EXHIBIT 10.37
NOTE PURCHASE AGREEMENT
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This
Note Purchase Agreement, dated as of April 4, 2008, (this
"Agreement"), is entered into by and among Salon Media Group, Inc.,
a Delaware
corporation (the "Company"), and each of the purchasers
(collectively the
"Purchasers" and individually a "Purchaser"), listed on the
Schedule of
Purchasers attached hereto as Exhibit A (the "Schedule of
Purchasers").
RECITAL
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A.
On the terms and subject to the conditions set forth herein,
the
Purchasers are willing to purchase from the Company, and the
Company is willing
to sell to the Purchasers, Convertible Promissory Notes (each, a
"Note" and
collectively, the "Notes"), in the principal amounts set forth
opposite each
Purchaser's name on the Schedule of Purchasers (each, a "Loan
Amount" and
collectively, the "Loan Amounts").
AGREEMENT
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NOW,
THEREFORE, in consideration of the foregoing, and the
representations,
warranties, and covenants set forth below, the parties hereto,
intending to be
legally bound, hereby agree as follows:
1.
Notes.
(a) Issuance of Notes. In reliance upon the representations,
warranties and covenants of the parties set forth herein, the
Company agrees to
issue, sell and deliver to the Purchasers, and the Purchasers agree
to purchase
from the Company, the Notes, in an aggregate amount not to exceed
$2,000,000.
The purchase price for the Notes shall be payable in immediately
available
funds.
(b) Terms of the Notes. The terms and conditions of the Notes are
set
forth in the form of Note attached hereto as Exhibit B. Capitalized
terms not
otherwise defined herein shall have the meanings set forth in
Exhibit B attached
hereto.
2.
Closings; Delivery.
(a) Closing. The closing of the purchase and sale hereunder
(the
"Closing"), shall take place at the offices of DLA Piper US LLP,
counsel to the
Company, 2000 University Avenue, East Palo Alto, California 94303
in one or more
closings at such time and place as the Company and each Purchaser
may agree
(each a "Closing Date").
(b) Delivery. Subject to the terms of this Agreement, at each
Closing,
the Company will deliver to each Purchaser a Note in such
Purchaser's name
representing the Note purchased by such Purchaser, and such
Purchaser will
deliver to the Company, by check or wire transfer, payment for the
Note being
purchased in an amount equal to the amount set forth opposite
Purchaser's name
on the Schedule of Purchasers.
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3.
Representations and Warranties of the Company. The Company
hereby
represents and warrants to each Purchaser as of the date
hereof:
(a) Organization and Standing. The Company is a corporation
duly
organized, validly existing and in good standing under the laws of
the State of
Delaware and has all requisite corporate power and authority to
carry on its
business as currently conducted.
(b) Corporate Power. The Company has all requisite legal and
corporate
power to enter into, execute and deliver this Agreement and to
issue each Note.
This Agreement, and the Notes, when issued, are valid and binding
obligations of
the Company, enforceable in accordance with their terms, except as
the same may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance,
moratorium, usury or other laws of general application relating to
or affecting
enforcement of creditors' rights and the rules or laws governing
specific
performance, injunctive relief or other equitable remedies.
(c) Authorization.
(i) Corporate Action. All corporate and legal action on the
part
of the Company, its officers, directors and stockholders necessary
for the
execution and delivery of this Agreement, the sale and issuance of
the Notes,
and the performance of the Company's obligations hereunder and
under the Notes
have been taken.
(ii) Valid Issuance. The Notes and any shares of common stock
issued upon conversion of the Notes (the "Securities"), when issued
in
compliance with the provisions of this Agreement and the Notes, as
the case may
be, will be validly issued and will be free of any liens or
encumbrances and
issued in compliance with all applicable federal securities laws,
provided,
however, that the Securities may be subject to restrictions on
transfer under
state and/or federal securities laws as set forth herein, and as
may be required
by future changes in such laws.
(d) Government Consent, Etc. No consent, approval, order or
authorization of, or designation, registration, declaration or
filing with, any
federal, state, local or other governmental authority on the part
of the Company
is required in connection with the valid execution and delivery of
this
Agreement and the Notes, other than, if required, filings or
qualifications
under the Securities Act of 1933, as amended (the "Securities
Act"), and other
applicable state securities laws, which filings or qualifications,
if required,
will be timely filed or obtained by the Company.
(e) Offering. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the
offer, issue,
and sale of the Notes and any shares common stock issued upon the
conversion of
the Notes will be exempt from the registration and prospectus
delivery
requirements of the Securities Act, and have been registered or
qualified (or
are exempt from registration and qualification) under the
registration, permit,
or qualification requirements of all applicable state securities
laws.
