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EXHIBIT 10.9
NOTE PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made this 7th day of June 1999, between
XXXX XXXXXX DIRECT, INC. (the "Company") and XXX XXXXX (the "Purchaser").
RECITAL
WHEREAS, the Company has authorized the issuance and sale of the
Company's 10% Convertible Notes up to an aggregate principal amount of $75,000
having the terms set forth in Exhibit A attached hereto (the "Note"); and
WHEREAS, the Purchaser desires to purchase, and the Company desires to
issue, the Note on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, the Company and the Purchaser agree as
follows:
1. PURCHASE AND SALE OF THE NOTE.
1.1 Subject to the terms and conditions contained in this Agreement, at
the Closing (as hereinafter defined) the Purchaser shall purchase from the
Company and the Company shall sell to the Purchaser the Note for $75,000 (the
"Loan Amount") which shall be payable via wire transfer to the Company's
designated account in the amount of $50,000.00 (not later than the next business
day after the date hereof).
1.2 Grant of Security Interest and Subordination. Effective on the
Closing Date, the Company shall grant to the Purchaser a security interest in
all of the assets of the Company to secure the prompt repayment of the
principal, interest and costs of collection of the Note. The security interest
shall only be subordinate to one lien granted by the Company in connection with
approximately $650,000.00 of indebtedness due and owing by the Company.
1.3 Warrants to be Issued to Purchaser or His Designees. In connection
with the purchase of the Note, the Company shall issued to the Purchaser, Common
Stock Purchase Warrants having the terms set forth in Exhibit B attached hereto
(the "Warrant") entitling the Purchaser to purchase 100,000 shares of the
Company's Common Stock at an exercise price equal to $1.00. The Warrant shall
have and exercise period of five (5) years from its issuance date.
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1.4 Guarantee by Xxxxxxxxx. The principal, interest and costs of
collection of the Note shall be unconditionally guaranteed by Xx. X.X. Xxxxxxxxx
pursuant to a guarantee agreement to be executed on the Closing Date (the
"Guarantee Agreement"). The Guarantee Agreement shall also secure any and all
additional advances made by the Purchaser from and after the Closing Date.
2. CLOSING.
2.1 Closing Date. The closing of the purchase and sale of the Notes
(the "Closing") shall take place on June __, 1999 or such other day as agreed to
by the parties (the "Closing Date").
2.2 Items to be Delivered to Purchaser. The following shall be
delivered by the Company to the Purchaser on the Closing Date:
(a) the Note purchased by the Purchaser;
(b) the Security Agreement;
(c) the Guarantee Agreement executed by Xx. X.X.
Xxxxxxxxx;
(d) a certificate of the secretary or an assistant secretary
of the Company certifying (i) an attached complete and correct copy of
its articles of incorporation, (ii) an attached complete and correct
copy of its bylaws, and (iii) an attached complete and correct copy of
resolutions duly adopted by its board of directors authorizing the
execution, delivery and performance of this Agreement and the Note.
2.3 Items to be Delivered to the Company. On the Closing Date, the
Purchaser shall deliver to the Company the Loan Amount by wire transfer to the
account designated by the Company.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company. The Company
represents and warrants that as of the date of this Agreement:
(a) Existence. The Company is a corporation duly organized and
in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing in all states where
such qualification is necessary, except for those jurisdictions in
which the failure to qualify would not, in the aggregate, have a
material adverse effect on the Company's financial condition, results
of operations or business.
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(b) Authority. The execution and delivery by the Company of
this Agreement and the Note (i) are within the Company's corporate
powers; (ii) are duly authorized by the Company's board of directors;
(iii) are not in contravention of the terms of the Company's
certificate of incorporation or bylaws; (iv) are not in contravention
of any law or laws; (v) except for the filing of a Form D Notice with
the Securities and Exchange Commission and any exemption filing related
thereto which may be required pursuant to applicable state securities
or "blue sky" laws, do not require any governmental consent,
registration or approval; (vi) do not contravene any contractual or
governmental restriction binding upon the Company; and (vii) will not
result in the imposition of any lien, charge, security interest or
encumbrance upon any property of the Company under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Company is a party or by
which the Company or any of the Company's property may be bound or
affected.
