Exhibit 5.0
BESTNET COMMUNICATIONS CORP.
(A NEVADA CORPORATION)
NOTE PURCHASE AGREEMENT
The parties to this Agreement are BestNet Communications Corp, a Nevada
corporation having its principal place of business at 0000 Xxxxxxx Xxxx XX,
Xxxxx X, Xxxxx Xxxxxx, Xxxxxxxx 00000 (the Company) and Katsinam Partners, LP,
whose business address is 0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000. Katsinam Partners, LP is sometimes called herein a Lender.
The parties have agreed as follows:
1. TRANSACTION
The Company, by due action of its Board of Directors, has authorized the offer
and sale to the Lender, under this Agreement, of a Promissory Note (the Note) in
the aggregate principal amount of $20,000. The form of the Note shall be as
shown in Exhibit 1, attached hereto.
2. PURCHASE AND SALE
2.1 Note. Subject to all of the terms and conditions of this Agreement, the
Company will issue and sell to Katsinam Partners, LP a Note in the principal
amount of $20,000 and Lender will purchase a respective Note from the Company at
a price equal to the principal amount of such Note; provided that all such terms
and conditions are satisfied.
2.2 Closing. The purchase by and sale to the Lender of the Note (the
"Closing") shall take place at 11:00 AM, local time, on July 15, 2004 at the
offices of the Company at 0000 Xxxxxxx Xxxx XX, Xxxxx X, Xxxxx Xxxxxx, Xxxxxxxx
00000, or at such other time or place upon which the Company and the Lender may
agree (such date being hereinafter called the "Closing Date"). At the Closing,
the Company shall deliver to the Lender or his representative an instrument
evidencing the Note and other items required to be delivered to the Lender
pursuant to this Purchase Agreement.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
As an inducement to the Lender to enter into this Agreement and to purchase and
pay for the Note, the Company represents, warrants and agrees that:
3.1 Disclosure Documents. The Company has heretofore delivered to the
Lender a copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended August 31, 2003, as filed with the Securities and Exchange Commission,
every Report filed with the said Commission subsequent thereto pursuant to the
Securities Exchange Act of 1934, together with all exhibits annexed thereto, and
each press release or other public announcement including without limitation all
shareholder communications (such Reports and the exhibits annexed thereto, press
releases, public announcements, shareholder communications are called
collectively herein the "Disclosure Documents", which term shall include any
additions or supplements thereto). The Company has carefully prepared the
Disclosure Documents or has caused them to be so prepared. When read as one
document, the Disclosure Documents are intended to provide all of the
information required to be contained in a registration statement under the 1933
Act, including without limitation, a prospectus as that term is defined in
Section 2(10) of the 1933 Act, except as such requirement is modified by
Regulation D. Except as disclosed in Schedule 3.1 attached hereto, the
Disclosure Documents are, and shall be on the Closing Date, true and correct and
shall not omit to state any material fact necessary to make the statements made
in the Disclosure Documents not misleading on and as of such date.
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3.2 Valid Existence. The Company was duly organized and is validly existing
as a corporation under the laws of Nevada and is duly qualified to do business
in Michigan and in Ontario and in each other jurisdiction where qualification is
material to its business as presently conducted.
3.3 Authority for Agreement. This Agreement has been duly authorized by all
necessary corporate action of the Company and, when executed and delivered by
the Company, will be a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms except to the extent that the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally or by general
principles of equity, and except that the indemnification provisions of the
Agreement may be held to be violative of public policy under either federal or
state laws in the context of the offer or sale of securities.
3.4 Validity of Note. The Note, when issued and paid for at the Closing,
will be the duly authorized, validly existing obligation of the Company,
enforceable in accordance with its terms.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE LENDER
The Lender hereby represents and warrants to and agrees with the Company as
follows (provided that such representations, warranties and agreements do not
diminish or obviate the representations, warranties and agreements of the
Company set forth in this Agreement) that he has full power and authority to
enter into this Agreement, which, when executed and delivered, will constitute
his valid and legally binding obligation.