4.
Representations and Warranties by the Purchaser. Each Purchaser
hereby
represents and warrants to the Company as of the date hereof:
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(a) Investment Intent. The Securities will be acquired for the
Purchaser's own account, for investment and not with a view to, or
for resale in
connection with, any distribution or public offering thereof within
the meaning
of the Securities Act. The Purchaser understands that the
Securities have not
been registered under the Securities Act by reason of their
issuance in a
transaction exempt from the registration and prospectus delivery
requirements of
the Securities Act pursuant to Section 4(2) thereof, which
exemption depends
upon, among other things, the bona fide nature of the Purchaser's
investment
intent expressed herein.
(b) Access to Information. During the negotiation of the
transactions
contemplated herein, the Purchaser and its representatives have
been afforded
full and free access to corporate books, financial statements,
records,
contracts, documents, and other information concerning the Company,
and to its
offices and facilities, have been afforded an opportunity to ask
such questions
of the Company's officers, employees, agents, accountants and
representatives
concerning the Company's business, operations, financial condition,
assets,
liabilities and other relevant matters as they have deemed
necessary or
desirable, and have been given all such information as has been
requested, in
order to evaluate the merits and risks of the prospective
investment
contemplated herein.
(c) Due Diligence. The Purchaser and its representatives have
been
solely responsible for the Purchaser's own "due diligence"
investigation of the
Company and its management and business, for its own analysis of
the merits and
risks of this investment, and for its own analysis of the fairness
and
desirability of the terms of the investment. Notwithstanding the
foregoing, such
due diligence investigation shall not limit the representations and
warranties
made by the Company in Section 4 hereof.
(d) Accredited Investor. The Purchaser (i) is an "Accredited
Investor"
as that term is defined in Rule 501 of Regulation D promulgated
under the
Securities Act or has such knowledge and experience in financial
and business
matters as to be capable of evaluating the merits and risks of such
Purchaser's
prospective investment in the Securities; and (ii) has the ability
to bear the
economic risks of such Purchaser's prospective investment,
including a complete
loss of Purchaser's investment in the Securities.
(e) General Solicitation. The Purchaser has not been offered
the
Securities by any form of advertisement, article, notice or other
communication
published in any newspaper, magazine, or similar media or broadcast
over
television or radio, or any seminar or meeting whose attendees have
been invited
by any such media.
(f) Authority. The Purchaser has the full right, power and
authority
to enter into and perform the Purchaser's obligations under this
Agreement, and
this Agreement constitutes a valid and binding obligation of the
Purchaser
enforceable in accordance with its terms except as may be limited
by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium,
usury or other
laws of general application relating to or affecting enforcement of
creditors'
rights and the rules or laws governing specific performance,
injunctive relief
or other equitable remedies.
(g) Government Consent. No consent, approval, order or
authorization
of, or designation, registration, declaration or filing with, any
federal,
state, local or other governmental authority on the part of the
Purchaser is
required in connection with the valid execution and delivery of
this Agreement.
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(h) Restricted Securities. The Purchaser understands that the
Company
has no present intention of registering the Securities, and that if
the Company
does not (i) register its Common Stock with the Securities and
Exchange
Commission pursuant to Section 12 of the Securities Exchange Act of
1934, as
amended (the "Exchange Act"), (ii) become subject to Section 15(d)
of the
Exchange Act, (iii) supply information pursuant to Rule 15c2-11
thereunder, or
(iv) have a registration statement covering the Securities under
the Securities
Act in effect when Purchaser desires to sell the Securities, the
Purchaser may
be required to hold the Securities for an indeterminate period.
Purchaser also
understands that any sale of the Securities that might be made by
such Purchaser
in reliance upon Rule 144 under the Securities Act may be made only
in limited
amounts in accordance with the terms and conditions of that
rule.
5.
Restrictive Legend. Each certificate or document representing
the
Securities, and any other securities issued in respect of the
Securities upon
any stock split, stock dividend, recapitalization, merger,
consolidation or
similar event shall be stamped or otherwise imprinted with a legend
in
substantially the following form (in addition to any legend
required under
applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS
AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER
THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING
THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
6.
Miscellaneous.
(a) Waivers and Amendments. Any provision of this Agreement may
be
amended, waived or modified upon the written consent of the Company
and the
Purchasers holding at least a majority in interest of the then
outstanding Loan
Amounts.
(b) Governing Law. This Agreement and all actions arising out of or
in
connection with this Agree