(c) Binding Effect. This Agreement and the Note have been duly
authorized, executed and delivered by the Company and constitute the
valid and legally binding obligation of the Company, enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(d) Capitalization. The authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, par value $.0001
per share, 5,632,776 shares of which are issued and outstanding and
5,000,000 shares of authorized Preferred Stock, par value $0.001 per
share, of which none are issued or outstanding. The shares of common
stock issuable upon conversion of the Note (the "Conversion Shares")
and the shares issuable upon exercise of the Warrant granted to
Purchaser in connection with the Note (collectively the "Shares") have
been duly and validly authorized and reserved for issuance and, when
issued and delivered in accordance with the terms of this Agreement,
will be duly and validly issued, fully paid and non-assessable. The
Company shall at all times have authorized, reserved and set aside a
sufficient number of Common Shares for the conversion of the Note and
for payment of interest on the Note by issuing Interest Shares.
(e) Disclosure Documents. The Company has furnished the
Purchaser with a Disclosure Schedule attached hereto and made a part
hereof.
Except as disclosed in the Disclosure Schedule, the Company has not
incurred any material liability except in the ordinary course of its
business consistent with past practice and there has not been any
change in the business, financial condition or results of operations of
the Company which has had a material adverse effect on the Company. The
Financial Statements in the Disclosure Schedule are accurate, complete
and have been prepared in accordance with the books and records of the
Company and in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present (subject, in
the case of
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the unaudited statements, to normal, recurring audit adjustments that
are not material) the consolidated financial position of the Company as
at the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended.
(f) Litigation. Except as disclosed in the Disclosure
Schedule, there is neither pending nor, to the Company's knowledge,
threatened any action, suit, proceeding or claim, or any basis
therefor, to which the Company is or may be named as a party or its
property is or may be subject other than routine litigation in the
ordinary course of business or which calls into question any of the
transactions contemplated by this Agreement.
(g) Securities Matters. Subject to the accuracy of the
representations of the Purchaser set forth in Section 3.2 hereof, the
offer, sale and issuance of the Note and the Shares as contemplated by
this Agreement are exempt from the registration requirements of the
Securities Act of 1933 as amended (the "Securities Act"). The Company
has complied and will comply with all applicable state "blue sky" or
securities laws in connection with the offer, sale and issuance of the
Note and the Shares as contemplated by this Agreement. The Company will
become subject to the reporting requirements of the Securities and
Exchange Commission Act of 1934, as amended, within thirty (30) days of
the date hereof.
3.2 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants that as of the date of the execution of this Agreement:
(a) Authorization. This Agreement constitutes a valid and
legally binding obligation of the Purchaser.
(b) Investment Representations. (i) The Purchaser has received
and reviewed the Company's Disclosure Documents and the Purchaser or
the Purchaser's designated representatives have concluded a
satisfactory due diligence investigation of the Company and have had an
opportunity to review the documents provided by the Company and to have
all of their questions related thereto satisfactorily answered.
(ii) The Purchaser acknowledges that the Note and the
Shares are speculative and involve a high degree of risk and
the Purchaser represents that it is able to sustain the loss
of the entire amount of its investment.
(iii) The Purchaser (or its members and/or officers)
has previously invested in unregistered securities and has
sufficient financial and investing expertise to evaluate and
understand the risks of the Note and the Shares.
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(iv) The Purchaser has received from the Company, and
is relying on, no representations or projections (except as
set forth in this Agreement or the Disclosure Documents) with
respect to the Company's business and prospects.
(v) The Purchaser is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(vi) The Purchaser is acquiring the Note and the
Shares for investment purposes only without intent to
distribute the same, and acknowledges that the Note and the
Shares have not been registered under the Securities Act and
applicable state securities laws, and accordingly, constitute
"restricted securities" for purposes of the Securities Act and
such state securities laws.
(vii) The Purchaser acknowledges that it will not be
able to transfer the Note and the Shares except upon
compliance with the registration requirements of the
Securities Act and applicable state securities laws or
exemptions therefrom.
(viii) The certificates and/or instruments evidencing
the Note and the Shares will contain a legend to the foregoing
effect.
4. PURCHASER REGISTRATION OF SHARES. The Shares issuable upon
conversion of the Note as well as the Shares issuable upon exercise of the
Warrant shall receive piggyback registration rights. If and when the Company
registers shares of its common stock, the Company covenants that the Purchaser
shall be included in the Registration Statement as a selling shareholder with
respect to the Shares.
