Exhibit 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of November 7, 2001,
between Augustine Fund, L.P., an Illinois limited partnership ("Lender") and
Sales Online Direct, Inc., a Delaware corporation (the "Corporation").
RECITALS
A. The Corporation desires financing for payment of certain operating
expenses.
B. The Lender has agreed to extend to the Corporation, subject to the terms
and conditions set forth herein, loans in an aggregate principal amount of up to
$1,000,000.
C. Such loans shall be evidenced by promissory notes which will be
convertible into shares of the common stock of the Corporation pursuant to the
terms hereof and the terms of such promissory note.
D. The Corporation hereby notifies the Lender that the offering of the
promissory notes is not registered under the Securities Act of 1933; the
securities received by the Lender will be restricted and cannot be resold
without registration unless an exemption is available; Lender does not have the
protection of Section 11 of the Securities Act; and a registration statement for
the abandoned public offering was filed and subsequently, on August 30, 2001,
was withdrawn.
AGREEMENTS
In consideration of the recitals and the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions. In addition to the capitalized terms defined elsewhere in
this Agreement, the following capitalized terms shall have the following
respective meanings when used in this Agreement:
"Affiliate" as applied to any specified Person means any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such specified Person. The term "control" (including, with
correlative meanings, the terms "controlling" and "controlled by"), as applied
to any Person, means the possession, directly or indirectly, of 10% or more of
the voting power of such Person or the power otherwise to direct or cause the
direction of the management and policies of that Person, whether through voting,
by contract or otherwise. For purposes of this paragraph, "voting power" of any
Person means the total number of votes which may be cast by the holders of the
total number of outstanding shares of stock of any class or classes of such
Person in any election of directors of such Person. For purposes of this
Agreement, all executive officers and directors of a Person shall be deemed to
be Affiliates of such Person.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York, are authorized or required by law
to close.
"Capitalized Lease" means any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capitalized lease
or a capital expenditure on the Corporation's balance sheet.
"Change of Control Event" means (a) the closing of a sale of 50 percent or
more of the assets utilized by the Corporation in its business in bulk either in
one transaction or in a series of related transactions; or (b) the closing of an
equity issuance, sale, transfer or other disposition or transaction including
reorganization or consolidation or merger after which the current shareholders
of the Corporation no longer (i) have the legal and contractual right or power
to designate a majority of the members of the board of directors of the
Corporation or (ii) own and control at least 50 percent of the Corporation's
outstanding Common Stock on a fully-diluted basis.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" has the meaning ascribed to it in Section 3.1.
"Code" means the Internal Revenue of Code of 1986, as amended.
"Common Stock" means the common stock of the Corporation, $.001 par value
per share.
"Corporation" means Sales Online Direct, Inc., a Delaware corporation.
"Event of Default" has the meaning ascribed to it in Section 9.1.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Indebtedness" of any Person shall mean the principal of, premium, if any,
and unpaid interest on: (a) Indebtedness for Borrowed Money; (b) obligations for
which a Person is obligated pursuant to a guaranty; (c) all indebtedness secured
by any Lien upon property owned by such Person, even though such Person has not
in any manner become liable for the payment of such indebtedness, but only to
the extent that such indebtedness is secured by such Lien; (d) the principal
portion only of all indebtedness of such Person created or arising under any
Capitalized Lease; (e) all indebtedness of such Person arising under a
conditional sale or other title retention or security agreement with respect to
property acquired by such Person even though the remedies of the seller, lessor
or lender under such agreement or lease in the event of default may be limited
to repossession or sale of such property; (f) all obligations of such Person
issued or assumed for the deferred purchase price of property or services,
including all trade payables; and (g) all obligations of such Person under or
with respect to letters of credit, but only to the extent of the face amount of
such letters of credit.
"Indebtedness for Borrowed Money" means any indebtedness or obligations
upon which interest is or is customarily charged or any indebtedness or
obligation issued in substitution for or exchange of such Indebtedness for
Borrowed Money, in any case, whether evidenced by notes, bonds, debentures or
otherwise.
"Lender" means Augustine Fund, L.P.
"Lien" means any mortgage, deed of trust, lien, security interest, pledge,
lease, conditional sale contract, claim, charge, easement, right of way,
assessment, restriction and other encumbrance of every kind.
"Loans" means, at any given time, the aggregate principal amount
outstanding under the Notes.
"Material Adverse Effect" means any material adverse effect on the
operations, properties, or financial condition of the Corporation taken as a
whole.
"Notes" means those certain promissory notes of the Corporation in favor of
the Lender and in the form attached hereto as Exhibit A, as amended and in
effect from time to time, and any note or notes issued in exchange for such
notes.
"Operative Documents" means this Agreement, the Notes, the Security
Agreement, and the Registration Rights Agreement.
"Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
"Registration Rights Agreement" means that certain Registration Rights
Agreement between the Corporation and the Lender substantially in the form
attached hereto as Exhibit B.
"SEC" means the Securities and Exchange Commission.
"Security Agreement" means that certain Security Agreement between the
Corporation and the Lender substantially in the form attached hereto as Exhibit
C.
1.2 Accounting Principles. Where the character or amount of any asset or
liability or an item of income or expense is required to be determined, or any
accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall be made, to the extent
applicable and except as otherwise specified in this Agreement, in accordance
with GAAP.
