SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of
September 20, 1999, by and between Go Online Networks Corporation, a
corporation organized under the laws of the State of Delaware, with
headquarters located at 0000 Xxxxx Xxxx., Xxxxx 000, Xxxxx Xxxx,
Xxxxxxxxxx 00000 (the "Company") and the buyer set forth on the
execution page hereof (the "Buyer").
RECITALS
A. The Company and the Buyer are executing and delivering
this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act") and Section 4(2) under the 1933 Act;
B. The Buyer desires to purchase from the Company, and the
Company desires to sell to the Buyer, for the amounts and upon the
terms and conditions stated in this Agreement, in a closing (the
"Closing") as herein described, certain of the Company's convertible
notes as listed and described in Recital B(i) immediately below, and
certain warrants as listed and described in Recital B(ii) below.
(i) At the Closing (the "Closing"), the Company's Series
1999-A Eight Percent (8%) Convertible Notes, the form of which is
attached hereto as Exhibit A (the "Notes"), which may be converted
into common stock of the Company, $.001 par value per share ("Common
Stock"), upon the terms and conditions hereof and upon the terms and
conditions of the Notes. The purchase price for the Notes sold
pursuant to this Agreement shall be as stated in Section 1(a) below.
The total aggregate principal amount of Notes to be issued and sold
by the Company at the Closing is Five Hundred Thirty-Eight Thousand
Four Hundred Sixty-Two Dollars ($538,462), all in accordance with
the terms of this Agreement and of the Notes.
(ii) At the Closing, as additional consideration for Buyer's
purchase of the Notes a warrant (the "Warrants") to purchase 175,000
shares of Common Stock at a purchase price of $.50 per share, which
Warrants must be exercised if at all, on or before December 31,
2000. The Warrants shall be substantially in the form attached
hereto as Exhibit B.
The Common Stock into which the Notes may (in accordance with their
terms) be convertible shall be collectively referred to herein as
the "Conversion Shares." Certain shares of Common Stock may (at the
Company's option as described in the Notes) be issued to the Buyer
in payment of interest (the "Interest Shares"). The Common Stock
received upon exercise of the Warrants shall be referred to as the
"Warrant Shares." The Notes, the Conversion Shares, the
Interest Shares (if any), the Warrants and the Warrant Shares may be
collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement (the "Registration Rights Agreement")
substantially in the form of Exhibit C attached hereto pursuant to
which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. Purchase. The Buyer hereby agrees to purchase from the
Company, and the Company agrees to sell to the Buyer, $538,462.00 in
aggregate principal amount of Notes at the Closing. The purchase
price (the "Purchase Price") for the Notes purchased at the Closing
shall be $350,000.00.
b. The Closing. The date of the Closing (the "Closing
Date") shall be September 21, 1999. The Purchase Price for the Notes
being purchased at the Closing shall be delivered to the Escrow
Agent (as defined in the Escrow Agreement substantially in the form
of Exhibit D attached hereto (the "Escrow Agreement")) on behalf of
the Company on or before the Closing Date. On or before the Closing
Date, the Company shall deliver the original Notes and Warrants
being purchased at the Closing, duly issued, authorized and executed
by the authorized officers on behalf of the Company, to the Escrow
Agent (as defined in the Escrow Agreement) on behalf of the Buyer.
c. Form of Payment. The Buyer shall pay the Purchase Price
for the Securities purchased at the Closing by wire transfer of
immediately available funds in United States Dollars, to be
deposited into the Escrow Account as defined in the Escrow
Agreement, against delivery to the Escrow Agent of duly executed
Notes and Warrants being purchased by the Buyer hereunder at such
Closing. The Escrow Agent shall be responsible for delivery of the
Purchase Price to the Company and the Notes and Warrants to the
Buyer in accordance with the terms of the Escrow Agreement and with
the instructions of the said parties.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to
the Company with respect to its purchase hereunder, that:
a. Investment Purposes; Compliance With 1933 Act. The Buyer
is purchasing the Securities for its 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 0000 Xxx. The Buyer is not purchasing the
Securities for the purpose of covering short sale positions in the
Common Stock established on or prior to the Closing Date. The Buyer
agrees to offer, sell or otherwise transfer the Securities only (i)
in accordance with the terms of this Agreement, the Notes and the
Warrants, 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 Buyer does not by its
representations contained in this Section 2(a) agree to hold the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities 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 Buyer understands
that it shall be a condition to the issuance of the Conversion
Shares and the Interest Shares (if any) that the Conversion Shares
and the Interest Shares (if any) be and are subject to the
representations set forth in this Section 2(a).
b. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501 (a) of Regulation D.
