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): March 18, 1997
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.)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following Exhibits are filed as a part of this report:
Exhibit 10.1 Form of Letter Agreement A
Exhibit 10.2 Form of Letter Agreement B
Exhibit 10.3 Form of Letter Agreement C
Exhibit 10.4 Form of Offshore Securities Subscription Agreement
Item 9. Sales of Equity Securities Pursuant to Regulation S.
The Registrant issued 1,105,700 shares of common stock to GEM (Singapore)
Limited on behalf of certain holders of convertible preferred stock and
convertible debentures of the Registrant, in settlement of the Registrant's
conversion obligations pursuant to such instruments. The issuance was pursuant
to executed Letter Agreements with the convertible preferred stockholders and
convertible debenture holders in the forms attached hereto as Exhibits 10.1,
10.2 and 10.3. No consideration or commissions were paid.
The Registrant relied on warranties and representations made by the
holders in subscription agreements substantially in the form filed herewith
as Exhibit 10.4, which is hereby incorporated herein by reference, and
reaffirmed in said Letter Agreements, as the basis for claiming the exemption
pursuant to Regulation S.
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: April 1, 1997 By: /s/ James J. McNamara
James J. McNamara, Chairman
EXHIBIT INDEX
Exhibit 10.1 Form of Letter Agreement A Page
Exhibit 10.2 Form of Letter Agreement B Page
Exhibit 10.3 Form of Letter Agreement C Page
Exhibit 10.4 Form of Offshore Securities Subscription Agreement Page
Exhibit 10.1 Form of Letter Agreement A
Letter Agreement
Princeton Media Group, Inc. (the "Company") Date:
Dear Sirs:
This letter shall constitute my Notice of Conversion of all Series D
and/or Series E Convertible Preferred Stock and all Convertible Debentures of
the Company held by me, in accordance with the following terms:
1. Any previous Notice of Conversion by me is hereby superseded.
2. The number of shares issuable upon conversion shall be [ ],
which number was determined with reference to my Total Dollar Amount, which
equals $[ ]. I hereby agree to the immediate return to the Company for
cancellation all warrants for the purchase of common shares of the Company
held by me. Within thirty (30) days of execution of this Agreement, the
parties shall determine the total amount of any loss incurred by me resulting
from buy-ins of the Company's common shares necessary to cover any short
positions, and shall add such total amount to the Total Dollar Amount.
3. All common stock issuable upon conversion (the "Common Shares")
shall be delivered by the Company without any restrictive legend directly to a
foreign securities broker who is neither a U.S. Person as defined in
Regulation S nor a U.S. domiciliary (the "Agent") mutually agreed upon by me
and the Company to be held for my benefit by the Agent.
4. The conversion noticed hereby shall be effectuated according to
the following schedule: (a) 7% of the Common Shares shall be issued on my
behalf to the Agent during the week which is the sixth full week after full
execution of this Letter Agreement; (b) an additional 7% shall be issued
during each week thereafter for a consecutive 12 week period; and (c) the
remaining 9% shall be issued during the next week thereafter (the last day of
such week, the "End Date").
5. For purposes of this paragraph 5, Return shall mean the amount of
cash proceeds from sales of my Common Shares (if any) plus any unsold Common
Shares, which unsold shares shall be valued at the 5-day average closing bid
price for the week of issuance of such shares. The Agent shall deliver to me
all cash proceeds from sales of my Common Shares within ten (10) days after
the date of each respective sale. If the Agent fails to timely deliver to me
sale proceeds as set forth in the foregoing sentence, then the Company shall
suspend all further issuances of shares to the Agent and all shares shall be
issued directly to me or my written designee, according to the same schedule
as set forth in paragraph 4 above. If the Agent has not delivered to me,
within 15 days following the End Date, a Return which equals my Total Dollar
Amount, then the Company shall make up any shortfall within twenty (20) days
thereafter, either in cash or in common stock of the Company, such shares
being valued according to the then most recent 5-day average closing bid
price, or any combination thereof; provided, however, that if the Agent has
delivered to me, within 15 days following the End Date, a Return which equals
at least 70% of my Total Dollar Amount, then the Company shall have a period
of thirty (30) days to make up any shortfall, in cash or common stock as set
forth above. I acknowledge that I shall not be entitled to any Return
exceeding my Total Dollar Amount, but that any such excess shall be forfeited
to the Agent.
