SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 1996
Princeton Media Group, Inc.
(Exact name of registrant as specified in its charter)
Ontario, Canada 0-16355 98-0082860
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
214 Brazilian Ave., Suite 400, Palm Beach, FL 33480
(Address of principal executive offices) (Zip Code)
(561) 659-0121
Registrant's telephone number, including area code
DeNovo Corporation
(Former name or former address, if changed since last report.)
Total Number of Pages:
Exhibit Index appears on page:
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following Exhibits are filed as a part of this report:
Exhibit 4.1 Form of Series Z Convertible Debenture
Exhibit 10.1 Form of Offshore Securities Subscription Agreement
Item 9. Sales of Equity Securities Pursuant to Regulation S.
The Registrant sold the following equity securities pursuant to Regulation
S on the dates indicated:
Date Title of Security Face Amount Gross Sale Proceeds
11/04/96 Series Z Convertible Debentures $250,000 $200,000
11/06/96 Series Z Convertible Debentures $ 31,250 $ 25,000
11/08/96 Series Z Convertible Debentures $ 62,500 $ 50,000
Total $343,750 $275,000
The securities were sold to Italian citizens through a placement agent.
Gross sale proceeds were $275,000; commissions in the amount of $101,750 were
paid, rendering net proceeds to the Registrant of $173,250. The Registrant
relied on warranties and representations made by each purchaser in a
subscription agreement in the form filed herewith as Exhibit 10.1, which is
hereby incorporated herein by reference, as the basis for claiming the exemption
pursuant to Regulation S. The terms of conversion are set forth in the
convertible debenture instrument, the form of which is filed herewith as Exhibit
4.1 and is hereby incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Princeton Media Group, Inc.
Date: November 25, 1996 By: /s/ James J. McNamara
James J. McNamara, Chairman
EXHIBIT INDEX
4.1 Form of Series Z Convertible Debenture Page
10.1 Form of Offshore Securities Subscription Agreement Page
EXHIBIT 4.1
FORM OF DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN
REGULATION S UNDER THE ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE ACT) EXCEPT
PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES
LAWS.
No. _______ US $_______
PRINCETON MEDIA GROUP, INC.
SERIES Z 8.0% SENIOR SECURED CONVERTIBLE DEBENTURE DUE
SEPTEMBER 30, 1998
THIS DEBENTURE is one of a duly authorized issue of Series Z Debentures of
Princeton Media Group, Inc., a corporation duly organized and existing under the
laws of Ontario, Canada (the "Company") designated as its Series Z 8.0% Senior
Secured Convertible Debenture Due September 30, 1998, in an aggregate principal
face amount not exceeding Four Million Dollars (U.S. $4,000,000). This
Debenture is being purchased by Holder at a price equal to 80% of its face
amount.
FOR VALUE RECEIVED, the Company promises to pay to _________________,
the registered holder hereof and its successors and assigns (the "Holder"),
the principal face sum of ____________________________ Dollars (US $________)
on September 30, 1998 (the "Maturity Date"), and to pay interest on the
principal face sum outstanding, at the rate of 8% per annum due and payable
quarterly in arrears. Accrual of interest shall commence on the date hereof and
shall continue until payment in full of the outstanding principal face sum has
been made or duly provided for. The interest so payable will be paid to the
person in whose name this Debenture (or one or more predecessor Debentures) is
registered on the records of the Company regarding registration and transfers of
the Debentures (the "Debenture Register"); provided, however, that the Company's
obligation to a transferee of this Debenture arises only if such transfer, sale
or other disposition is made in accordance with the terms and conditions of the
Offshore Securities Subscription Agreement dated as of November _______, 1996
between the Company and _______________________ (the "Subscription Agreement").