ARTICLE II
Authorization of Loan
2.1 The Loans. Commencing on the date hereof, subject to the terms and
conditions of this Agreement and in accordance with the draw request procedure
set forth in Section 2.2 below, the Lender shall make such loans to the
Corporation as the Corporation shall from time to time request from the Lender,
up to the maximum amount set forth below, but in any case in an aggregate
principal amount not to exceed $1,000,000 (the "Loans"). Pursuant to a verbal
agreement, the Lender has loaned the Corporation $669,980 at 8% per annum
interest. The parties hereby agree that the Corporation is deemed to have repaid
all of the principal ($669,980) and accrued interest ($15,294) pursuant to the
verbal agreement and borrowed the identical amount from the Lender as of the
date hereof pursuant to the terms and conditions of this Agreement.
Unless waived in writing by the Lender, the Corporation agrees to use the
proceeds of the Loans solely to satisfy the Indebtedness.
2.2 Draw Request Procedure; Funding. The initial draw shall occur on the
date hereof in the amount of $685,274 and shall represent the repayment of the
monies borrowed pursuant to the verbal agreement plus accrued interest and
deemed re-borrowed pursuant to the terms of this Agreement. No actual funds
shall be transferred pursuant to such initial draw. The second draw also shall
take place on or soon after the date hereof. It shall be for an amount equal to
$160,207. Draw Requests are in the form of Exhibit D and shall include a
detailed description of the specific bona fide operating expenses that the
Corporation intends to pay with the requested funds. Provided that the
Corporation complies with the Draw Request procedure, within three (3) Business
Days of receiving a Draw Request, the Lender will advance to the Corporation the
amount of the Draw Request. The Loans shall be evidenced by the Notes and upon
honoring a Draw Request, a Lender shall record such Draw Request on the grid
attached to its respective Note.
2.3 Interest. (a) Interest shall accrue on the principal amount of the
Loans outstanding from time to time at a rate of eight percent (8%) per annum,
calculated on the basis of a 360-day year. Interest shall be due and payable
quarterly in arrears on the last Business Day of each September, December, March
and June commencing on March 31, 2002 and continuing until all amounts owing
under the Notes have been either paid in full or converted into Common Stock.
Notwithstanding anything elsewhere contained herein to the contrary, the rate of
interest payable hereunder shall in no event exceed the maximum lawful rate
which may be charged under applicable law.
(b) The interest payable to the Lender for any given period shall be paid,
at the Lender's election, either in cash or in shares of Common Stock (such
shares being referred to as "Interest Payment Shares"). In the event that the
Lender elects to receive Interest Payment Shares in lieu of cash with respect to
an interest payment payable, the Lender shall provide written notice of such
election to the Corporation at least three (3) days prior to the scheduled
interest payment date. The number of Interest Payment Shares issuable in respect
of any such interest payment shall
be calculated in accordance with the conversion procedure set forth in the Notes
as if such payment is a conversion of principal in an amount equal to the
interest payment and the scheduled interest payment date is the conversion date.
The Corporation shall promptly (but in no event later than three (3) Business
Days after the scheduled interest payment date) issue to the Lender a
certificate for the Interest Payment Shares issuable with respect to a scheduled
interest payment. Regardless of the date of issuance of any such certificate,
the Lender shall be deemed to have become, on the scheduled interest payment
date, the holder of record of the number of Interest Payment Shares issuable
with respect to such scheduled interest payment. The issuance of certificates
for Interest Payment Shares will be made without charge to the holder for any
issuance tax or other governmental charge in respect thereof or other cost
incurred by the Corporation in connection with such election to receive Interest
Payment Shares in lieu of a cash interest payment. The Corporation will take all
such actions as are necessary in order to ensure that any Interest Payment
Shares will be validly issued, fully paid and nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof.
(c) Notwithstanding anything to the contrary set forth herein, in no event
shall the Lender be entitled to elect to receive Interest Payment Shares in lieu
of a cash interest payment if, upon giving effect to such conversion, such
election would cause the aggregate number of shares of Common Stock beneficially
owned by the Lender and its affiliates to exceed 4.99% of the outstanding shares
of the Common Stock following such conversion. For purposes of the foregoing
proviso, the aggregate number of shares of Common Stock beneficially owned by
the Lender and its affiliates shall include the number of Interest Payment
Shares issuable in connection with such scheduled interest payment with respect
to which the determination of such proviso is being made. Except as set forth in
the preceding sentence, for purposes of this subsection (c), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. The limitations imposed by this subsection (c)
shall no longer apply, and the Lender may elect to receive Interest Payment
Shares without restriction, irrespective of the resulting beneficial ownership
of the Corporation's Common Stock, should any of the following events occur: (I)
The Corporation shall: (i) become insolvent; (ii) admit in writing its inability
to pay its debts generally or as they become due; (iii) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; or (iv)
apply for, or consent to the appointment of, a trustee, liquidator, or receiver
for its or for a substantial part of its property or business; or (II) A
trustee, liquidator or receiver shall be appointed for the Corporation or for a
substantial part of its property or business without the Corporation's consent
and such appointment is not discharged within sixty (60) days after such
appointment; or (III) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of
the Corporation and shall not be dismissed within sixty (60) days thereafter; or
(IV) Any money judgment, writ or note of attachment, or similar process in
excess of Five Hundred Thousand United States Dollars (US$500,000.00) in the
aggregate shall be entered or filed against the Corporation or any of its
properties or assets; or (V) bankruptcy, reorganization, insolvency or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Corporation and, if instituted against the Corporation, shall not be dismissed
within sixty days after such institution or the Corporation shall by any action
or answer approve of, consent to, or acquiesce in any such proceedings or admit
the material allegations of, or default in answering a petition filed in, any
such proceeding.
2.4 Maturity Date. The outstanding principal amount of the Loans, and any
interest accrued but unpaid, shall be payable in full on the third anniversary
of the date of this Agreement, or if such day is a not a Business Day, on the
next Business Day thereafter.
