SECURITIES
PURCHASE AGREEMENT
JUNIPER
CONTENT CORPORATION
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made
as of the 11 th
day of
February 2009, by and between Juniper Content Corporation, a
Delaware corporation (“Company”), and each person or
entity whose name appears on Schedule I (each an
“Investor” and collectively, the
“Investors”).
WHEREAS,
the Company proposes to sell up to $1,500,000 of principal amount
Senior Secured Convertible Notes due August 31, 2009
(“Notes”) in a private placement
(“Offering”) to “accredited investors” with
a minimum investment of a Note with a principal amount of $10,000
(“Private Placement Minimum”);
WHEREAS,
the Notes will be secured by a lien and security interest covering
all of the assets of the Company, Firestone Communications, Inc.
and Sorpresa! Rights LLC, each a wholly owned subsidiary of the
Company, pursuant to a security agreement between such parties and
the Investors (“Security Agreement”) and will be
convertible into shares of the Company’s Series B
Participating Preferred Stock (“Series B
Preferred”); and
WHEREAS,
the Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of
1933, as amended (“Securities Act”), and Rule 506
of Regulation D (“Regulation D”) as
promulgated under the Securities Act.
NOW
THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1.
Securities Purchase . Subject to the terms and conditions of
this Agreement, each Investor hereby purchases from the Company,
and the Company hereby issues and sells to each Investor (the
“Securities Purchase”), the principal amount of Notes
for an aggregate purchase price (“Purchase Price”) as
set forth opposite each Investor’s name on Schedule I.
The form of Note is attached as Exhibit A , the form of
Security Agreement to secure the Company’s obligations under
the Notes is attached as Exhibit B and the form of
Certificate of Designations, Preferences and Rights for the
Series B Preferred is attached as Exhibit C
.
2.
Purchase Price Rebate . Concurrently with the consummation
of the Securities Purchase, the Company is paying to certain
Investors the cash sum, and issuing to it warrants (“Rebate
Warrants”) to purchase the number of shares of the
Company’s Common Stock as set forth opposite each
Investor’s name on Schedule I, representing a rebate on
the Purchase Price (“Rebate”). The form of Rebate
Warrants is attached as Exhibit D .
3.1
The Securities Purchase is being consummated concurrently with the
execution of this Agreement (“Closing”) at the offices
of Graubard Miller, The Chrysler Building, 405 Lexington Avenue,
19th Floor, New York, New York 10174 at 10:00 a.m., on
or
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before
February 11, 2009. Additional subsequent Closings may occur
beyond the closing date upon the mutual agreement of the Investors
and the Company. Accordingly, (a) the Notes are being
delivered to the Investors by the Company, (b) the Purchase
Price is being paid and delivered via wire transfer to the Company
by the Investors and (c) the Rebate Warrants are being
delivered to the Investors by the Company and the cash portion of
the Rebate is being paid and delivered via wire transfer to the
Investors by the Company, concurrently with the execution of this
Agreement. The applicable wiring instructions of each party are set
forth on Exhibit D hereto.
3.2
As a condition of to the Securities Purchase, Stuart Rekant, the
Chairman and Chief Executive Officer of the Company (or parties
associated with him or introduced by him) shall purchase a Note or
Notes in an aggregate amount of at least $150,000.
4.
Representations, Warranties and Covenants of the Company .
The Company hereby makes the following representations, warranties
and covenants to the Investor as of the date hereof
that:
4.1
Organization, Organizational Documents .
(a) 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
now conducted. The Company is duly qualified and is in good
standing in each jurisdiction in which the failure so to qualify
would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the business, assets,
properties, rights and results of operations of the Company taken
as a whole (“Material Adverse Effect”).
(b) Attached
as Schedule 4.1(b) hereto are correct and complete
copies of the Amended and Restated Certificate of Incorporation and
the By-laws of the Company, including all amendments thereto, each
as in effect on the date hereof (collectively, the
“Organizational Documents”). No amendments, revisions
or waivers of any provisions of any Organizational Documents are in
the process of occurring or otherwise have been
requested.
4.2
Subsidiaries . Except as set forth on
Schedule 4.2 , the Company (i) does not presently
own, directly or indirectly, an interest in any corporation,
association or other business entity and (ii) is not a party
to any joint venture, partnership, or similar
arrangement.
4.3
Authorization . All corporate action on the part of the
Company, its officers, directors, and shareholders necessary for
the (a) authorization, execution, issuance and/or delivery of
(i) this Agreement, (ii) the Notes, (iii) the
Series B Preferred issuable upon conversion of the Notes and
the related Certificate of Designations, Preferences and Rights for
the Series B Preferred, (iv) the Security Agreement and
(iv) the Rebate Warrants and the Warrant Shares (defined
below) (the foregoing hereinafter collectively referred to as the
“Transaction Documents”) and (b) the performance
of all obligations of the Company hereunder and thereunder has been
taken. The Transaction Documents constitute valid and legally
binding obligations of the Company, enforceable against the Company
in accordance with their
2
respective
terms, except (1) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other laws of general application affecting
enforcement of creditors’ rights generally, (2) as
limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and
(3) to the extent the indemnification and contribution
provisions contained in the Transaction Documents may be limited by
applicable federal or state laws.
4.4
No Conflict . The execution and delivery by the Company of
this Agreement and the other Transaction Documents, the
consummation of the transactions contemplated hereby and thereby,
and the compliance with the provisions hereof and thereof, will not
(i) violate or conflict with any of the Organizational
Documents, (ii) violate, conflict with, result in a breach of,
constitute a default under, or give rise to any right of
termination, cancellation, or acceleration (with or without notice
or lapse of time, or both) under any material agreement, lease,
security, license, permit, or instrument to which the Company is a
party, or to which it or its material assets or businesses are
subject, (iii) result in the imposition of any Encumbrance (as
hereinafter defined) on any material asset of the Company or
(iv) violate or conflict with any Laws (as hereinafter
defined) applicable to the Company or its properties or assets,
except in each case for such violations, conflicts and Encumbrances
which would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. For purposes of
this Agreement, “Encumbrance” means any security
interest, mortgage, lien, pledge, charge, easement, reservation,
equities, rights of way, options, rights of first refusal and any
other encumbrances, whether or not relating to the extension of
credit or the borrowing of money. For purposes of this Agreement,
“Laws” means all laws, statutes, rules, regulations,
ordinances, bylaws, writs, permits, orders and other legislative,
administrative or judicial restrictions.
4.5
Capitalization . The numbers of all authorized, issued and
outstanding shares of capital stock of the Company are set forth on
Schedule 4.5 hereto. No holder of the Company’s
securities is entitled to preemptive or similar rights with respect
to the Company’s securities. Except as disclosed in
Schedule 4.5 and as contemplated by the Transaction
Documents, there are no (i) outstanding securities exercisable
or convertible into securities of the Company, (ii) other
outstanding options, warrants, script rights, calls, commitments or
similar rights or obligations relating to the Company’s
securities, (iii) any other agreements, contracts, commitments
or understandings giving any person any right to subscribe for or
acquire any of the Company’s securities, or (iv) any
other agreements, contracts, commitments or understandings by which
the Company is or may become bound to issue any of its
securities.
4.6
Registration Rights . Except as set forth on
Schedule 4.6 hereto, no holder of any of the
Company’s securities or any other person has any registration
rights with respect to such securities.
4.7
No Right to Receive or Purchase . Neither the issuance of
the Notes sold hereunder, the issuance of any shares of
Series B Preferred upon conversion of the Notes
(“Conversion Shares”) nor the issuance of any shares of
Common Stock upon exercise of the Rebate Warrants (“Warrant
Shares” and together with the Conversion Shares, the
“Underlying Securities”) will give any holder of any of
the Company’s securities outstanding prior to such
3
issuance
(a) the right to receive or purchase any additional securities
of the Company or (b) the right to an anti-dilution adjustment to
any outstanding securities of the Company or securities into or for
which such outstanding securities may be exercised or
converted.