The principal of, and interest on, this Debenture are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay the outstanding principal of and
all accrued and unpaid interest due upon this Debenture on the Maturity Date,
less any amounts required by law to be deducted or withheld, to the Holder of
this Debenture as of the tenth (10th) day prior to the Maturity Date and
addressed to such Holder at the last address appearing on the Debenture
Register. The forwarding of such check shall constitute a payment of
outstanding principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Debenture to the extent of the sum
represented by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same but
not less than U.S. $50,000. No service charge will be made for such
registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged in the U.S.
only in compliance with the Securities Act of 1933, as amended (the "Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected or bound by notice to the
contrary. Any holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), is also required to give the Company (i) written
confirmation that it is not a U.S. Person and the Debenture is not being
converted on behalf of a U.S. Person ("Notice of Conversion") or (ii) an opinion
of U.S. counsel to the effect that the Debenture and shares of common stock
issuable upon conversion thereof have been registered under the 1933 Act or are
exempt from such registration. In the event a Notice of Conversion or opinion
of counsel is not provided the Holder hereof will not be entitled to exercise
the right to convert the Debentures pursuant to Section 4(a) herein.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time commencing 45 days after issue hereof to convert any or all of the
original principal face amount of this Debenture and accrued interest into
shares of common stock, $0.01 par value per share, of the Company (the "Common
Stock"), at a conversion price for each share or Common Stock equal to the lower
of (a) 90% of the average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date or (b) 90% of the
average of the closing bid price of the Common Stock for the five (5) business
days immediately preceding the date of Subscription by the Holder as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") (the "Conversion Price"). Such conversion shall be effectuated by
surrendering the Debentures to be converted to the Company with the form of
conversion notice attached hereto as Exhibit I, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion (as above provided) hereof, and accompanied by proper
assignment hereof in blank. Accrued but unpaid interest shall be subject to
conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share, with the fraction paid in cash at the discretion of the
Company. The date on which notice of conversion is given shall be deemed to be
the date on which the Holder has delivered this Debenture, with the conversion
notice duly executed, to the Company or, if earlier, the date set forth in such
notice of conversion if the Debenture is received by the Company within five (5)
business days thereafter.
(b) Notwithstanding the provisions of paragraph 4(a) hereof, if at
the time of conversion of a Debenture or any portion thereof the average of the
closing bid price for the 5 trading days prior to conversion as reported by
NASDAQ (as adjusted for recapitalizations stock splits etc.) is below $.1875,
the Company may, at its sole option, exercised by five days prior written notice
thereof to the Holder redeem the Debenture for 110% of the remaining
outstanding face amount of such Debenture being converted.
(c) Notwithstanding the provisions of paragraph 4(a) hereof, the
Company may redeem part or all of the Debentures 75 days after issue hereof by
paying to the holder of the product of (i) the Market price, and (ii) the higher
number of shares of Common Stock that would be issuable for such Debentures
pursuant to the calculations in paragraph 4(a). Such payment shall include
accrued interest to such date, and shall be less any amounts required by law to
be deducted or withheld. Such payment shall be made by delivering immediately
available funds in United States Dollars by wire transfer to the Holder, or if
no wiring instructions have been provided to the company, by cashier's or
certified check to the last address of Holder appearing on the Debenture
Register. The wiring of such funds or the forwarding of such check shall
constitute of payment of principal and interest hereunder and shall satisfy and
discharge the liability for principal and interest on this Debenture to the
extent of the sum represented by such wire or check plus any amount so deducted.
Such payment to be made by the Company within 5 days of receipt of notice by the
Company from the Investor.
(d) Notwithstanding the provisions of paragraph 4(a) hereof, at
any time on and after 120 days from the date of the issuance of the Debentures,
if the average of the closing bid price for the Company's common shares for 5
consecutive trading days shall be in excess of U.S. $.50 as reported on NASDAQ
the Company may, at its sole option, exercised by five days prior written notice
thereof to the holder require the Holders of the Debentures to convert that
portion of the principal amount of the Debentures, not previously converted in
accordance with the procedures set forth in Section 4(a) hereof, except that for
purposes of Section 4(a)(i) the conversion date shall be the date specified in
the Company's notice to Holder.
5. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
currency, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of seven
(7) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its liability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be
dismissed within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or similar
process in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within thirty (30)
days after such instruction of the Company shall by any action
or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding; or
(i) The Company shall have its Common Stock delisted from an
exchange or over-the-counter market.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately, and without expiration of any period of grace,
enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law.
9. This Debenture represents a general unsecured obligation of the
Company. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. The Holder of this Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon exercise thereof except under circumstances which will not result
in a violation of the Act or any applicable state Blue Sky law or similar laws
relating to the sale of securities.
11. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
12. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
13. This Debenture shall be governed by and construed in accordance with
the laws of Florida.
14. The Series Z Debentures as a whole shall be secured by a first lien
on the property and personalty described in Exhibit II hereto.
15. As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within three business days after the Holder has fulfilled all
conditions and submitted all necessary documents duly executed and in proper
form required for conversion (the "Deadline"), to the Holder or any part
receiving a Debenture by transfer from the Holder (together, a "Holder"), at the
address of the Holder on the books of the Company, a certificate or certificates
for the number of Shares of Common Stock to which the Holder shall be entitled.
The Company understands that a delay in the issuance of the Shares of Common
Stock beyond the Deadline could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay liquidated
damages to the Holder for late issuance of Shares upon conversion in accordance
with the following schedule (where "No. Business Days Late" is defined as the
number of business days beyond seven (7) business days from the date of receipt
by the Company of a Notice of Conversion and the transfer agent of all necessary
documentation duly executed and in proper form required for conversion,
including the original Debenture to be converted, all in accordance with the
Debenture, Subscription Agreement and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
10 $5,000 + $1,000 each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under
this Section by check upon the earlier to occur of (i) issuance of the Shares to
the Holder or (ii) each monthly anniversary of the receipt of the Company of
such Holder's Notice of Conversion. Nothing herein shall limit the Holder s
right to pursue actual damages for the Company's failure to issue and deliver
shares of Common Stock to the Subscriber in accordance with the terms of the
Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: PRINCETON MEDIA GROUP, INC.
By:
Title:
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $______________ of
the above Debenture No. ___ into Shares of Common Stock of Princeton Media
Group, Inc. (the "Company") according to the conditions set forth in such
Debenture, as of the date written below.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Debenture on behalf of any U.S. Person and the
representations contained in the Subscription Agreement are true.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
* This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.
EXHIBIT 10.1
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of
_______________, 1996 (the "Agreement"), is executed in reliance upon the
exemption from registration afforded by Regulation S ("Regulation S") as
promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended. Capitalized terms used herein and not
defined shall have the meanings given to them in Regulation S.
This Agreement has been executed by the undersigned "Buyer" in connection
with the private placement of Series Z 8.0% Senior Secured Convertible
Debentures of Princeton Media Group, Inc., a corporation organized under the
laws of Ontario, Canada, with its principal executive offices located at 214
Brazilian Ave., Suite 300, Palm Beach, FL 33480 (hereinafter referred to as
"Seller"). Buyer hereby represents and warrants to, and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE
"1933 ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
(AS DEFINED IN REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S OF
THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
1. Agreement To Subscribe; Purchase Price.
(a) Subscription. The undersigned Buyer hereby subscribes for
and agrees to purchase the Seller's Series Z 8.0% Senior Secured Convertible
Debentures substantially in the form of the Debentures attached as Exhibit A
hereto and having an aggregate original principal face amount of U.S. $4,000,000
(singly, a "Debenture," and collectively, the "Debentures"), at an aggregate
purchase price of 80% of the face amount of each of the Debentures as set forth
in subsection (b) herein, secured by a lien on the assets listed on Exhibit II
attached hereto and incorporated herein which have a fair market value of not
less than $6,000,000.