5. MISCELLANEOUS.
5.1 Confidentiality. (a) The Purchaser agrees to keep confidential any
and all non-public information delivered or made available to the Purchaser by
the Company except for disclosures, as necessary, made by the Purchaser to the
Purchaser's officers, directors, employees, agents, counsel and accountants each
of whom shall be notified by the Purchaser of this confidentiality covenant and
for whom the Purchaser shall be liable in the event of any breach of this
covenant by any such individual or individuals; provided, however, that nothing
herein shall prevent the Purchaser from disclosing such information (a) upon the
order of any court or administrative agency, (b) upon the request or demand of
any regulatory agency or authority having jurisdiction over the Purchaser, (c)
which has been publicly disclosed or (d) to any of its members provided that any
such members agree in writing (with a copy provided to the Company) to be bound
by confidentiality provisions in form and substance substantially as are
contained herein. In the event of a mandatory disclosure as described in clause
(a) and/or (b) of the preceding sentence, the Purchaser shall promptly notify
the Company in writing of any applicable order, request or demand for such
information, cooperate with the Company if and to the extent that the Company
elects to seek an appropriate protective order or other relief from such order,
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request, or demand, and disclose only the minimal amount of information
ultimately required to be disclosed. The Purchaser shall not use for its own
benefit, nor permit any other person to use for such person's benefit, any of
the Company's non-public information including, without limitation, in
connection with the purchase and/or sale of the Company's securities.
(b) The Company shall in no event disclose non-public
information to the Purchaser, advisors to or representatives of the
Purchaser unless prior to disclosure of such information the Company
marks such information as "Non-Public Information - Confidential" and
provides the Purchaser, such advisors and representatives with the
opportunity to accept or refuse to accept such non-public information
for review. The Company may, as a condition to disclosing any
non-public information hereunder, require the Purchaser's advisors and
representatives to enter into a confidentiality agreement in form
reasonably satisfactory to the Company and the Purchaser.
(c) Nothing herein shall require the Company to disclose
non-public information to the Purchaser or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any Purchasers who purchase stock
in the Company in a public offering, to money managers or to securities
analysts.
5.2 Legends. To the extent applicable, each note, certificate or other
document evidencing the Notes to be purchased and sold pursuant to this
Agreement and any Shares issued shall be endorsed with the legends set forth
below, and the Purchaser on behalf of itself and each holder of the Note
covenants that, except to the extent such restrictions are waived by the
Company, it shall not transfer the Note or Shares without complying with the
restrictions on transfer described in the legends endorsed on such note or
certificate:
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH
ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) If required by the authorities of any state in connection
with the issuance or sale of the Note or the Shares, the legend
required by such state authority.
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5.3 Costs and Expenses. The Company shall reimburse Purchaser for its
reasonable legal fees and expenses in connection with the purchase of the Note.
The Company shall be responsible for all of its fees and expenses in connection
with this transaction.
5.4 Assignability; Successors. The provisions of this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of the parties hereto.
5.5 Survival. All agreements, covenants, representations and warranties
made by the Company or by the Purchaser herein shall survive the execution and
delivery of this Agreement.
5.6 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE
LAWS OF THE STATE OF NEW JERSEY WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAWS.
5.7 Counterparts: Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. The descriptive
headings in this Agreement are inserted for convenience of reference only and
shall not affect the construction of this Agreement.
5.8 Entire Agreement, Amendments. This Agreement and the Exhibits
contain the entire understanding of the parties with respect to the subject
matter hereof, and supersede all other representations and understandings, oral
or written, with respect to the subject matter hereof. No amendment,
modification, alteration, or waiver of the terms of this Agreement or consent
required under the terms of this Agreement shall be effective unless made in a
writing, which makes specific reference to this Agreement and which has been
signed by the Company and the Purchaser. Any such amendment, modification,
alteration, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
5.9 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given or
made when delivered in hand, deposited in the mail, or sent by facsimile, with
confirmation (if sent by facsimile on a non-business day, receipt shall be
deemed to have occurred on the next succeeding business day). Communications or
notices shall be delivered personally or by certified or registered mail,
postage, or by facsimile and addressed as follows, unless and until either of
such parties notifies the other in accordance with this Section of a change of
address:
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if to the Company: Xxxx Xxxxxx Direct, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Att: Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
if to the Purchaser: Xxx Xxxxx
Xxxxx 00
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx. 0000 Xxxxxxxxx
Tel: 000-00-0-0000-0000
Fax: 000-00-0-0000-0000
with copies to: Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
5.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
5.11 Maximum Interest. It is expressly stipulated and agreed to be the
intent of the Company and the Purchaser at all times to comply with the
applicable law governing the maximum rate of interest payable on or in
connection with all indebtedness and transactions hereunder (or applicable
United States federal law to the extent that it permits Purchaser to contract
for, charge, take, reserve or receive a greater amount of interest). If the
applicable law is ever judicially interpreted so as to render usurious any
amount of money or other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of the Note results in the
Company's having paid any interest in excess of that permitted by law, then it
is the Company's and the Purchaser's
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express intent that all excess cash amounts theretofore collected by Purchaser
be credited on the principal balance of the Note (or if the Note has been or
would thereby be paid in full, refunded to the Company), and the provisions of
this Agreement immediately be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder. The right to
accelerate maturity of the Note does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
the Purchaser does not intend to collect any unearned interest in the event of
acceleration.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
XXXX XXXXXX DIRECT, INC.