2.5 Optional Prepayment. The Corporation may, at its option, prepay the
Notes in whole by giving written notice thereof to the holder of the Note to be
prepaid not less than thirty (30) days prior to the date fixed for such
prepayment in such notice. Unless the holder of the Note to be prepaid elects to
convert the outstanding principal of such Note to Common Stock as contemplated
by Section 7.1 prior to the date fixed for prepayment, the Corporation shall
deliver to the holder of the Note to be prepaid the amount to be prepaid on the
date fixed for such prepayment.
ARTICLE III
Closing
3.1 Closing. The Closing will be held at the offices of the Lender on or
about October 23, 2001 (the "Closing Date").
ARTICLE IV
Conditions to Closing
The obligation of the Lender to extend the Loans is subject to the
fulfillment to the Lender's satisfaction at or prior to the Closing of each of
the following conditions:
4.1 Representations and Warranties. The representations and warranties
contained in Article V shall be true and correct when made, and shall be true
and correct as of the Closing as if made at the Closing.
4.2 Performance; No Event of Default. All covenants, agreements and
conditions contained in this Agreement to be performed or complied with by the
Corporation at or prior to the Closing shall have been performed or complied
with and there shall exist no Default or Event of Default.
4.3 Compliance Certificate. At the Closing, the Corporation shall have
delivered to the Lender a certificate of the Corporation executed by its
president or other executive officer acceptable to the Lender, dated the Closing
Date, certifying to (i) the fulfillment of the conditions specified in Sections
4.1 and 4.2 of this Agreement and (ii) such other matters as the Lender shall
have reasonably requested.
4.4 Secretary's Certificate. At the Closing, the Corporation shall have
delivered to the Lender copies of each of the following, in each case certified
to be in full force and effect on the Closing Date by the Secretary of the
Corporation:
(i) the articles of incorporation of the Corporation as of the
Closing;
(ii) the bylaws of the Corporation; and
(iii)resolutions of the Board of Directors of the Corporation, the
form and substance of which are reasonably satisfactory to the Lender, (x)
authorizing (1) the execution, delivery and performance of this Agreement
and the other Operative Documents and the transactions contemplated hereby
and thereby, (2) the execution, delivery and performance of the Notes, and
(3) the issuance of the Interest Payment Shares and the shares of Common
Stock issuable upon conversion of the Notes.
4.5 Notes. At the Closing, the Corporation shall have executed and
delivered the Notes to the Lender.
4.6 Good Standing Certificates. At the Closing, the Corporation shall have
delivered certificates of good standing relating to the Corporation from the
Secretary of State of the States of Massachusetts and Delaware, in each case
dated not more than ten days prior to the Closing Date.
4.7 Legal Investment; Compliance with Laws. As of the Closing, the
extension of the Loan by the Lender shall be legally permitted by all laws,
rules and regulations of the jurisdictions and governmental authorities and
agencies to which the Corporation and the Lender are subject.
4.8 Proceedings and Documents. As of the Closing, all proceedings of the
Corporation in connection with the transactions contemplated hereby, by the
other Operative Documents and all documents and instruments incident to such
transactions, shall be reasonably satisfactory in form and substance to the
Lender, and the Lender shall have received at or prior to the Closing copies of
all such legal documents or proceedings taken in connection with the
consummation of the transactions as they reasonably shall have requested.
4.9 Security Agreement. At the Closing, the Corporation shall have executed
and delivered to the Lender the Security Agreement and any such financing
statements or other documents, agreements, certificates or instruments that the
Lender may reasonably request in connection therewith.
4.10 Registration Rights Agreement. At the Closing, the Corporation shall
have executed and delivered to the Lender the Registration Rights Agreement.
4.11 Contribution of Posters. At the Closing, the Corporation shall be the
sole owner of posters sold or otherwise transferred to the Corporation pursuant
to an Agreement and Plan of Merger by and among the Corporation, Rotman
Collectibles, Inc., and Xxxxxx Xxxxxx (the "Xxxxxx Agreement"), which posters
have a fair market value of at least $1,000,000; and the terms of such sale or
transfer of the posters, including the resale provisions of any stock issuable
by the Corporation in return for such sale or transfer, have been made known to
the Lender.
ARTICLE V
Representations and Warranties
5.1 Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Lender as follows:
(a) Organization and Standing of the Corporation. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Corporation is qualified to do business as a
foreign corporation under the laws of the Commonwealth of Massachusetts where
the failure to so qualify would have a Material Adverse Effect on the
Corporation. The Corporation does not own or lease property or engage in any
activity in any other jurisdiction that would require its qualification to do
business as a foreign corporation in such jurisdiction where the failure to so
qualify would have a Material Adverse Effect on the Corporation.
(b) Power. The Corporation has all requisite legal and corporate power
to enter into this Agreement, the Notes and the other Operative Documents to
which it is a party, to issue the Notes, to issue the Interest Payment Shares
and the shares of Common Stock issuable upon conversion of the Notes and to
otherwise carry out and perform its obligations under the terms of this
Agreement, the Notes and the other Operative Documents to which it is a party.
(c) Authorization and Binding Effect. All corporate action on the part
of the Corporation and its directors necessary for the authorization, execution,
delivery and performance by the Corporation of this Agreement and the
consummation of the transactions contemplated hereby, and for the authorization,
issuance and delivery of the Notes and the authorization of the issuance of the
Interest Payment Shares and the shares of Common Stock issuable upon conversion
of the Notes, has been taken. This Agreement is and, upon its execution and
delivery by the Corporation, the Notes will be, a legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with their respective terms, except as limited by bankruptcy, insolvency or
other laws affecting creditors' rights generally or by the availability of
equitable remedies.