(b) Payment. The aggregate Purchase Price for the Buyer's portion
of the Debentures shall be ___________________ United States Dollars _________
(U.S. $_________) which represents a discount of 20% of the total face
amount of the Debentures purchased by the Buyer (the "Purchase Price"), which
shall be payable at each closing pursuant to paragraph C herein by delivering
immediately available funds in United States Dollars by wire transfer to the
designated depository Barry B. Globerman, Esq. as Escrow Agent ("Escrow Agent")
for closing by delivery of securities versus payment.
(c) Closing. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Agreement shall occur from time to time in denominations of not less
than $50,000 but in any event on or before October 15, 1996, or such earlier or
later date as is mutually agreed to in writing by Buyer and Seller.
2. Buyer Representations and Covenants; Access to Information.
Offshore Transaction. In connection with the purchase and sale of
the Debentures, Buyer represents and warrants to, and covenants and agrees with
Seller as follows:
(i) Buyer is not a natural person and is not organized under
the laws of any jurisdiction within the United States, was not
formed by a U.S. Person (as defined in Section 902(o) of Regulation
S) for the purpose of investing in Regulation S securities and is
not otherwise a U.S. Person. Buyer is not, and on the closing date
will not be, an affiliate of Seller;
(ii) At the time the buy order was originated, Buyer was
outside the United States and is outside of the United States as of
the date of the execution and delivery of this Agreement;
(iii) No offer to purchase the Debentures or the common stock
of Seller issuable upon conversion of the Debentures (collectively,
the "Securities"), was made by Buyer in the United States;
(iv) Buyer is purchasing the Securities for its own account
and Buyer is qualified to purchase the Securities under the laws of
its jurisdiction of residence, and the offer and sale of the
Securities will not violate the securities or other laws of such
jurisdiction;
(v) All offers and sales of any of the Securities by Buyer
prior to the end of the Restricted Period (as hereinafter defined)
shall be made in compliance with any applicable securities laws of
any applicable jurisdiction and in accordance with Rule 903 and 904,
as applicable, of Regulation S or pursuant to registration of
securities under the 1933 Act or pursuant to an exemption from
registration. In any case, none of the Securities have been and
will be offered or sold by Buyer to, or for the account or benefit
of, a U.S. Person or within the United States until after the end of
the forty (40) day period commencing on the later of (x) the date of
closing of the offering of the Securities or (y) the date of the
first offer of the Securities to persons other than distributors
(the "Restricted Period"), as certified by Buyer to Seller and
thereafter only pursuant to a Registration Statement or an
applicable exemption therefrom;
(vi) The transactions contemplated by this Agreement (a) have
not been and will not be pre-arranged by Buyer with a purchaser
located in the United States or a purchaser which is a U.S. Person,
and (b) are not and will not be part of a plan or scheme by Buyer,
to evade the registration provisions of the 1933 Act;
(vii) Buyer understands that the Securities are not registered
under the 1933 Act and are being offered and sold to it in reliance
on specific exclusions from the registration requirements of Federal
and State securities laws, and that Seller is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in
order to determine the applicability of such exclusions and the
suitability of Buyer and any purchaser from Buyer to acquire the
Securities;
(viii) Buyer shall take all reasonable steps to ensure
its compliance with Regulation S and shall promptly send to each
purchaser who acts as a distributor, dealer or a person receiving a
selling concession, fee or other remuneration in respect of any of
the Securities, who purchases prior to the expiration of the
Restricted Period referred to in subparagraph (v) above, a
confirmation or other notice to the purchaser stating that the
purchaser is subject to the same restrictions on offers and sales as
Buyer pursuant to Section 901(c)(2)(iv) of Regulation S;
(ix) Buyer has not conducted and shall not conduct any
"directed selling efforts" as that term is defined in Rule 902(b) of
Regulation S; nor has Buyer conducted any general solicitation
relating to the offer and sale of any of the Securities in the
United States or elsewhere;
(x) This Agreement has been duly authorized, validly
executed and delivered on behalf of Buyer and is a valid and binding
agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(xi) The execution and delivery of this Agreement and the
consummation of the purchase of the Securities, and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by Buyer of any of the terms of provisions of, or