6. My signature below shall constitute a reaffirmation as of this
date of my Offshore Securities Subscription Agreement with the Company, which
is incorporated herein by reference in its entirety. I acknowledge that the
40-day "Restricted Period" with respect to all securities of the Company
purchased by me or to be delivered to me pursuant to my Preferred Stock or
Convertible Debentures, including securities to be delivered pursuant to this
Notice of Conversion, will commence this date, due to such reaffirmation.
7. As further consideration for my entering into the arrangement
described herein, the Company hereby agrees to issue to me warrants for the
purchase of [ ] shares of common stock in the Company at an exercise
price of $4.85 per share; warrants for the purchase of [ ] shares at $5.85
per share; warrants for the purchase of [ ] shares at $6.85 per share;
warrants for the purchase of [ ] shares at $7.85 per share; and warrants
for the purchase of [ ] shares at $8.85 per share. All of said warrants
shall have a two-year exercise period commencing on the date of issuance.
8. If the Company does not fulfill any of its obligations (fails to
perform even partially) hereunder by August 15, 1997, then I shall be entitled
to all of the privileges and protections granted and detailed in the
subscription documents and Certificate of Designation of the Series D
Preferred shares or convertible debentures, including the attachable warrants.
If the Company does not fulfill all of its obligations hereunder by August
15, 1997 (including making up any shortfall during the appropriate time period
as referenced in paragraph 5), then the Company shall pay to me within thirty
(30) days thereafter, in cash or stock at the Company's option, the amount
then remaining due of the Total Dollar Amount. If paid in stock, such shares
shall be valued according to the then most recent 5-day average closing bid
price.
9. I further, on behalf of myself and my representatives, heirs and
assigns, do hereby release, acquit, and forever discharge the Company and its
successors and assigns, its agents, servants, directors, officers,
stockholders, employees, divisions, subdivisions, subsidiaries, and
affiliates, of and from any and all past and present claims, counterclaims,
demands, actions, causes of action, liabilities, damages, costs, loss of
services, expenses, compensation, third-party actions, suits at law or in
equity, of every nature and description, whether known or unknown, suspected
or unsuspected, foreseen or unforeseen, real or imaginary, and whether arising
at law or in equity, under the common law, state or federal law, or any other
law, or otherwise, except, however, those obligations of the Company pursuant
to the Series D and E Convertible Preferred Stock or Convertible Debentures of
the Company held by me, taking into account this Agreement.
10. The Company, on behalf of itself and its successors and assigns,
its agents, servants, directors, officers, stockholders, employees, divisions,
subdivisions, subsidiaries, and affiliates, does hereby release, acquit, and
forever discharge me and my representatives, heirs and assigns, of and from
any and all past and present claims, counterclaims, demands, actions, causes
of action, liabilities, damages, costs, loss of services, expenses,
compensation, third-party actions, suits at law or in equity, of every nature
and description, whether known or unknown, suspected or unsuspected, foreseen
or unforeseen, real or imaginary, and whether arising at law or in equity,
under the common law, state or federal law, or any other law, or otherwise.
Witness: Signature of Stockholder:
Print Name: Print Name:
Witness: Signature of Joint Owner, If Any:
Print Name: Print Name:
Princeton Media Group, Inc. hereby agrees to the terms set forth above.
Princeton Media Group, Inc.