(d) No Violation. Neither the execution and delivery by the
Corporation of this Agreement, the Notes or the other Operative Documents to
which it is a party, the consummation by the Corporation of the transactions
provided for herein and therein or contemplated hereby and thereby, nor the
fulfillment by the Corporation of the terms hereof or thereof, will (a) conflict
with or result in a breach of any provision of the articles of incorporation or
by-laws of the Corporation; (b) result in a default, give rise to any right of
termination, cancellation, acceleration or imposition of any Lien upon any
assets of the Corporation, or require any consent or approval under any of the
terms, conditions or provisions of any material contract or agreement to which
the Corporation is a party or by which the Corporation or any of its assets may
be bound; or (c) violate any law, judgment, order, writ, injunction, decree,
statute, rule or regulation of any court, administrative agency, bureau, board,
commission, department or other governmental entity applicable to the
Corporation or any of its assets, where such conflict, breach, result, or
violation would neither singly or in the aggregate have a Material Adverse
Effect on the Corporation.
(e) Validity of Common Stock. The Interest Payment Shares and the
shares of Common Stock issuable upon the conversion of the Notes have been duly
and validly reserved by the Corporation, and, upon issuance in accordance with
the conversion provisions of the Notes, such share of Common Stock will be duly
and validly issued, fully paid, non-assessable and free and clear of all Liens.
If the Corporation has insufficient authorized shares, it will use its best
efforts to increase the number of authorized shares as promptly as possible, or
otherwise have sufficient shares available for issuance.
(f) Contracts. Except for those contracts, agreements and instruments
set forth on Schedule 5.7 (the "Contracts"), this Agreement and the other
Operative Documents to which the Corporation is a party and all documents
executed in connection therewith, the Corporation is not a party to any (a)
lease agreement concerning any real property or any material personal property;
(b) any agreement granting any Person registration rights; or (c) contract,
lease, agreement, plan, arrangement, obligation or commitment (i) evidencing
Indebtedness for Borrowed Money or any guarantee of such Indebtedness; (ii)
involving delivery or licensing by or to the Corporation of money, goods or
other assets or services in each case with aggregate payments in excess of
$10,000; or (iii) that would otherwise be considered a material contract. The
Corporation has heretofore delivered or made available to the Lender true and
complete copies of all such Contracts. All the Contracts are valid and in full
force and effect, and, to the best knowledge of the Corporation, there exists no
material breach or default, or event which, with notice or lapse of time or
both, would constitute any such material breach or default by any party thereto.
The Corporation has not received any notice of cancellation or renewal of any of
the Contracts.
(g) Proprietary Rights. The Corporation owns all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service xxxx rights and copyrights set forth on Schedule 5.8 attached
hereto (collectively, "Proprietary Rights"). The Proprietary Rights are all of
such rights necessary to conduct its business as presently conducted or which
are necessary in connection with the performance of any Contract to which the
Corporation is a party without conflict with or infringement upon any valid
rights of others, and the use of such Proprietary Rights will not infringe upon
or conflict with, the asserted rights of others.
(h) SEC Documents. Since at least June 1, 2001, the Corporation has
timely filed all reports, schedules, forms, statements and other documents to be
filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to as the "SEC
Documents"). The Corporation has delivered to the Lender to the extent requested
by the Lender true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5.2 Representations and Warranties of the Lender. The Lender hereby
represents and warrants to the Corporation as follows:
(a) Investment Purposes; Compliance With 1933 Act. The Note and any
Interest Payment Shares will be acquired for the Lender's own account for
investment only and not with a view towards, or in connection with, the public
sale or distribution thereof, except pursuant to sales registered under or
exempt from the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws. The Lender agrees to offer, sell or otherwise
transfer the Interest Payment Shares only (i) in accordance with the terms of
this Agreement and the Notes, as applicable, and (ii) pursuant to registration
under the 1933 Act or to an exemption from registration under the 1933 Act and
any other applicable securities laws. The Lender does not by its representations
contained in this Section 6.1 agree to hold the Notes or the Interest Payment
Shares for any minimum or other specific term and reserves the right to dispose
of the Notes and the Interest Payment Shares at any time pursuant to a
registration statement or in accordance with an exemption from registration
under the 1933 Act, in all cases in accordance with applicable state and federal
securities laws. The Lender understands that it shall be a condition to the
issuance of the Interest Payment Shares that such Interest Payment Shares be and
are subject to the representations set forth in this Section 5.2.
(b) Accredited Investor Status. The Lender is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D. The Lender has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment made pursuant to this
Agreement. The Lender is aware that it may be required to bear the economic risk
of an investment made pursuant to this Agreement for an indefinite period of
time, and is able to bear such risk for an indefinite period.
(c) Reliance on Exemptions. The Lender understands the Notes and the
Interest Payment Shares will be issued and acquired in reliance on specific
exemptions from the registration requirements of the applicable United States
federal and state securities laws and that the Corporation is relying upon the
truth and accuracy of, and the Lender's compliance with, the representations,
warranties, acknowledgments, understandings, agreements and covenants of the
Lender set forth herein in order to determine the availability of such
exemptions and the eligibility of the Lender to acquire the Notes and the
Interest Payment Shares.
(d) Information. The Lender and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Corporation and materials relating to the Notes and the issuance of any
Interest Payment Shares that have been requested by the Lender. The Lender and
its advisors, if any, have been afforded the opportunity to ask all such
questions of the Corporation as they have in their discretion deemed advisable.
The Lender understands that its investment in the Corporation involves a high
degree of risk. The Lender has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision with respect
to the investment made pursuant to this Agreement.