constitute a default under, the articles of incorporation or by-laws
(or similar constitutive documents) of Buyer or any indenture,
mortgage, deed of trust, or other material agreement or instrument
to which Buyer is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule or regulation
of the United States or any State thereof or any applicable decree,
judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States
governmental body having jurisdiction over Buyer or any of its
properties or assets;
(xii) All invitation, offers and sales of or in respect of,
any of the Securities, by Buyer and any distribution by Buyer of any
documents relating to any offer by it of any of the Securities will
be in compliance with applicable laws and regulations and will be
made in such a manner that no prospectus need be filed and no other
filing need be made by Seller with any regulatory authority or stock
exchange in any country or any political sub-division of any
country;
(xiii) Buyer will not make any offer or sale of the
Securities by any means which would not comply with the laws and
regulations of the territory in which such offer or sale takes place
or to which such offer or sale is subject or which would in
connection with any such offer or sale impose upon Seller any
obligation to satisfy any public filing or registration requirement
or provide or publish any information of any kind whatsoever or
otherwise undertake or become obligated to do any act; and
(xiv) Neither the Buyer nor any of its affiliates has entered,
has the intention of entering, or will during the Restricted Period
enter into any put option, short position or other similar
instrument or position with respect to any of the Securities or
securities of the same class as the Securities.
(xv) the Buyer (or others for whom it is contracting
hereunder) has been advised to consult its own legal and tax
advisors with respect to applicable resale restrictions and
applicable tax considerations and it (or others for whom it is
contracting hereunder) is solely responsible (and the Company is not
in any way responsible) for compliance with applicable resale
restrictions and applicable tax legislation.
(xvi) No Government Recommendation or Approval. Buyer
understands that no Federal or State or foreign government agency
has passed on or made any recommendation or endorsement of the
Securities.
(xvii) Current Public Information. Buyer acknowledges
that it and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of
Seller and all materials relating to the offer and sale of the
Securities which have been requested by Buyer. Buyer further
acknowledges that it and its advisors, if any, have received
complete and satisfactory answers to such inquiries.
(xviii) Buyer's Sophistication. Buyer acknowledges that
the purchase of the Securities involves a high degree of risk,
including the total loss of Buyer's investment. Buyer has such
knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of purchasing the
Securities.
(xix) Tax Status. Buyer is not a "10-percent Shareholder" (as
defined in Section 871(h)(3)(B) of the U.S. Internal Revenue Code)
of Seller.
3. Seller Representations and Covenants.
(a) Reporting Company Status. Seller is a "Reporting Issuer" as
defined by Rule 902 of Regulation S. Seller has registered its Common Stock, no
par value per share (the "Common Stock"), pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and trades on NASDAQ. Seller has filed all material required to
be filed pursuant to all reporting obligations under either Section 13(a) or
15(d) of the Exchange Act for a period of at least twelve (12) months
immediately preceding the offer or sale of the Securities (or for such shorter
period that Seller has been required to file such material).
(b) Current Public Information. Seller has furnished Buyer with
copies of its most recent reports, as amended, filed under the Exchange Act
referred to in Section 2(c) above, and other publicly available documents
requested by Buyer.
(c) Offshore Transaction. Seller has not offered any of the
Securities to any person in the United States, any identifiable groups of U.S.
citizens abroad, or to any U.S. Person, as such terms are used in Regulation S.
(i) At the time the buy order was originated, Seller and/or
its agents reasonably believe the Buyer was outside of the United
States and was not a U.S. person, based on the representations of
Buyer.
(ii) Seller and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United
States, based on the representations of Buyer.
(iii) No offer to buy or sell the Securities was or will
be made by Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant to this
Agreement will be made in accordance with the provisions and
requirements of Regulation S provided that the representations and
warranties of Buyer in Section 2(a) hereof are true and correct.
(v) The transactions contemplated by this Agreement (a) have
not been and will not be pre-arranged by Seller with a purchaser
located in the United States or a purchaser which is a U.S. Person,
and (b) are not and will not be part of a plan or scheme by Seller
to evade the registration provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this transaction,
Seller has not conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S nor has Seller conducted any general solicitation
relating to the offer and sale of any of the Securities in the United States or
elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery of
the Debentures have been duly authorized by all required corporate action on the
part of Seller, and when issued, sold and delivered in accordance with the terms
hereof and thereof for the consideration expressed herein and therein, will be
duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon conversion of the Debenture has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable and will not
subject the holders thereof, if such persons are non-U.S. persons, to personal
liability by reason of being such holders. There are no pre-emptive rights of
any shareholder of Seller.
(f) Subscription Agreement. This Agreement has been duly
authorized, validly executed and delivered on behalf of Seller and is a valid
and binding agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
(g) Non-contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or provisions of, or constitute
a default under, the articles of incorporation or by-laws of Seller, or any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which Seller is a party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule or regulation of the United States
or any State thereof or any applicable decree, judgment or order of any Federal
or State court, Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Seller or any of its
properties or assets.
(h) Approvals. Seller is not aware of any authorization, approval
or consent of any governmental body which is legally required for the issuance
and sale of the Debentures and the Common Stock issuable upon conversion thereof
to persons who are non-U.S. Persons, as contemplated by this Agreement.
4. Exemption; Reliance on Representations. Buyer understands that the
offer and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
5. Transfer Agent Instructions.
(a) Debentures. Upon the conversion of the Debentures, the holder
thereof shall submit such Debenture with a notice of conversion to the Seller
and the Seller shall instruct Seller's transfer agent to issue one or more
Certificates representing that number of shares of Common Stock into which the
Debenture or Debentures are convertible in accordance with the provisions
regarding conversion set forth in Exhibit A hereto. The Seller shall act as
Debenture Registrar and shall maintain an appropriate ledger containing the
necessary information with respect to each Debenture.
(c) Common Stock to be Issued Without Restrictive Legend. Upon
the conversion of any Debenture by a person who is a non-U.S. Person, Seller
shall instruct Seller's transfer agent to issue Stock Certificates without
restrictive legend in the name of Buyer (or its nominee (being a non-U.S.
Person) or such non-U.S. Persons as may be designated by Buyer prior to the
closing) and in such denominations to be specified at conversion representing
the number of shares of Common Stock issuable upon such conversion, as
applicable. Seller warrants that no instructions other than these instructions
and instructions to impose a "stop transfer" instruction with respect to the
certificates until the end of the Restricted Period have been given or will be
given to the transfer agent and that the Common Stock shall otherwise be freely
transferable on the books and records of Seller. Nothing in this Section 5,
however, shall affect in any way Buyer's or such nominee's obligations and
agreements to comply with all applicable securities laws upon resale of the
Securities.