By:
Exhibit 10.2 Form of Letter Agreement B
Letter Agreement
Princeton Media Group, Inc. (the "Company") Date:
Dear Sirs:
This letter shall constitute my Notice of Conversion of all Series D
and/or Series E Convertible Preferred Stock and all Convertible Debentures of
the Company held by me, in accordance with the following terms:
1. Any previous Notice of Conversion by me is hereby superseded.
2. The number of shares issuable upon conversion shall be [ ],
which number was determined with reference to my Total Dollar Amount, which
equals $[ ].
3. All common stock issuable upon conversion (the "Common Shares")
shall b
e delivered by the Company without any restrictive legend directly to a
foreign securities broker who is neither a U.S. Person as defined in
Regulation S nor a U.S. domiciliary (the "Agent") mutually agreed upon by me
and the Company to be held for my benefit by the Agent.
4. The conversion noticed hereby shall be effectuated according to
the following schedule: (a) 7% of the Common Shares shall be issued on my
behalf to the Agent during the week which is the sixth full week after full
execution of this Letter Agreement; (b) an additional 7% shall be issued
during each week thereafter for a consecutive 12 week period; and (c) the
remaining 9% shall be issued during the next week thereafter (the last day of
such week, the "End Date").
5. For purposes of this paragraph 5, Return shall mean the amount of
cash proceeds from sales of my Common Shares (if any) plus any unsold Common
Shares, which unsold shares shall be valued at the 5-day average closing bid
price for the week of issuance of such shares. The Agent shall deliver to me
all cash proceeds from sales of my Common Shares within ten (10) days after
the date of each respective sale. If the Agent fails to timely deliver to me
sale proceeds as set forth in the foregoing sentence, then the Company shall
suspend all further issuances of shares to the Agent and all shares shall be
issued directly to me or my written designee, according to the same schedule
as set forth in paragraph 4 above. If the Agent has not delivered to me,
within 15 days following the End Date, a Return which equals my Total Dollar
Amount, then the Company shall make up any shortfall within twenty (20) days
thereafter, either in cash or in common stock of the Company, such shares
being valued according to the then most recent 5-day average closing bid
price, or any combination thereof; provided, however, that if the Agent has
delivered to me, within 15 days following the End Date, a Return which equals
at least 70% of my Total Dollar Amount, then the Company shall have a period
of thirty (30) days to make up any shortfall, in cash or common stock as set
forth above. I acknowledge that I shall not be entitled to any Return
exceeding my Total Dollar Amount, but that any such excess shall be forfeited
to the Agent.
6. My signature below shall constitute a reaffirmation as of this
date of my Offshore Securities Subscription Agreement with the Company, which
is incorporated herein by reference in its entirety. I acknowledge that the
40-day "Restricted Period" with respect to all securities of the Company
purchased by me or to be delivered to me pursuant to my Preferred Stock or
Convertible Debentures, including securities to be delivered pursuant to this
Notice of Conversion, will commence this date, due to such reaffirmation.
7. I further, on behalf of myself and my representatives, heirs and
assigns, do hereby release, acquit, and forever discharge the Company and its
successors and assigns, its agents, servants, directors, officers,
stockholders, employees, divisions, subdivisions, subsidiaries, and
affiliates, of and from any and all past and present claims, counterclaims,
demands, actions, causes of action, liabilities, damages, costs, loss of
services, expenses, compensation, third-party actions, suits at law or in
equity, of every nature and description, whether known or unknown, suspected
or unsuspected, foreseen or unforeseen, real or imaginary, and whether arising
at law or in equity, under the common law, state or federal law, or any other
law, or otherwise, except, however, those obligations of the Company pursuant
to the Series D and E Convertible Preferred Stock or Convertible Debentures of
the Company held by me, taking into account this Agreement.
8. The Company, on behalf of itself and its successors and assigns,
its agents, servants, directors, officers, stockholders, employees, divisions,
subdivisions, subsidiaries, and affiliates, does hereby release, acquit, and
forever discharge me and my representatives, heirs and assigns, of and from
any and all past and present claims, counterclaims, demands, actions, causes
of action, liabilities, damages, costs, loss of services, expenses,
compensation, third-party actions, suits at law or in equity, of every nature
and description, whether known or unknown, suspected or unsuspected, foreseen
or unforeseen, real or imaginary, and whether arising at law or in equity,
under the common law, state or federal law, or any other law, or otherwise.