(e) No Government Review. The Lender understands that no United States
federal or state agency or any other government or governmental agency has
approved or made any recommendation or endorsement of the Notes and the Interest
Payment Shares or the fairness or suitability of the investment in the Notes and
the Interest Payment Shares, nor have such authorities passed upon or endorsed
the merits of any offer or sale related to the Notes and the Interest Payment
Shares.
(f) Transfer or Resale. The Lender understands that: (i) except as
provided in the Registration Rights Agreement, the Notes and the Interest
Payment Shares have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless either (a) subsequently registered thereunder or (b) the
Lender shall have delivered to the Corporation an opinion by counsel reasonably
satisfactory to the Corporation, in form, scope and substance reasonably
satisfactory to the Corporation, to the effect that the Notes and the Interest
Payment Shares to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, (ii) any sale of
such securities made in reliance on Rule 144 as amended (or any applicable rule
which operates to replace said Rule), promulgated under the 1933 Act ("Rule
144") may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of such securities under circumstances in
which the seller (or the person though whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder and applicable state securities laws, and
(iii) neither the Corporation nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).
(g) Legend. The Lender understands that the Notes, and until such time
as the Interest Payment Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Interest Payment Shares will bear a restrictive legend (the
"Legend") in substantially the following form: THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS (COLLECTIVELY, THE "LAWS"). THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER (I) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE LAWS, OR (II) AN OPINION OF
COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE LAWS. The Legend shall be
removed and the Corporation will issue certificates without the Legend to the
holder of the applicable Notes or any Interest Payment Shares upon which the
Legend is stamped, in accordance with Section 5.2.
(h) Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
by the Lender and are each and collectively valid and binding agreements of the
Lender enforceable in accordance with their terms, subject as to enforceability
to general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally.
(i) No Brokers. The Lender has taken no action that would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement and the transactions contemplated hereby.
The Corporation and the Lender both acknowledge that no other broker or finder
was involved with respect to the transactions contemplated hereby.
ARTICLE VI
Reporting and Payments
6.1 Financial Reports. The Corporation will deliver to the Lender along
with each Draw Request (or within fifteen (15) days after the end of any
calendar month during which no Draw Requests were made), a report certified by
the president or the chief financial officer of the Corporation, detailing the
Corporation's cash flow for such calendar month (or first portion thereof, as
applicable). The Corporation will promptly (but in any event within five (5)
Business Days after learning of) deliver to the Lender, written notice of any of
the following:
(a) (i) any pending or threatened material litigation (for purposes hereof
litigation with less than $100,000 in issue shall not be considered
material) affecting the Corporation; and (ii) any pending or
threatened administrative or arbitration proceeding or investigation
affecting the Corporation, or any order or directive from any
regulatory body or agency having jurisdiction over the Corporation
which proceeding, investigation, order or directive could reasonably
be expected to have a Material Adverse Effect on the Corporation;
(b) any Event of Default under this Agreement, which notice will specify
the nature and period of existence thereof and the actions taken or
proposed to be taken with respect thereto; or
(c) (i) any disputes with material customers or vendors; (ii) any default
under any instrument evidencing Indebtedness of the Corporation in the
aggregate outstanding amount of $10,000 or more or under any material
contract involving payments, delivery or licensing by or to the
Corporation of money, goods or other assets or services having an
aggregate value of more than $10,000; or (iii) any other event which
has had, or would reasonably be expected to have, a Material Adverse
Effect on the Corporation.
6.2 Inspection Rights. The Corporation will permit the Lender to visit and
inspect the properties of the Corporation, review its books and records (and to
make extracts therefrom), and to discuss its affairs, finances and accounts with
their officers and personnel, all at such reasonable times and as often as the
Lender may reasonably request upon reasonable notice to the Corporation, but
without hindrance or delay.
6.3 Board Observation Rights. The Corporation shall permit one
representative designated by Augustine (the "Lender Representative") to attend
as an observer all meetings of the Board of Directors of the Corporation and all
meetings of any committee of the Board of Director. The Corporation agrees to
give the Lender Representative the same notice of all such meetings and at
approximately the same time as such materials are given to the members of the
Board of Directors, and the Lender Representative will be given the opportunity
to participate in any telephonic meetings of the Board of Directors. If the
Corporation's Board of Directors (or any committee thereof) proposes to take any
action by written consent in lieu of a meeting, the Corporation shall give
written notice thereof
to the Lender Representative at least two (2) days prior to the effective date
of such consent describing in reasonable detail the nature and substance of such
action.
6.4 [Intentionally omitted.]
6.5 [Intentionally omitted.].
6.6 Mandatory Prepayment. The occurrence of a Change of Control Event shall
give the holder of a Note, at its option, the right to demand the prepayment of,
and upon such demand the Corporation must prepay, the entire then outstanding
principal amount of such Note held by such holder subject to such demand for
prepayment and all of the interest accrued and unpaid on such Note to the date
of such prepayment (a "Mandatory Prepayment"). The Corporation agrees to give
the holders of the Notes written notice of a Change of Control Event (specifying
the details thereof, to the extent known), as soon as reasonably practical after
the Corporation has made a determination that in the Corporation's good faith
judgment a Change of Control Event is reasonably likely to occur (but in no
event more than five (5) days after making such determination) and in any event
not less than the maximum number of days as is reasonably practical prior to the
Change of Control Event (taking into account the timing and nature of the offer,
if any, that will be the basis for the Change of Control Event) (the "Change of
Control Notice"). The prepayment option described above may be exercised by such
holder's giving the Corporation written notice to that effect (the "Prepayment
Notice") not more than ten (10) days after a holder of a Note receives a Change
of Control Notice. The date of prepayment shall be the date of the Change of
Control Event. The Prepayment Notice can be revoked any time prior to the date
of prepayment if a material change occurs in the terms of the Change of Control
Event.