5. CONDITIONS TO THE OBLIGATIONS OF THE LENDER
The obligations of the Lender to purchase the Note under this Agreement is
subject to the fulfillment on or before the Closing of each of the following
conditions:
5.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 3 shall be true as of and shall survive the
Closing.
5.2 No Deterioration. Except as described in Schedule 5.2 attached hereto,
nothing has occurred that has or may reasonably be expected to affect materially
adversely the Company, its assets or its business
5.3 No Security Interest. Except as described in Schedule 5.3 attached
hereto, there are no security interests in favor of any party in any material
asset of the Company.
5.4 Officer Certificates. The President and the Chief Financial Officer of
the Company shall have delivered at the Closing a certificate, substantially in
the form shown by Exhibit 5.4 attached hereto, to the effect that the Company
has complied with all agreements, obligations and conditions required of it
pursuant to this Agreement.
5.5 Satisfaction with Inquiries, etc. The Lender shall be satisfied with
the results of his inquiries into the Company and its business and affairs,
including without limitation the status of all executive employment agreements
to which the Company is a party and the status, as outstanding or terminated, of
all rights, options and warrants for the purchase of any of the Company's
securities that were in the past awarded or purported to be awarded to any
executive employee of the Company.
6. FURTHER AGREEMENTS
6.1 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns, if any, of Lender, except as provided by certain state
laws.
6.2 Indemnification. Lender shall indemnify, hold harmless and defend the
Company and its affiliates and agents with respect to any and all loss, damage,
expense, claim, action or liability any of them may incur as a result of the
breach or untruth of any representations or warranties made by the Lender
herein, and the Lender agrees that in the event of any breach or untruth of any
representations or warranties made by him herein, the Company may, at its
option, forthwith rescind the sale of the Note to such Lender.
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6.3 Operating Statements. For as long as any of the Note remains
outstanding, the Company shall furnish to the Lender, forthwith upon the
preparation thereof, correct copies of its press releases and other public
announcements, and its quarterly, annual and other Reports filed with the
Securities and Exchange Commission
7. GENERAL AND MISCELLANEOUS
7.1 Survival Of Warranties. The warranties, representations and covenants
of the parties contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and any inquiries by
any party.
7.2 Entire Agreement. This Agreement constitutes the entire agreement among
the parties, and no party shall be liable or bound to any other party in any
manner by any warranties, representations, guarantees or covenants except as
specifically set forth in this Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed under
the internal laws of the State of Arizona without regard to conflicts of law.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Note Purchase Agreement as of
this 15th day of July, 2004.
Katsinam Partners, LP BESTNET COMMUNICATIONS CORP.
By __________________________ By ___________________________
Its _________________________ Its __________________________
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Exhibit 1 - Form of Promissory Note
Exhibit 1 - Form of Convertible Promissory Note
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Exhibit 5.4 Officer Certificate
The undersigned, _______________________, hereby certifies that he is the [Chief
Financial Officer] of BestNet Communications Corp, a Nevada corporation (the
Company) and further certifies as follows to the purchasers of the Company's
Promissory Note:
1. As such officer he is familiar with the business, affairs and assets
of the Company and with the provisions of a certain Note Purchase
Agreement (Agreement) between the Company on the one hand and Xxxxxxx
Xxxxxxxxx on the other and acknowledges that the making, delivery and
accuracy of this Certificate is a condition to the performance of the
Purchaser under the Agreement.
2. To the best of his knowledge, after careful inquiry, the
representations and warranties of the Company contained in the
Agreement are true and correct on and all conditions required to be
fulfilled as a condition to the obligations of the Purchaser have been
fulfilled and as of the date of this Certificate.
3. Nothing in the Agreement or any attachment thereto or document
delivered in connection therewith contains any untrue statement of a
material fact or omits to make a statement necessary to make the
statements made therein not misleading.
Signed at Grand Rapids, Michigan on the _______ day of July, 2004
By
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[Name and Title]
Exhibit 5.4 Officer Certificate
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