4.8
Valid Issuance; Underlying Securities; Outstanding
Securities .
(a) The
Notes and Rebate Warrants when issued, sold, and delivered in
accordance with the terms of this Agreement, will be duly and
validly issued, and, based in part upon the representations of the
Investor in this Agreement, will be issued in compliance with all
applicable federal and state securities laws.
(b) Upon
issuance in accordance with the terms of the Notes and Rebate
Warrants, all Underlying Securities shall be duly and validly
issued, fully paid and nonassessable, and issued in compliance with
all applicable Laws, as presently in effect
(c) All
outstanding securities of the Company were duly and validly
authorized and issued, are fully paid and nonassessable, and were
issued in compliance with all applicable federal and state
securities laws.
4.9
Filings, Consents and Approvals . The Company is not
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other person in connection with the execution,
delivery and performance by the Company of the Transaction
Documents, other than (a) a Form D in accordance with
Regulation D, (b) a Current Report on Form 8-K disclosing
the sale of unregistered securities and any other event of which
disclosure is required, (c) applicable Blue Sky filings,
(d) such filings as may be necessary to perfect the security
interest granted to the Investors under the Security Agreement and
(e) where the failure to obtain such consent, waiver,
authorization or order, or to give such notice or make such filing
or registration would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse
Effect.
4.10
Financial Information .
(a) As
of the Closing, the Company has the approximate amount
of cash and receivables as indicated on
Schedule 4.10(a).
(b)
Schedule 4.10(b) sets forth the unaudited balance sheet
of the Company at September 30, 2008 (the “Balance
Sheet”) and the related statements of operations,
shareholders’ equity and cash flows of the Company for the
nine months then ended (collectively, the “Financial
Statements”).
(c) The
Financial Statements present fairly in all material respects the
financial position of the Company and the results of operations,
shareholders’ equity and cash flows of the Company at the
dates and for the periods indicated.
(d) Except
as incurred under the existing terms of any Disclosed Agreement (as
defined below in Section 4.15(a)), at the date of the Balance
Sheet, the Company did not have
4
any
material Liability (as hereinafter defined) of any nature or any
loss contingency (as such term is used in the Statement of
Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975) that should have
been disclosed or provided for on the Balance Sheet and that was
not adequately disclosed or provided for on the Balance Sheet,
including the notes thereto. For purposes of this Agreement,
“Liability” means any liability or obligation, whether
known, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted.
4.11
Absence of Changes; Review of Interim Financials
.
(a) Since
the date of the Balance Sheet and except as contemplated by the
Transaction Documents and as set forth on Schedule 4.11
, there has not been:
(i)
any change in the assets, liabilities or financial condition of the
Company, except for changes (i) in the ordinary course of
business or (ii) which in the aggregate have not resulted in
and would not reasonably be expected to result in a Material
Adverse Effect;
(ii)
any event or change that would reasonably be expected to result in
a Material Adverse Effect, individually or in the aggregate,
whether or not insured against;
(iii)
any damage, destruction or loss (whether or not covered by
insurance) affecting any asset of the Company in excess of
$50,000;
(iv)
any material Liability or loss contingency incurred by the Company
that would have to be disclosed on financial statements (including
the notes thereto) (on a consolidated basis) in accordance with
United States generally accepted accounting principles (“U.S.