ARTICLE VII
Conversion; Registration
7.1 Conversion. On the terms set forth in the Notes (and subject to the
restrictions on conversion set forth therein relating to the maximum percentage
of outstanding capital stock the Lender may hold), each Note shall convert into
shares of Common Stock upon the election of the holder of such Note in
accordance with the particular procedures more fully described in the Notes. The
number of shares of Common Stock into which each Note is convertible is set
forth in the Notes.
7.2 Registration. The Interest Payment Shares and the shares of Common
Stock issuable upon conversion of the Notes are entitled to the benefits of and
subject to the terms of the Registration Rights Agreement. The Corporation shall
keep or cause to be kept a copy of the Registration Rights Agreement and any
amendments thereto at its chief executive office and shall furnish, without
charge, copies thereof to the Lender upon request.
ARTICLE VIII
Covenants
So long as any Note remains outstanding, the Corporation shall comply with
the following covenants:
8.1 Adherence to Business Plan. The Corporation shall use its best efforts
to conduct its business in substantial compliance with the description of its
business in the SEC Documents, as amended from time to time.
8.2 Liens. The Corporation shall not create or permit to exist any Lien
with respect to any assets now or hereafter existing or acquired, except the
following: (i) Liens for current taxes or special assessments not delinquent or
for taxes or special assessments being contested in good faith and by
appropriate proceedings that do not subject the Company or any of its
Subsidiaries to penalties under the Code and for which adequate reserves shall
have been established and are then being maintained in accordance with GAAP;
(ii) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits; (iii) Liens in favor of the lessor pursuant
to any material lease; (iv) mechanics', workers', materialmen's and
warehousemen's Liens arising in the ordinary course of business in respect of
obligations which are not delinquent or which are being contested in good faith
and by appropriate proceedings and for which adequate reserves shall have been
established and are then maintained in accordance with GAAP (or deposits made to
obtain the release of such Lien); (v) easements and rights of way restrictions
that do not individually or in the aggregate interfere with the ordinary conduct
of the business; (vi) Liens with respect to the Rotman Agreement; and (vii)
Liens already existing in favor of the Lender or otherwise approved in writing
by the Lender.
8.3 Compliance With Laws. The Corporation agrees to comply with all laws,
rules, regulations, judgments, orders and decrees of any governmental or
regulatory authority applicable to it and its respective assets, and with all
contracts and agreements to which it is or shall become a party, and to perform
all obligations which it has or shall incur, the failure to comply with which or
perform would reasonably be expected to have a Material Adverse Effect on the
business, property, assets, operations, financial condition or prospects of the
Corporation.
8.4 Payment of Taxes. The Corporation agrees to pay all taxes, assessments
and other governmental charges levied upon any of its assets or in respect of
its franchises, businesses, income or profits before the same become delinquent,
except that (unless and until foreclosure, sale or other similar proceedings
shall have been commenced) no such tax, assessment or charge need be paid if it
is being contested in good faith and by appropriate measures promptly initiated
and diligently conducted if (a) such reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor, and (b) such
contest could not reasonably be expected to have a Material Adverse Effect on
the Corporation's business, property, assets, operations or condition, financial
or otherwise.
8.5 Corporate Existence and Property. The Corporation agrees to preserve,
protect, and maintain its existence and all rights, franchises, accreditations,
privileges, permits, licenses and properties to the extent necessary for the
conduct of its business.
8.6 Payment of Indebtedness; Fulfillment of Obligations. The Corporation
shall pay all amounts owed on any Indebtedness of the Corporation as and when
the same shall become due and payable by the lapse of time, by declaration, by
call for redemption or otherwise. The Corporation shall comply in all material
respects, with all other material contracts or agreements as the obligations
thereunder become due, except that no such Indebtedness need be paid if it is
being contested in good faith and by appropriate measures promptly initiated and
diligently conducted if the Corporation either posts a bond or otherwise
establishes adequate reserves (as determined in accordance with GAAP
consistently applied) therefor.
8.7 Mergers, Consolidations and Sales; Permitted Acquisitions. Without the
prior written consent of the Lender, which shall not be unreasonably withheld,
the Corporation shall not (a) be a party to any merger or consolidation with any
other Person, or purchase or otherwise acquire all or substantially all of the
assets or stock of any class of, or any partnership, membership, or joint
venture interest in, any other Person; or (b) sell, transfer, convey or lease
all or any substantial part of its assets to any other Person.
8.8 Liquidation, Dissolution. The Corporation shall not liquidate, dissolve
or, without the prior written consent of the Lender, which shall not be
unreasonably withheld, effect a recapitalization or reorganization in any form
of transaction (including any reorganization into a corporation or another type
of entity or after which the Corporation becomes a subsidiary of another Person)
or otherwise alter its legal status.
8.9 Restricted Payments. Without the prior written consent of the Lender,
which shall not be unreasonably withheld, the Corporation shall not (a) purchase
or redeem any Common Stock or other equity interests, warrants or options with
respect to such Common Stock, (b) declare, make or pay any distributions with
respect to Common Stock, or (c) grant, or allow the exercise of, any redemption
rights, put rights or other similar rights with respect to its equity interests
to any holder of its equity securities (contingent or otherwise) or contract
rights the value of which appreciates in accordance with the value of the
Corporation or the Corporation's earnings.
8.10 Transactions with Affiliates. The Corporation shall not enter into or
maintain any transaction or agreement with its Affiliates, except in the
ordinary course of business and upon fair and reasonable terms no less favorable
to the Corporation than would be obtained by the Corporation in a comparable
arm's length transaction with a Person who is not the Corporation's Affiliate.