The Buyer 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 Buyer
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 Buyer understands the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of the applicable
United States federal and state securities laws and that the Company
is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, acknowledgments,
understandings, agreements and covenants of the Buyer set forth
herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer
and sale of the Securities that have been requested by the Buyer.
The Buyer and its advisors, if any, have been afforded the
opportunity to ask all such questions of the Company as they have in
their discretion deemed advisable. The Buyer understands that its
investment in the Securities involves a high degree of risk. The
Buyer has sought such accounting, legal and tax advice as it has
considered necessary to an informed investment decision with respect
to the investment made pursuant to this Agreement.
e. No Government Review. The Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the
investment in the Securities, nor have such authorities passed upon
or endorsed the merits of the offering of the Securities.
f. Transfer or Resale. The Buyer understands that: (i)
except as provided in the Registration Rights Agreement, the
Securities 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 Buyer shall have delivered to the
Company an opinion by counsel reasonably satisfactory to the
Company, in form, scope and substance reasonably satisfactory to the
Company, to the effect that the securities 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 hereafter defined) 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 (iii)
neither the Company 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 Buyer understands that the Notes, the
Warrants, and until such time as the Conversion Shares, the Warrant
Shares and the Interest Shares (if any) (collectively, the
"Registrable Securities"), have been registered under the 1933 Act
as contemplated by the Registration Rights Agreement or otherwise
may be sold by the Buyer pursuant to Rule 144 (as amended, or any
applicable rule which operates to replace said Rule) promulgated
under the 1933 Act ("Rule 144"), the stock certificates representing
the Registrable Securities 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 Company will issue certificates
without the Legend to the holder of the applicable Notes or any
Registrable Securities upon which the Legend is stamped, in
accordance with Section 5(b).
h. Authorization; Enforcement. This Agreement, the
Registration Rights Agreement and the Escrow Agreement have been
duly and validly authorized, executed and delivered by the Buyer and
are each and collectively valid and binding agreements of the Buyer
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.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to
the Buyer that:
a. Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and existing in good
standing under the laws of the respective jurisdictions in which
they are incorporated, except as would not have a Material Adverse
Effect (as defined below), and have the requisite corporate power to
own their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiary is duly qualified
as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on the operations,
properties or financial condition of the Company and its
subsidiaries taken as a whole. The Common Stock is eligible to trade
and is listed for trading on the OTC Bulletin Board Market. The
Company has received no notice, either written or oral, with respect
to the continued eligibility of the Common Stock for such listing,
and the Company has maintained all requirements for the continuation
of such listing, and the Company does not reasonably anticipate that
the Common Stock will be delisted from the OTC Bulletin Board Market
for the foreseeable future; except that, with respect to the
representations contained in this sentence, the NASD has imposed a
requirement that every company that trades on the OTC Bulletin Board
Market become a reporting issuer under the 1934 Act and have all
comments on filings cleared within certain time limits imposed by
the NASD. The Company must become a reporting issuer on or before
January 1, 1999. The Company shall use its best efforts to meet such
deadline, and shall use its best efforts to continue to have its
stock eligible to trade on the OTC Bulletin Board Market or a
comparable national securities market or exchange. The Company has
complied with all requirements of the National Association of
Securities Dealers and the OTC Bulletin Board Market with respect to
the issuance of the Securities.
b. Authorization; Enforcement. (i) The Company has the
requisite corporate power and authority to enter into and perform
this Agreement, the Registration Rights Agreement and the Escrow
Agreement, to issue and sell the Notes and the Registrable
Securities in accordance with the terms hereof, and to perform its
obligations under the Notes in accordance with the requirements of
the same, (ii) the execution, delivery and performance of this
Agreement, the Notes, the Warrants, the Registration Rights
Agreement and the Escrow Agreement by the Company and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company,
its Board of Directors, or its stockholders is required, (iii) this
Agreement, the Registration Rights Agreement, the Escrow Agreement
and, on the Closing Date, the Notes and Warrants sold at the
Closing, have been duly and validly authorized, executed and
delivered by the Company, and (iv) this Agreement, the Notes (when
issued), the Warrants
(when issued), the Registration Rights
Agreement and the Escrow Agreement constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and
remedies or by other equitable principles of general application.