By: /s/ X.X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
/s/ Xxx Xxxxx
----------------------------------------
Xxx Xxxxx
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF
UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY
ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
No. 1 June 7, 1999
XXXX XXXXXX DIRECT, INC.
10% CONVERTIBLE NOTE
FOR VALUE RECEIVED, Xxxx Xxxxxx Direct, Inc., a Delaware corporation
(the "Company") hereby promises to pay to the order of Xxx Xxxxx having an
address at Xxxxx 00, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx Xxx. 3000 Australia (the
"Holder"), or his registered assigns, the principal sum of Seventy Five Thousand
Dollars ($75,000.00), and to pay interest from the date hereof on the principal
sum at the rate of 10% per annum based on a 365-day year, such interest to
accrue from the date hereof (the "Closing Date"). The principal and accrued
interest shall be paid in full on or before the earlier of (i) thirty (30) days
from the Closing Date, or (ii) the occurrence of an Event of Default as defined
herein (the "Maturity Date") subject to extension as described in Section 7(b)
below.
This Note is an authorized issue of $75,000 aggregate amount of 10%
Notes of the Company (collectively, the "Notes") issued pursuant to a Note
Purchase Agreement dated as of June 7, 1999 between the Company and the Holder
(the "Note Purchase Agreement"). The Holder of this Note is entitled to the
benefits of the Note Purchase Agreement and to enforce the agreements of the
Company contained therein. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Note Purchase Agreement.
All payments shall be paid in lawful money of the United States of America at
the principal office of the Holder or at such other place as the Holder may
designate from time to time in writing to the Company.
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1. PREPAYMENT. The Company may prepay and redeem the Note, at the
election of the Company, upon not less than 10 days' notice, at any time as a
whole only and not in part, at a price equal to the outstanding principal of the
Note together with accrued interest to the Maturity Date.
2. CONVERSION RIGHTS. The Note and any and all interest payable thereon
shall be convertible, at the option of the Holder, at any time (i) prior to the
Maturity Date or (ii) within five (5) business days after receipt of written
notice of redemption by the Company into shares of Common Stock of the Company
at a price equal to $1.00 per share.
3. REGISTRATION. The Company shall maintain at its principal office a
register of the Note and shall record therein the names and addresses of the
registered holders of the Notes, the address to which notices are to be sent and
the address to which payments are to be made as designated by the registered
holder if other than the address of the holder, and the particulars of all
transfers, exchanges and replacements of Notes. No transfer of a Note shall be
valid unless the registered holder or his or its duly appointed attorney request
such transfer to be made on such register, upon surrender thereof for exchange
as hereinafter provided, accompanied by an instrument in writing, in form and
execution reasonably satisfactory to the Company. Each Note issued hereunder,
whether originally or upon transfer, exchange or replacement of a Note, shall be
registered on the date of execution thereof by the Company. The registered
holder of a Note shall be that person or entity in whose name the Note has been
so registered by the Company. A registered holder shall be deemed the owner of a
Note for all purposes, and the Company shall not be affected by any notice to
the contrary.