GAAP”), other than liabilities incurred in the ordinary
course of business consistent with past practice;
(v)
any commitment to borrow money from or provide financial support to
any person or entity entered into by the Company;
(vi)
any payment or discharge of any material Liability by the Company
outside the ordinary course of business consistent with past
practice;
(vii)
any sale, assignment, license, or other disposition of any material
asset or right of the Company outside the ordinary course of
business consistent with past practice;
(viii)
any declaration or payment of any dividend or other distribution
with respect to any shares of capital stock of the Company, or the
direct or indirect acquisition of any equity securities by the
Company;
5
(ix)
any labor trouble, problem or grievance affecting the business of
the Company other than such matters which would not reasonably be
expected to have a Material Adverse Effect;
(x)
any capital expenditure or commitment therefor by the Company or
any subsidiary for additions to property, plant or equipment in
excess of $50,000;
(xi)
any change in the accounting or tax methods, practices, or
assumptions therefor followed by the Company; or
(xii)
any other transaction or event not in the ordinary course of
business consistent with past practice that the Investor has not
been advised of.
(b) The
Company’s independent accountants have not advised the
Company that the Financial Statements (i) do not comply in all
material respects with the applicable accounting requirements of
the Securities Act and the related published rules and regulations
thereunder or (ii) are not in conformity with U.S. GAAP
(except for the lack of complete footnotes and subject to year-end
audit adjustments).
4.12
Litigation . Except as disclosed on
Schedule 4.12 , there is no action, suit, proceeding,
claim or investigation pending or, to the knowledge of the Company,
currently threatened against the Company which questions the
validity of the Transaction Documents, or the right of the Company
to enter into any of them, or to consummate the transactions
contemplated hereby or thereby, or which would reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect or cause any change in the current equity
ownership of the Company, nor is the Company aware that there is
any basis for the foregoing. The foregoing includes, without
limitation, actions, pending or threatened (or any basis therefor
known to the Company), involving the prior employment of any of the
Company’s employees, their use in connection with the
Company’s business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a
party or subject to the provisions of any order, writ, injunction,
judgment, or decree of any court or government agency or
instrumentality.
4.13
Intellectual Property .
(a) The
Company has sufficient right, title and/or interest in, or has
otherwise acquired use rights with respect to all proprietary
rights and processes and intellectual property owned by or licensed
to the Company (collectively, the “Intellectual
Property”) necessary for its business as now conducted and,
to the best knowledge of the Company, without any conflict with or
infringement of the rights of others.
(b) The
Company has not received any communications alleging that the
Company has violated or, by conducting its business as currently
conducted would violate any of the patents, trademarks, service
marks, trade names, copyrights, or trade secrets, or other
proprietary rights of any other person or entity. The Company is
not aware that any of its
6
employees,
officers, or consultants are obligated under any contract
(including licenses, covenants, or commitments of any nature) or
other agreement, or subject to any judgment, decree, or order of
any court or administrative agency, that would interfere with the
use of such employee’s, officer’s, or
consultant’s commercially reasonable efforts to promote the
interests of the Company or that would conflict with the
Company’s business as currently conducted. None of the
execution or delivery of the Transaction Documents, or the carrying
on of the Company’s business as currently conducted by the
employees of the Company, or the conduct of the Company’s
business as currently conducted, will, to the Company’s
knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such
employees, officers or consultants are now obligated.
4.14
Compliance with Other Instruments . The Company is not in
violation or default of any provisions of its Amended and Restated
Certificate of Incorporation or Bylaws or, of any instrument,
judgment, order, writ, decree, mortgage, indenture, lease, license
or contract to which it is a party or by which it is bound or, to
its knowledge, of any provision of federal, state, or local
statute, rule, or regulation applicable to the Company, except as
would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.
(a) All
material written contracts, agreements, licenses, commitments,
instruments and understandings (“Disclosed Agreements”)
are set forth in the Company’s public filings.
(b) Each
Disclosed Agreement is in full force and effect and constitutes a
valid and binding obligation of the Company and to the knowledge of
the Company, the other parties thereto. Except as set forth on
Schedule 4.15(b) , the Company has performed in all
material respects the obligations requi
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