Witness: Signature of Stockholder:
Print Name: Print Name:
Witness: Signature of Joint Owner, If Any:
Print Name: Print Name:
Princeton Media Group, Inc. hereby agrees to the terms set forth above.
Princeton Media Group, Inc.
By:
Exhibit 10.3 Form of Letter Agreement C
Letter Agreement
Princeton Media Group, Inc. (the "Company") Date:
Dear Sirs:
This letter shall constitute the Notice of Conversion of all Series D
and/or Series E Convertible Preferred Stock and all Convertible Debentures of
the Company held by [ ] ("Holder"), in accordance with the
following terms:
1. Any previous Notice of Conversion by Holder is hereby superseded.
2. The number of shares issuable upon conversion shall be [ ],
which number was determined with reference to Holder's Total Dollar Amount,
which equals [$ ]. (See detail on Exhibit A attached hereto.) Holder
hereby agrees to the immediate return to the Company for cancellation all
warrants for the purchase of common shares of the Company held by it. Within
thirty (30) days of execution of this Agreement, the parties shall determine the
total amount of any loss incurred by Holder resulting from buy-ins of the
Company's common shares necessary to cover any short positions, and shall add
such total amount to the Total Dollar Amount.
3. All common stock issuable upon conversion (the "Conversion
Shares") shall be delivered by the Company without any restrictive legend
directly to a foreign securities broker who is neither a U.S. Person as
defined in Regulation S nor a U.S. domiciliary (the "Agent") mutually agreed
upon by Holder and the Company to be held for Holder's benefit by the Agent.
4. The conversion noticed hereby shall be effectuated according to
the following schedule: (a) 7% of the Conversion Shares shall be issued on
Holder's behalf to the Agent during the week which is the sixth full week after
full execution of this Letter Agreement; (b) an additional 7% shall be issued
during each week thereafter for a consecutive 12 week period; and (c) the
remaining 9% shall be issued during the next week thereafter (the last day of
such week, the "End Date").
5. For purposes of this paragraph 5, Return shall mean the amount of
cash proceeds from sales of Holder's Conversion Shares (if any) plus any unsold
Conversion Shares, which unsold shares shall be valued at the 5-day average
closing bid price for the week of issuance of such shares. The Agent shall
deliver to Holder all cash proceeds from sales of Holder's Conversion Shares
within ten (10) days after the date of each respective sale. If the Agent fails
to timely deliver to Holder sale proceeds as set forth in the foregoing sentence
then the Company shall suspend all further issuances of shares to the Agent
and all shares shall be issued directly to Holder or Holder's written designee,
according to the same schedule as set forth in paragraph 4 above. If the
Agent has not delivered to Holder, within 15 days following the End Date, a
Return which equals Holder's Total Dollar Amount, then the Company shall make up
any shortfall within twenty (20) days thereafter, either in cash or in common
stock of the Company, such shares being valued according to the then most
recent 5-day average closing bid price, or any combination thereof; provided,
however, that if the Agent has delivered to Holder, within 15 days following the
End Date, a Return which equals at least 70% of Holder's Total Dollar Amount,
then the Company shall have a period of thirty (30) days to make up any
shortfall, in cash or common stock as set forth above. Holder acknowledges that
it shall not be entitled to any Return exceeding Holder's Total Dollar Amount,
but that any such excess shall be forfeited to the Agent.
6. Holder's signature below shall constitute a reaffirmation as of this
date of Holder's Offshore Securities Subscription Agreement with the Company,
which is incorporated herein by reference in its entirety. Holder acknowledges
that the 40-day "Restricted Period" with respect to all securities of the
Company purchased by Holder or to be delivered to Holder pursuant to Holder's
Preferred Stock or Convertible Debentures, including all Conversion Shares and
Non-Conversion Shares to be delivered pursuant to this Notice of Conversion,
will commence this date, due to such reaffirmation.