6. Registration. If upon conversion of Debentures effected by the
Buyer pursuant to the terms of this Agreement the Company fails to issue
certificates for shares of Common Stock issuable upon such conversion (the
"Underlying Shares") to the Buyer bearing no restrictive legend for any reason
other than the Company's reasonable good faith belief that the representations
and warranties made by the Buyer in this Agreement or the Notice of Conversion
were untrue when made, or if the restricted period under Regulation S is
extended, then the Company shall be required, at the request of the Buyer and at
the Company's expense, to effect the registration of the Underlying Shares
issuable upon conversion of the Debentures under the Act and relevant Blue Sky
laws as promptly as is practicable. The Company and the Buyer shall cooperate
in good faith in connection with the furnishing of information required for such
registration and the taking of such other actions as may be legally or
commercially necessary in order to effect such registration. The Company shall
file a registration statement within 15 days of Buyer's demand therefor and
shall use its best efforts to cause such registration statement to become
effective as soon as practicable thereafter and in any event within 60 days of
the date of the initial filing thereof. Such best efforts shall include, but
not be limited to, promptly responding to all comments received from the staff
of the Securities and Exchange Commission, providing Buyer's counsel with a
contemporaneous copy of all written communications from and to the staff of the
Securities and Exchange Commission with respect to such registration statement
and promptly preparing and filing amendments to such registration statement
which are responsive to the comments received from the staff of the Securities
and Exchange Commission. Once declared effective by the Securities and Exchange
Commission, the Company shall cause such registration statement to remain
effective until the earlier of (i) the sale by the Buyer of all Underlying
Shares registered or (ii) 120 days after the effective date of such registration
statement. In the event the Company undertakes to file a Registration Statement
on Form S-3 in connection with the Common Stock, upon the effectiveness of such
Registration, Buyer shall have the option to sell the Common Stock pursuant
thereto. The foregoing shall not in any way limit Buyer's rights in connection
with the Common Stock pursuant to Regulation S.
7. Delivery Instructions. The Debentures being purchased hereunder
shall be delivered to the Buyer at such time and place as shall be mutually
agreed by Seller and Buyer.
8. Conditions To Seller's Obligation To Sell. Seller's obligation to
sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Buyer of this Agreement as
evidenced by execution of this Agreement by Buyer.
(b) Delivery into the closing depository of good funds by Buyer as
payment in full of the purchase price of the Debentures.
(c) Delivery of fully executed subscription agreements and good
funds into the closing depository.
9. Conditions To Buyer's Obligation To Purchase. Buyer's obligation to
purchase the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
evidenced by execution of this Agreement by the duly authorized officer of
Seller.
(b) Delivery of the Debentures as described herein.
10. Offering Materials. All offering materials and documents used in
connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(a)(v) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act or applicable state securities laws, and that neither Buyer, nor any
direct or indirect purchaser of the Securities from Buyer, may directly or
indirectly offer or sell the Securities in the United States or to U.S. Persons
(other than distributors) unless that Securities are registered under the 1933
Act any applicable state securities laws, or any exemption from the registration
requirements of the 1933 Act or such state securities laws is available. Such
statements shall appear (1) on the cover of any prospectus or offering circular
used in connection with the offer or sale of the Securities, (2) in the
underwriting section of any prospectus or offering circular used in connection
with the offer or sale of the Securities, and (3) in any advertisement made or
issued by Seller, Buyer, any other distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing.
11. No Shareholder Approval. Seller hereby agrees that from the Closing
Date until the issuance of Common Stock upon the conversion of the Debentures,
Seller will not take any action which would require Seller to seek shareholder
approval of such issuance unless such shareholder approval is required by law or
regulatory body (including but not limited to the NASDAQ Stock Market, Inc.) as
a result of the issuance of the Securities hereunder.
12. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties, and neither party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous agreement among
the parties related to the transactions described herein is superseded hereby.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or impled, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any representations
or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer will advise
each purchaser, if any, and potential purchaser of the Securities, of the
foregoing sentence, and that such purchaser is relying on its own investigation
with respect to all such matters, and that such purchaser will be given access
to any and all documents and Seller personnel as it may reasonably request for
such investigation.
(d) All representations and warranties contained in this Agreement
by Seller and Buyer shall survive the closing of the transactions contemplated
by this Agreement.
(e) This Agreement shall be construed in accordance with the laws
of New Jersey and shall be binding upon the successors and assigns of each party
hereto. This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as
an original.
(f) Buyer agrees to indemnify and hold Seller harmless from any
and all claims, damages and liabilities arising from Buyer's breach of its
representations and/or covenants set forth herein.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first set forth above.
Official Signatory of Seller:
Princeton Media Group, Inc.
By:
Title:
Official Signatory of Buyer:
By:
Title:
Address of Buyer:
