escrow Agreement.
(e) The
Company shall have delivered the Debenture to the Investor.
6.2 Conditions to Obligations of
the Company. The Company’s obligation to sell and issue the Debenture and
issue the Additional Consideration Shares at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the
Company:
(a) The
representations and warranties made by the Investor in Section 5 hereof (the
“Investment Representations”), shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date. The Investor shall have performed in all material
respects all obligations and covenants herein required to be performed prior to
the Closing Date.
(b) The
Investor and the Escrow Agent shall have entered into the Escrow
Agreement.
(c) The
Investor shall have delivered the Purchase Price to the Escrow
Agent.
7. Survival and
Indemnification.
7.1 Survival. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement.
7.2 Indemnification. The
Company agrees to indemnify and hold harmless the Investor and its Affiliates
and their respective directors, officers, employees and agents from and against
any and all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”) to which such Person may become subject as a result of
any breach of representation, warranty, covenant or agreement made by or to be
performed on the part of the Company under the Transaction Documents and will
reimburse any such Person for all such amounts as they are incurred by such
Person; unless such action is based upon a breach of such Investor’s
representations, warranties or covenants under the Transaction Documents which
causes a material adverse effect on the Company or any conduct by such Investor
which constitutes fraud, gross negligence, willful misconduct or malfeasance
related to the transactions contemplated by the Transaction
Documents,
7.3 Conduct of Indemnification
Proceedings. Promptly
after receipt by any Person (the “Indemnified Person”) of
notice of any demand, claim or circumstances which would or might give rise to a
claim or the commencement of any action, proceeding or investigation in respect
of which indemnity may be sought pursuant to Section 7.2, such Indemnified
Person shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person, and shall assume the payment of all fees and
expenses; provided, however, that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is materially
prejudiced by such failure to notify. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed to
the retention of such counsel; or (ii) in the reasonable judgment of counsel to
such Indemnified Person representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Without the prior
written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such
proceeding.
6
8. Miscellaneous.
8.1 Successors and
Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investor, as applicable,
provided, however, that Investor may assign its rights and delegate its duties
hereunder in whole or in part to an Affiliate or to a third party acquiring some
or all of its Securities in a private transaction without the prior written
consent of the Company, after notice duly given by Investor to the Company
provided, that no such assignment or obligation shall affect the obligations of
Investor hereunder. The provisions of this Agreement shall inure to
the benefit of and be binding upon the respective permitted successors and
assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.2 Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
may also be executed via facsimile, which shall be deemed an
original.
8.3 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.4 Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by
an internationally recognized overnight air courier, then such notice shall be
deemed given one Business Day after delivery to such carrier. All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:
If to the
Company: Sahara Media, Inc.,
00
Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
With a copy
to: Xxxx Xxxx,
Esq.
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
If to the Investor, to the address set
forth on the signature page.
8.5 Expenses. The
parties hereto shall pay their own costs and expenses in connection herewith. In
the event that legal proceedings are commenced by any party to this Agreement
against another party to this Agreement in connection with this Agreement or the
other Transaction Documents, the party or parties which do not prevail in such
proceedings shall severally, but not jointly, pay their pro rata share of the
reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.
8.6 Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.
7
8.7 Publicity. Except
as set forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investor
without the prior consent of the Company (in the case of a release or
announcement by the Investor) or the Investor (in the case of a release or
announcement by the Company) (which consents shall not be unreasonably
withheld), except as such release or announcement may be required by law or the
applicable rules or regulations of any securities exchange or securities market,
in which case the Company or the Investor, as the case may be, shall allow the
Investor or the Company, as applicable, to the extent reasonably practicable in
the circumstances, reasonable time to comment on such release or announcement in
advance of such issuance.
8.8 Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.
8.9 Entire
Agreement. This Agreement (including all Exhibits hereto) and
the Debenture constitute the entire agreement among the parties hereof with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
8.10 Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
8.11 Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
[signature
page follows]
8
IN WITNESS WHEREOF, the parties have
executed this Agreement or caused their duly authorized officers to execute this
Agreement as of the date first above written.
| The Company: | SAHARA MEDIA, INC. | ||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxxxx XX | |
| Name: Xxxxxxxx Xxxxxxxx XX | |||
| Title: Chief Executive Officer | |||
| The Investor: | |||
|
|
By:
|
/s/ Xxxxxx Xxxxxxx | |
| Name | |||
| Title | |||
Aggregate
Purchase Price: $100,000
Principal
Amount of Debenture: $100,000
9