7. As further consideration for Holder's entering into the arrangement
described herein, the Company hereby agrees to issue to Holder warrants for the
purchase of [ ] shares of common stock in the Company at an exercise price
of $4.85 per share; warrants for the purchase of [ ] shares at $5.85 per
share; warrants for the purchase of [ ] shares at $6.85 per share; warrants
for the purchase of [ ] shares at $7.85 per share; and warrants for the
purchase of [ ] shares at $8.85 per share. All of said warrants shall have
a two-year exercise period commencing on the date of issuance. The Company
further undertakes that if, during the two-year exercise period of said
warrants, there is no period of 15 consecutive business days during which the
Company's Common Stock has a closing bid price of $10 or more, then the
Company shall pay to Holder, in cash, the difference between (a) the amount
Holder would have realized if it exercised all warrants and simultaneously sold
the underlying Common Stock at a moment when the closing bid price was $10, and
(b) the amount Holder would have realized if it exercised all warrants and
simultaneously sold the underlying Common Stock at the highest closing bid
price which the Common Stock reached or exceeded for a period of 15
consecutive business days during said two-year period.
8. If the Company does not fulfill any of its obligations (fails to
perform even partially) hereunder by August 15, 1997, then Holder shall be
entitled to all of the privileges and protections granted and detailed in the
subscription documents and Certificate of Designation of the Series D
Preferred shares, including the attachable warrants, provided, however, that
the warrants delivered pursuant hereto shall in such event be cancelled. If
the Company does not fulfill all of its obligations hereunder by August 15,
1997 (including making up any shortfall during the appropriate time period as
referenced in paragraph 5), then the Company shall pay to Holder within thirty
(30) days thereafter, in cash or stock at the Company's option, the amount
then remaining due of the Total Dollar Amount. If paid in stock, such shares
shall be valued according to the then most recent 5-day average closing bid
price.
9. Holder further, on behalf of itself and its successors and assigns,
does hereby release, acquit, and forever discharge the Company and its
successors and assigns, its agents, servants, directors, officers,
stockholders, employees, divisions, subdivisions, subsidiaries, and
affiliates, of and from any and all past and present claims, counterclaims,
demands, actions, causes of action, liabilities, damages, costs, loss of
services, expenses, compensation, third-party actions, suits at law or in
equity, of every nature and description, whether known or unknown, suspected
or unsuspected, foreseen or unforeseen, real or imaginary, and whether arising
at law or in equity, under the common law, state or federal law, or any other
law, or otherwise, except, however, those obligations of the Company pursuant
to the Series D and E Convertible Preferred Stock or Convertible Debentures of
the Company held by Holder, taking into account this Agreement. This release
shall not be construed in any manner to discharge Celebrity Entertainment,
Inc., or its successors, assigns, agents, servants, directors, officers,
stockholders, employees, divisions, subdivisions, subsidiaries or affiliates
in their capacity as such with respect to Celebrity Entertainment, Inc.
10. The Company, on behalf of itself and its successors and assigns,
its agents, servants, directors, officers, stockholders, employees, divisions,
subdivisions, subsidiaries, and affiliates, does hereby release, acquit, and
forever discharge Holder and its successors and assigns, of and from any and all
past and present claims, counterclaims, demands, actions, causes of action,
liabilities, damages, costs, loss of services, expenses, compensation, third-
party actions, suits at law or in equity, of every nature and description,
whether known or unknown, suspected or unsuspected, foreseen or unforeseen,
real or imaginary, and whether arising at law or in equity, under the common
law, state or federal law, or any other law, or otherwise.
Witness: [Holder]
By:
Print Name: Print Name:
Princeton Media Group, Inc. hereby agrees to the terms set forth above.
Princeton Media Group, Inc.
By:
Exhibit 10.4
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.
[The remainder of this page is intentionally left blank.]
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:
