Item 1.01 Entry Into a Material Definitive Agreement
Purchase Agreement
On July 20, 2017, the Board of Directors (the “Board”) of Salon Media Group, Inc. (the “Company”) determined to conclude the final closing (the “Final Closing”) of a private placement (the “Private Placement”) that was entered into pursuant to a Purchase Agreement (the “Purchase Agreement”) among the Company and purchasers identified therein (each, a “Purchaser” and together, the “Purchasers”) to issue and sell to the Purchasers in the Private Placement shares of the Company’s Series A Mandatorily Convertible Voting Preferred Stock (the “Series A Preferred Stock”). At a special meeting concluded on January 24, 2017, the Board of Directors approved the designation of the Series A Preferred Stock. The Company has authorized the issuance and sale in the Private Placement up to 2,417,471 shares of the Series A Preferred Stock, at the purchase price of $1.24 per share.
The Company completed the purchase and sale of the shares of the Series A Preferred Stock in three stages, each a “Closing.” As reported in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 27, 2017, the initial Closing (the “Initial Closing”) was completed on January 26, 2017. In the Initial Closing, the Company sold to the Purchasers an aggregate of 805,824 shares of Series A Preferred Stock for a total purchase price of $1 million. The purchase price was paid either in cash or by delivery for cancellation of certain demand promissory notes made by the Company to certain of the Purchasers who had advanced funds to the Company in anticipation of the Initial Closing.
As reported in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 27, 2017, the second Closing (the “Second Closing”) was completed on March 23, 2017. At the Second Closing, the Company sold to the Purchasers an aggregate of 173,252 shares of Series A Preferred Stock for a total purchase price of $0.215 million. The Second Closing included only investors who had previously indicated interest in participating in the Private Placement.
The Board determined to conclude the Final Closing on July 20, 2017. At the Final Closing, the Company sold to the Purchasers an aggregate of 221,601 shares of Series A Preferred Stock for a total purchase price of $0.275 million. The Final Closing included only investors who had previously indicated interest in participating in the Private Placement.
The Purchasers in each Closing included the Company’s Chief Executive Officer, Jordan Hoffner, and certain of his family members, the Company’s Chief Financial Officer, Elizabeth Hambrecht, and the Company’s director, William Hambrecht.
The sale of the shares of Series A Preferred Stock pursuant to the Purchase Agreement is being made in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof.
Exhibits
The Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. The above description of the material terms of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1.