The Corporation shall not make any loans or advances to, or guarantees for the
benefit of, any Person other than advances to employees in the ordinary course
of business (including travel allowances to employees in the ordinary course of
business), except as provided for in the Corporation's financial statements.
Furthermore, except for a consulting arrangement to be entered into with Xx.
Xxxxxx Xxxxxx or as provided
for in the Corporation's financial statements, or otherwise in the ordinary
course of business, the Corporation shall not increase the salary or rate of pay
of, or pay any bonuses to, employees or engage any consultants.
8.11 Fees and Expenses. (a) The Corporation shall bear all of its own
expenses in connection with this Agreement and the other Operative Documents,
and the transactions contemplated hereby and thereby. The Corporation shall also
promptly reimburse the Lender for or pay any reasonable expenses the Lender
incurs in connection with (i) the enforcement of, or the preservation of any
rights under, this Agreement, the Notes and the other Operative Documents, and
(ii) any stamp and other taxes (other than income taxes) payable with respect to
this Agreement and the Notes. The Corporation shall pay or reimburse such
expenses within 30 days of its receipt of an invoice for such amounts.
(b) The Corporation shall also pay or reimburse the Lender for the
reasonable legal costs in connection with the enforcement of or the preservation
of rights under, this Agreement, the Notes and the other Operative Documents and
the transactions contemplated hereby and thereby.
ARTICLE IX
Events of Default
9.1 Events of Default Defined; Acceleration of Maturity. If any one or more
of the following events (herein called "Events of Default") shall have occurred:
(a) all or any part of the principal of the Notes is not paid when due and
payable, whether at maturity thereof, by acceleration, by notice of
prepayment, whether mandatory or optional, or otherwise;
(b) all of any part of the interest on the Notes is not paid, whether in
cash or by the issuance of Interest Payment Shares, as applicable,
when due and payable;
(c) default shall occur in the observance or performance of any covenant
contained in Article VIII of this Agreement;
(d) default shall occur in the observance or performance of any of the
other covenants or agreements of the Corporation contained in this
Agreement or the other Operative Documents (including, without
limitation, the Corporation's obligation to register the Interest
Payment Shares and the Common Stock issuable upon conversion of the
Notes in accordance with the terms of the Registration Rights
Agreement) which is not remedied within ten (10) days after notice
thereof to the Corporation;
(e) a receiver, conservator, custodian, liquidator or trustee of the
Corporation or of all or any of its assets is appointed by court
order; or an order for relief is entered under the federal bankruptcy
laws with respect to the Corporation; or any of the material assets of
the Corporation is sequestered by court order; or a petition is filed
against the Corporation under the bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect;
(f) the Corporation files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under any
such law;
(g) the Corporation makes a general assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts
generally as they become due, or consents to the appointment of a
receiver, conservator, custodian, liquidator or trustee of the
Corporation or of all or any part of its assets;
(h) final judgment for the payment of money in excess of $10,000 which is
not fully covered by insurance shall be rendered by a court of record
against the Corporation and the Corporation shall not (i) discharge
the same or provide for its discharge in accordance with its terms or
(ii) procure a stay of execution thereof within 30 days from the date
of entry thereof and within said period of 30 days, or such longer
period during which execution shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal
including, without limitation, by providing adequate bond for such
judgment;
(i) any representation, warranty or certification made by the Corporation
or any of its officers in this Agreement or in any other Operative
Document or in any certificate, report, financial statement or other
instrument delivered under or pursuant to any provision hereof or
thereof shall prove to have been false or incorrect in any material
respect on the date or dates as of which they were made or delivered;
(j) a default shall occur in the observance or performance of any of the
covenants, conditions, promises, agreements or obligations under any
Contract if such failure might have a Material Adverse Effect on the
Corporation's business, property, assets, operations or condition,
financial or otherwise, and such default is not remedied within ten
(10) days after notice thereof to the defaulting party; or
(k) the exercise of any rights of default by Xxxxxx Xxxxxx or any of her
successors or assigns under the Rotman Agreement or any other material
agreement involving Xxxxxx Xxxxxx;
then, when any Event of Default described in clause (a), (b), (c), (d), (h),
(i), (j) or (k) above has occurred and shall be continuing, the principal of
each Note shall, upon written notice from the holder thereof to the Corporation,
forthwith become and be due and payable, if not already due and payable, without
presentment, demand, or notice of any kind. When any Event of Default described
in clause (e), (f) or (g) above has occurred, the principal of each Note shall
immediately become due and payable upon the occurrence thereof, without
presentment, demand, or notice of any kind. If any principal is not paid in full
on the due date thereof (whether by maturity, prepayment, or acceleration) or
any Event of Default has occurred and is continuing, then the outstanding
principal balance of each Note will bear interest from the due date of such
payment, or from and after an Event of Default, at a rate equal to eighteen
percent (18%) per annum, compounded quarterly, until the payment is received or
the Event of Default is cured, if permitted, or waived. The Corporation shall
pay to the holders of each Note all reasonable out-of-pocket costs and expenses
incurred by any such holder in any effort to collect such Note.
9.2 Remedies Cumulative. All remedies, under either this Agreement, the
Notes, the other Operative Documents, by law or otherwise, afforded to the
Lender shall be cumulative and not alternative.
9.3 Indemnification. The Corporation shall indemnify, defend and hold the
Lender, its affiliates, officers and agents harmless from, against and in
respect of any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest, penalties
and reasonable attorneys' fees (collectively, "claims"), that the Lender shall
incur or suffer, which arise, result from, or relate to any breach of, or
failure by the Corporation to perform, any of its representations, warranties,
covenants or agreements in this Agreement in any material respect.
9.4 Delays or Omissions. No failure to exercise or delay in the exercise of
any right, power or remedy accruing to the Lender upon any breach or default of
the Corporation under this Agreement shall impair any such right, power or
remedy of the Lender nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
ARTICLE X
Miscellaneous
10.1 Consent to Amendments; Waivers. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended at any time only by the
written agreement of the Corporation and the Lender. The provisions of this
Agreement may be waived at any time only by the written agreement of the waiving
party and any waiver, permit, consent or approval of any kind or character of
any provisions or conditions of this Agreement shall be effective only to the
extent specifically set forth in such writing.
10.2 Successors and Assigns. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
heirs, legal representatives and successors of the parties hereto and the
permitted assigns of the parties hereto. This Agreement, the Notes and the
rights and obligations of the Corporation hereunder and thereunder shall not be
assigned or otherwise transferred by the Corporation or the Lender without the
prior written consent of the other.
10.3 Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement unless the consummation of the transaction contemplated hereby is
materially adversely affected thereby.
10.4 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of and
shall not be utilized in interpreting this Agreement.
10.5 No Setoffs, Etc. All payments hereunder and under the Notes shall be
made by the Corporation without setoff, offset, deduction or counterclaim, free
and clear of all taxes, levies, imports, duties, fees and charges, and without
any withholding, restriction or conditions imposed by any governmental
authority. If the Corporation shall be required by any law to deduct, setoff or
withhold any amount from or in respect of any payment to the Lender hereunder or
under the Notes, then the amount so payable to the Lender shall be increased as
may be necessary so that, after making all required deductions, setoffs and
withholdings, the Lender shall receive an amount equal to the sum they would
have received had no such deductions, setoffs or withholdings been made.
10.6 Notices. Any notices desired, required or permitted to be given
hereunder shall be delivered personally, faxed or mailed, certified or
registered mail, return receipt requested, postage prepaid or delivered by
commercial overnight courier service, charges prepaid to the following
addresses, or such other addresses as shall be given by notice delivered
hereunder, and shall be deemed to have been given upon delivery, if delivered
personally or faxed, (3) three Business Days after mailing, if mailed, or one
Business Day after delivery to the overnight courier service, if delivered by
overnight courier service:
If to Augustine Fund, L.P., to:
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
If to the Corporation, to:
Sales Online Direct, Inc.
0 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000; (000) 000-0000
10.7 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois,
applicable to contracts made and wholly to be performed in that state.
10.8 Exhibits and Schedules. All exhibits and schedules hereto are an
integral part of this Agreement.
10.9 Final Agreement. This Agreement, together with the Notes, constitutes
the final agreement of the parties concerning the matters referred to herein,
and supersedes all prior agreements and understandings between the parties.
10.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument.
10.11 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby.
10.12 WAIVERS BY BORROWER. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR AS REQUIRED BY APPLICABLE LAW, THE CORPORATION WAIVES: (I)
PRESENTMENT, DEMAND AND PROTEST, AND NOTICE OF PRESENTMENT WITH RESPECT TO THIS
AGREEMENT OR THE NOTES AND (II) ITS RIGHT TO A JURY TRIAL IN THE EVENT OF ANY
LITIGATION INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER OPERATIVE DOCUMENTS. THE CORPORATION ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO THE LENDER ENTERING INTO THIS AGREEMENT AND
THAT THE LENDER ARE RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS
WITH THE CORPORATION. THE CORPORATION WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
10.13 CONSENT TO FORUM. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF THE CORPORATION OR THE LENDER, THE CORPORATION HEREBY CONSENTS AND
AGREES THAT THE UNITED STATES DISTRICT COURT OR ANY OTHER COURT HAVING SITUS
WITHIN CHICAGO, ILLINOIS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CORPORATION AND THE LENDER
PERTAINING TO, ARISING OUT OF, OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER OPERATIVE DOCUMENTS. THE CORPORATION WAIVES ANY OBJECTION BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE
CORPORATION HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY COMPLYING WITH THE
PROVISIONS FOR GIVING NOTICE AS SET FORTH IN THIS AGREEMENT. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF THE LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY THE LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement on
the date first set forth above.
SALES ONLINE DIRECT, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------------
Its: Xxxxxxx Xxxxxx, President
AUGUSTINE FUND, L.P.
By: /s/ Augustine Capital Management, LLC
------------------------------------------
Its: general partner
By: /s/ Xxxx Xxxxxx
------------------------------------------
Its: President
EXHIBIT D
DRAW REQUEST
To: Augustine Fund, L.P.
From: Sales Online Direct, Inc.
Date: , 200_
-------------------------------
Reference is made to that certain Loan Agreement dated as of November 7,
2001 between Augustine Fund, L.P., and Sales Online Direct, Inc.. (the "Loan
Agreement"). All capitalized terms used herein without definition shall have the
meanings set forth in the Loan Agreement.
The Corporation hereby requests that the Lender advance a total principal
amount of $______________ under the Loans (the "Advance").
The Corporation hereby certifies to the Lender that as of the date hereof:
(1) The representations and warranties of the Corporation contained in
Article V of the Loan Agreement are true and correct as of the date
hereof as if made on the date hereof;
(2) All covenants, agreements and conditions contained in the Loan
Agreement to be performed or complied with by the Corporation at or
prior to the date hereof have been performed or complied with; and
(3) As of the date hereof, there exists no Event of Default.
In witness whereof, this Draw Request has been signed in the name of and on
behalf of the Corporation as of the date first written above.
Sales Online Direct, Inc.
By:
-------------------------------------------------
Its:[President/Chief Financial Officer]