The Company (and its legal counsel) has examined this Agreement and
is satisfied in its sole discretion that this Agreement and the
accompanying Exhibits, Schedules and the Addenda, if any, are in
accordance with Regulation D and the 1933 Act and are effective to
accomplish the purposes set forth herein and therein.
c. Capitalization. As of August 1, 1999, the authorized
capital stock of the Company consists of (I) 100,000,000 shares of
Common Stock of which 71,302,677 shares were issued and outstanding,
and (II) 20,000,000 shares of Preferred Stock of which 499,333
shares were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. No
shares of Common Stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances. Except as disclosed in
Schedule 3(c) (attached if applicable), as of the effective date of
this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities, and (iii) there are no
agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or
their securities under the 1933 Act (except as provided herein and
in the Registration Rights Agreement). If requested by the Buyer,
the Company has furnished to the Buyer, and the Buyer acknowledges
receipt of same by its signature hereafter, true and correct copies
of the Company's Certificate of Incorporation, as amended, as in
effect on the date hereof ("Certificate of Incorporation"), and the
Company's Bylaws, as in effect on the date hereof (the "Bylaws").
d. Issuance of Securities. The Registrable Securities are
all duly authorized and reserved for issuance, and in all cases upon
issuance shall be validly issued, fully paid and non-assessable,
free from all taxes, liens and charges with respect to the issue
thereof, and will not be subject to preemptive rights or other
similar rights of stockholders of the Company.
e. Acknowledgment Regarding Buyer's Purchase of the
Securities. The Company acknowledges and agrees that the Buyer is
not acting as financial advisor to or fiduciary of the Company (or
in any similar capacity with respect to this Agreement or the
transactions contemplated hereby), that this Agreement and the
transactions contemplated hereby, and the relationship between the
Buyer and the Company, are and will be considered "arms-length"
notwithstanding any other or prior agreements or nexus between the
Buyer and the Company, whether or not disclosed, and that any
statement made by the Buyer, or any of its representatives or
agents, in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation, is merely
incidental to the Buyer's purchase of the Securities and has not
been relied upon in any way by the Company, its officers or
directors. The Company
further represents to the Buyer that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby have been based solely upon an independent
evaluation by the Company, its officers and directors.
f. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances which
would prevent the parties hereto from consummating the transactions
contemplated hereby pursuant to an exemption from registration under
the 1933 Act and specifically in accordance with the provisions of
Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the 1933 Act, assuming the accuracy
of the representations and warranties contained herein of the Buyer.
g. No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby will not (i) result in a
violation of the Certificate of Incorporation or Bylaws or (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound
or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect). Except as set forth in Schedule 3(g) (attached if
applicable), neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or other
organizational documents, and neither the Company nor any of
its/subsidiaries is in default (and no event has occurred which,
with notice or lapse of time or both, would put the Company or any
of its subsidiaries in default) under, nor has there occurred any
event giving others (with notice or lapse of time or both) any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any
of its subsidiaries is a party, except for possible defaults or
rights as would not, in the aggregate or individually, have a
Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted so
long as the Buyer owns any of the Securities, in violation of any
law, ordinance or regulation of any governmental entity, except for
possible violations which neither singly or in the aggregate would
have a Material Adverse Effect. Except as specifically contemplated
by this Agreement and as required under the 1933 Act and any
applicable state securities laws (any of which exceptions are set
forth in Schedule 3(g)), the Company is not required to obtain any
consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it
to execute, deliver or perform any of its obligations under this
Agreement, the Notes, the Warrants, the Registration Rights
Agreement or the Escrow Agreement in accordance with the terms
hereof and thereof, or to perform its obligations with respect to
the Notes exactly as described in the Notes (once issued), and with
respect to the Warrants exactly as described in the Warrants (once
issued).