4. TRANSFER AND EXCHANGE. Subject to compliance with the restrictions
on transfer set forth in the Note Purchase Agreement, the registered holder of
any Note or Notes may, prior to maturity, surrender such Note or Notes at the
principal office of the Company for transfer or exchange. Within a reasonable
time after notice to the Company from a registered holder of its intention to
make such exchange and without expense (other than applicable transfer taxes, if
any) to such registered holder, the Company shall issue in exchange therefor
another Note or Notes dated the date to which interest has been paid on, and for
the unpaid principal amount of, the Note or Notes so surrendered, containing the
same provisions and subject to the same terms and conditions as the Note or
Notes so surrendered. Subject to the restrictions on transfer set forth in the
Note Purchase Agreement, each new Note shall be made payable to such person or
entity, as the registered holder of such surrendered Note or Notes may
designate. Notes issued upon any transfer or exchange shall be only in
authorized denominations, which shall be $20,000.
5. REPLACEMENT. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of any Note and, if requested by the
Company in the case of any such loss, theft or destruction, upon delivery of an
indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor, in the
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amount of the unpaid principal of such Note, and dated the date to which
interest has been paid, in lieu of such lost, stolen, destroyed or mutilated
Note.
6. DEFAULT. The Company shall be in default under this Note upon the
occurrence of: (i) any of the events specified in Section 6(a); (ii) any of the
events specified in Section 6(b) hereof and the failure to cure such default
within ten (10) days after receipt of written notice thereof from the Holder; or
(iii) any of the events specified in Section 6(c) hereof (any of the foregoing
being an "Event of Default"):
(a) Failure to make any principal or interest payment required
under this Note on the due date of such payment;
(b) Any material default, breach or misrepresentation shall
occur under the terms and provisions of the Note Purchase Agreement; or
(c) Insolvency of, business failure of, or an assignment for
the benefit of creditors by or the filing of a petition under
bankruptcy, insolvency or debtor's relief law, or for any readjustment
of indebtedness, composition or extension by the Company, or commenced
against the Company which is not discharged within sixty (60) days.
7. LATE FEES.
(a) If the principal balance and accrued interest on this Note
are not paid in full at the Maturity Date, then the Company shall
immediately upon demand pay to Holder a late charge equal to ten
percent (10%) of the entire amount of principal and/or accrued interest
unpaid as of the Maturity Date. If the principal balance and accrued
interest on this Note are not paid in full before 15 days from the
Maturity Date, then the Company shall immediately upon demand pay to
the Holder an additional late charge equal to ten percent (10%) of the
entire amount of principal and/or accrued interest unpaid as of such
date. Such late fees shall be paid regardless of whether this Note has
been, or could be, declared in default and shall be in addition to all
other remedies available to the Holder;
(b) Provided, however, the Maturity Date may be extended for
an additional period of thirty (30) days at any time on or prior to the
Maturity Date upon the payment by the Company of $12,500.00 via wire
transfer of immediately available funds to an account designated by
Holder.
8. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default:
(a) specified in clause (c) of Section 6, then the Note shall
be automatically accelerated and immediately due and payable at the
option of Holder, without notice or
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demand, and said amount shall accrue interest from the date of default
at the rate of seventeen percent (17%) per annum;
(b) specified in clauses (a) or (b) of Section 6, then the
Holder may declare the Note immediately accelerated, due and payable
and said amount shall accrue interest from the date of default at the
rate of seventeen percent (17%) per annum; and
(c) the Holder shall have all of the rights and remedies, at
law and in equity, by statute or otherwise, and no remedy herein
conferred upon the Holder is intended to be exclusive of any other
remedy and each remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law,
in, equity, by statute or otherwise.
9. CHANGES; PARTIES. This Note can only be changed by an agreement in
writing signed by the Company and the Holder. This Note shall inure to the
benefit of and be binding upon the Company and the Holder and their respective
successors and assigns.
10. WAIVER OF PRESENTMENT. The Company hereby waives presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note.
11. MAXIMUM RATE OF INTEREST. It is expressly stipulated and agreed to
be the intent of the Company and Holder at all times to comply with the
applicable law governing the maximum rate of interest payable on or in
connection with all indebtedness and transactions hereunder (or applicable
United States federal law to the extent that it permits Holder to contract for,
charge, take, reserve or receive a greater amount of interest). If the
applicable law is ever judicially interpreted so as to render usurious any
amount of money or other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of this Note or the indebtedness
hereunder or if any prepayment by the Company results in the Company's having
paid any interest in excess of that permitted by law, then it is the Company's
and Holder's express intent that all excess cash amounts theretofore collected
by Holder be credited on the principal balance of this Note (or if this Note has
been or would thereby be paid in full, refunded to the Company), and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collectible hereunder reduced, without the necessity of the execution
of any new document, so as to comply with the applicable law, but so as to
permit the recovery of the fullest amount otherwise called for hereunder. The
right to accelerate maturity of this Note does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Holder does not intend to collect any unearned interest in the
event of acceleration.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE
LAWS OF THE STATE OF NEW JERSEY WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAWS.
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IN WITNESS WHEREOF, the Company has executed this Note as of the day
and year set forth above.
XXXX XXXXXX DIRECT, INC.
By: /s/ X.X. Xxxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
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THE WARRANTS REPRESENTED BY THIS CERTIFICATE ("WARRANTS") AND THE UNDERLYING
WARRANT SHARES ("WARRANT SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE WARRANTS MAY NOT BE
EXERCISED OFFERED OR SOLD UNLESS, IN EACH CASE, THE WARRANTS AND WARRANT SHARES
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, AS EVIDENCED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
PLEDGED, HYPOTHECATED AND ENCUMBERED EXCEPT PURSUANT TO THE PROVISIONS CONTAINED
HEREIN.
WARRANTS TO PURCHASE COMMON STOCK
XXXX XXXXXX DIRECT, INC., a Delaware corporation (the "Company") hereby
grants to XXX XXXXX (the "Holder") One Hundred Thousand (100,000) transferable
warrants (the "Warrants") for the purchase of common stock of the Company (the
"Common Stock"), with each whole Warrant entitling the Holder to purchase one
share of Common Stock (each a "Warrant Share" and collectively the "Warrant
Shares") on the terms and subject to the conditions set forth herein.
1. TERM. The Warrants may be exercised, in whole or in part, at any
time and from time to time until 5:00 Pacific Time on the date five (5) years
from the date of issuance (the "Exercise Period").
2. EXERCISE PRICE. The exercise price of each whole Warrant shall be
equal to $1.00.
3. EXERCISE OF WARRANTS. The Warrants are exercisable on the terms
provided herein at any time during the Exercise Period by the surrender of this
certificate to the Company at its principal office together with the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder,
accompanied by payment in full, in immediately available funds, of the amount of
the aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise. The Holder shall be deemed the record owner of such Warrant Shares as
of and from the close of business on the date on which this certificate is
surrendered together with the completed Notice of Exercise and payment in full
as required above (the "Exercise Date"). The Company agrees that the Warrant
Shares so purchased shall be issued as soon as practicable thereafter. It shall
be a condition to the exercise of the Warrants that the Holder or any transferee
hereof provide an
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opinion of counsel reasonably satisfactory to the Company that the Warrants and
the Warrant Shares to be delivered upon exercise thereof have been registered
under the Securities Act or that an exemption from the registration requirements
of the Securities Act is available.
4. FRACTIONAL INTEREST. In lieu of issuing fractional shares of Common
Stock upon exercise of the Warrants, the Company may pay the Holder a cash
amount determined by multiplying the fraction of a share otherwise issuable by
the Exercise Price as defined herein of one share of Common Stock.
5. WARRANTS CONFER NO RIGHTS OF STOCKHOLDER. The Holder shall not have
any rights as a stockholder of the Company with regard to the Warrant Shares
prior to the Exercise Date for any actual purchase of Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither the Warrants nor the Warrant
Shares issuable upon the exercise of the Warrants have been registered under the
Securities Act or any state securities laws. The Holder acknowledges by signing
this certificate that, as of the date of this Warrant and at the time of
exercise that: (a) the Holder has acquired the Warrant or the Warrant Shares, as
the case may be, for the Holder's own account; (b) the Holder has acquired the
Warrants or the Warrant Shares, as the case may be, for investment and not with
a view to distribution; and (c) either the Holder has a pre-existing personal or
business relationship with the Company or its executive officers, or by reason
of the Holder's business or financial experience the Holder has the capacity to
protect the Holder's own interests in connection with the transaction. The
Holder agrees, by acceptance of this certificate, that any Warrant Shares
purchased upon exercise of the Warrants may have to be held indefinitely or
until an exemption from registration is available, as evidenced by an opinion of
counsel reasonably satisfactory to the Company. The Holder, by acceptance of
this certificate, consents to the placement of a restrictive legend (the
"Legend") on the certificates representing any Warrant Shares that are purchased
upon exercise of the Warrants during the applicable restricted period under Rule
144 or any other applicable restricted period under the Securities Act. The
Legend shall be in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, UNLESS IN THE
WRITTEN LEGAL OPINION (APPROVED BY THE COMPANY) OF COUNSEL SATISFACTORY
TO THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
7. REGISTRATION RIGHTS. The Holder shall receive piggyback registration
rights for any Warrant Shares issuable upon the exercise of the Warrants such
that these shares shall be included in any registration statement being filed by
the Company under the Securities Act of
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1933, as amended; provided, however, in the event the Warrant Shares issuable
upon the exercise of the Warrants are not registered under the Securities Act of
1933, as amended, within nine months from and after the issuance date of the
Warrants, the Company shall file a Registration Statement under the Securities
Act of 1933, as amended, registering the Warrant Shares such that such Shares
shall be freely tradeable within not later than nine months from and after the
issuance date of the Warrants. In the event that the Warrant Shares are not so
registered within nine months, the Company shall agree to pay the holder thereof
$4,000 for each 30-day period that the Warrant Shares are not so registered.
8. RESERVATION OF SHARES. The Company agrees that, at all times during
the Exercise Period, the Company will have authorized and reserved, for the
exclusive purpose of issuance and delivery upon exercise of the Warrants, a
sufficient number of shares of its Common Stock to provide for the issuance of
the Warrant Shares.
9. ADJUSTMENT FOR CHANGES IN CAPITAL STOCK. If the Company at any time
during the Exercise Period shall, by subdivision, combination or
reclassification of securities, change any of the securities into which the
Warrants are exercisable into the same or a different number of securities of
any class or classes, the Warrants shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares if the Warrant Shares
had been outstanding immediately prior to such subdivision, combination, or
reclassification.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF CERTIFICATE. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any certificate representing the Warrants or the
Warrant Shares (referred to herein as the "original certificate"), and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to the Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the original
certificate if mutilated, the Company will make and deliver a new certificate of
like tenor in lieu of the original certificate.
11. ASSIGNMENT. The Warrants may be transferred subject to the
provisions of Section 6 of this Certificate.
12. GENERAL. This certificate shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable to contracts
between New Jersey residents entered into and to be performed entirely within
the State of New Jersey. The headings herein are for purposes of convenience and
reference only and shall not be used to construe or interpret the terms of this
certificate. The terms of this certificate may be amended, waived, discharged or
terminated only by a written instrument signed by both the Company and the
Holder. All notices and other communications from the Company to the Holder
shall be mailed by first-class registered or certified mail, postage pre-paid,
to the address furnished to the Company in writing by the last Holder who shall
have furnished an address to the Company in writing.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on
June 10, 1999.
XXXX XXXXXX DIRECT, INC.
Dated: June 10, 1999 By: /s/ X.X. Xxxxxxxxx
----------------- ---------------------------------------
X.X. Xxxxxxxxx,
President and Chief Executive Officer
Dated: June 10, 1999 By: /s/ Xxx Xxxxx
----------------- ---------------------------------------
Xxx Xxxxx
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NOTICE OF EXERCISE
To: Xxxx Xxxxxx Direct, Inc. (the "Company")
1. The undersigned hereby elects to exercise a total of ___________
Warrants for the purchase of a like number of Warrant Shares, and tenders
herewith payment of the Exercise Price for such shares in full.
2. In exercising the Warrants, the undersigned hereby confirms and
acknowledges that: (a) the Warrant Shares are being acquired solely for the
account of the undersigned for investment and not with a view to or for sale in
connection with any distribution; (b) the undersigned has a pre-existing
personal or business relationship with the Company or its executive officers, or
by reason of the undersigned's business or financial experience the undersigned
has the capacity to protect the undersigned's own interests in connection with
the exercise of the Warrants; and (c) the undersigned will not offer, sell or
otherwise dispose of any of the Warrant Shares unless the Warrant Shares have
been registered under the Securities Act or an exemption from such registration
is available, as evidenced by an opinion of counsel reasonably satisfactory to
the Company.
3. Please issue a certificate representing the Warrant Shares in the
name of the Holder and deliver the certificate to the address set forth below.
4. Please issue a new certificate representing the unexercised portion
(if any) of the Warrants in the name of the Holder and deliver the certificate
to the address set forth below.
Dated: _____________ _________________________________
(Name)
_________________________________
(Authorized Signature)
Address for Delivery:
_________________________________
_________________________________
_________________________________
_________________________________
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