h. Financial Statements. The Company has
delivered to the Buyer as requested by the Buyer (or the Buyer has
otherwise obtained) true and complete copies of the Company's
audited financial statements through December 31, 1998 and unaudited
financial statements through June 30, 1999. As of their respective
dates, the financial statements of the Company complied as to form
in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Buyer (including the information referred to in
Section 2(d) of this Agreement) contains any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading. Except as set
forth in the financial statements of the Company, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date
of such financial statements and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be
reflected in such financial statements, in each case of clause (i)
and (ii) next above which, individually or in the aggregate, are not
material to the financial condition, business, operations,
properties, operating results or prospects of the Company. The said
financial statements contain a complete and accurate list of all
material undischarged written and oral contracts, agreements, leases
or other instruments to which the Company or any subsidiary is a
party or by which the Company or any subsidiary is subject (each a
"Contract"). None of the Company, its subsidiaries or, to the best
of the Company's knowledge, any of the other parties thereto, is in
breach or violation of any Contract, which breach or violation would
have a Material Adverse Effect. No event, occurrence or condition
exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a
default by the Company or its subsidiaries thereunder which would
have a Material Adverse Effect.
i. Absence of Certain Changes. Except as disclosed in
Schedule 3(i) (attached if applicable), since at least June 30,
1999, there has been no material adverse change and no material
adverse development in the business, properties, operation,
financial condition, results of operations or prospects of the
Company. The Company has not taken any steps, and does not
currently have any reasonable expectation of taking any steps, to
seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge that its creditors intend to initiate involuntary
bankruptcy proceedings. The Company shall, at least until Buyer no
longer holds any of the Securities, maintain its corporate existence
in good standing and shall pay all taxes when due except for taxes
it reasonably disputes.
j. Absence of Litigation. Except as set forth in Schedule
3(j) (attached if applicable), there is no action, suit, proceeding,
inquiry or investigation before or by any court,
public board orbody pending or, to the knowledge of the Company,
threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or
which would adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations
under, this Agreement or any of the documents contemplated herein.
k. Foreign Corrupt Practices. Neither the Company nor any
of its subsidiaries, nor any officer, director or other person
acting on behalf of the Company or any subsidiary has, in the course
of his actions for or on behalf of the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
l. Brokers; No General Solicitation. The Company 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
Company and the Buyer both acknowledge that no broker or finder was
involved with respect to the transactions contemplated hereby, other
than Bridgewater Capital Corporation. Neither the Company nor any
distributor participating on the Company's behalf in the
transactions contemplated hereby nor any person acting for the
Company, or any such distributor, has conducted any "general
solicitation," as described in Rule 502(c) under Regulation D, with
respect to the Securities being offered hereby.
m. Acknowledgment of Dilution. The number of Conversion
Shares issuable upon conversion of the Notes may increase
substantially in certain circumstances, including the circumstance
wherein the trading price of the Common Stock declines. The
Company's executive officers and directors have studied and fully
understand the nature of the securities being sold hereunder and
recognize they have a potential dilutive effect. The board of
directors of the Company has concluded in its good faith business
judgment that such issuance is in the best interests of the Company.
The Company acknowledges that its obligation to issue Conversion
Shares upon conversion of the Notes is binding upon it and
enforceable regardless of the dilution that such issuance may have
on the ownership interests of other stockholders.
n. Eligibility to File Registration Statement. The Company
is currently eligible to file a registration statement with the SEC
either on Form S-1 or Form S-B2 under the 1933 Act.
o. Non-Disclosure of Non-Public Information.
(a) The Company shall in no event disclose non-public information to the
Buyer, advisors to or representatives of the Buyer unless prior to
such disclosure of information the Company marks such information as
"non-public information confidential" and provides the Buyer, 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
Buyer, its advisors and representatives to
enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Buyer.
(b) Nothing herein shall require the Company to disclose
non-public information to the Buyer, its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to investors who purchase stock
in the Company in a public offering, to money managers or to
securities analysts; provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of the
Buyer and, if any, underwriters, of any event or the existence of
any circumstance (without any obligation to disclose the specific
event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company
specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus
included in the registration statement to be filed pursuant to the
Registration Rights Agreement, would cause such prospectus to
include a material misstatement or to omit a material fact required
to be stated therein in order to make the statements therein, in
light of the circumstances in which they were made, not misleading.
Nothing herein shall be construed to mean that such persons or
entities other than the Buyer (without the written consent of the
Buyer prior to disclosure of such information) may not obtain
non-public information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall
prevent any such persons or entities from notifying the Company of
their opinion that, based upon such due diligence by such persons or
entities, that the registration statement contains an untrue
statement of a material fact or omits a material fact required to be
stated in such registration statement or necessary to make the
statements contained therein, in light of the circumstances in which
they were made, not misleading.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Securities Laws. The Company agrees to timely file a
Form D (or equivalent form required by applicable state law) with
respect to the Securities if and as required under Regulation D and
applicable state securities laws and to provide a copy thereof to
the Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as is necessary to sell
the Securities being sold to the Buyer on each such date under
applicable securities laws of the United States, and shall if
specifically so requested provide evidence of any such action so
taken to the Buyer on or prior to the Closing Date.
c. Reporting Status; Covenant to Become a "Reporting
Issuer". As of the date of this Agreement, the Company is not
subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). As a
material inducement to the Buyer to enter into this Agreement and to
complete the transactions contemplated hereby, the Company agrees,
on or before the date which is thirty (30) days following the date
of this Agreement, to file with the SEC all reports and other
documents and things necessary to become
a "reporting issuer" subject to the reporting requirements of Section
13 or 15(d) of the 1934 Act (the "Reporting Requirements"). The Company
will use its best efforts to become a reporting issuer within sixty (60)
days after the date of this Agreement. The Company may utilize any means
permitted by the SEC to become subject to the Reporting
Requirements, including without limitation filing Form 10 or Form
10-SB, or Form SB-2 with the SEC. Thereafter, and for so long as the
Buyer beneficially owns any of the Securities, the Company shall
file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations hereunder would permit such
termination. As a material inducement for the Buyer to execute this
Agreement and to effect the transactions contemplated herein, the
Company agrees that, if it has not become a reporting issuer subject
to the Reporting Requirements within one hundred twenty (120) days
after the date hereof (the "Reporting Deadline"), then the Company
will make payments to the Buyer, as liquidated damages and in such
amounts and at such times as shall be determined pursuant to this
Section 2(b) as partial relief for the damage to the Buyer by reason
of any delay in or reduction of its ability to resell the Securities
(which remedy shall be exclusive of any other remedies available at
law or in equity), an amount to be determined as follows. The
Company shall pay to the Buyer an amount equal to the purchase price
for the Notes purchased at the Closing (the "Aggregate Note Price")
multiplied by two hundredths (.02) times the sum of the number of
months (prorated for partial months) beginning the day after the
Reporting Deadline and ending on the date the Company becomes a
reporting issuer subject to the Reporting Requirements, provided,
however, that there shall be excluded from such period any delays
which are solely attributable to the delays or improper action of
the Buyer.
d. Use of Proceeds. The Company will use the proceeds from
the sale of the Securities to purchase 75 internet kiosks
($250,000), undertake advertising with Xxxxxxxxxxx.xxx for Shop
GoOnline ($50,000) and for software development for Auctionomics,
Inc. ($50,000).
e. Financial Information. After becoming a reporting issuer
as described in Section 4(c) above, until such time as the Buyer no
longer beneficially owns Notes and Warrants, the Company agrees to
send the following reports to the Buyer: (i) after filing with the
SEC, a copy of each of its Annual Reports, its quarterly Reports,
and any reports filed on Form 8-K; and (ii) as soon as practicable
after release thereof, copies of all press releases issued by the
Company or any of its subsidiaries.
f. Reservation of Shares. The Company shall at all times
have authorized, and reserved for the purpose of issuance, a
sufficient number of shares of Common Stock to provide for the
issuance of all of the Conversion Shares, the Warrant Shares and the
Interest Shares (if any). Prior to complete conversion of the Notes
and exercise of the Warrants, the Company shall not reduce the
number of shares of Common Stock reserved for issuance hereunder
without the written consent of the Buyer except for a reduction
proportionate to a reverse stock split effected for a business
purpose other than affecting the requirements of this Section, which
reverse stock split affects all shares of Common Stock equally.
g. Listing. Upon the Closing, the Company shall promptly
secure the listing of the Registrable Securities underlying the
Notes and the Warrants upon each national securities exchange or
automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and
shall maintain, so long as any other shares of Common Stock shall be
so listed, such listing of shares of Registrable Securities from
time to time issued under the terms of this Agreement and the
Registration Rights Agreement. The Company shall at all times comply
in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association
of Securities Dealers and the OTC Bulletin Board Market (or such
other national securities exchange or market on which the Common
Stock may then be listed, as applicable).
h. Prospectus Delivery Requirement. The Buyer understands
that the 1933 Act requires delivery of a prospectus relating to the
Common Stock in connection with any sale thereof pursuant to a
registration statement under the 1933 Act covering any resale by the
Buyer of the Common Stock being sold, and the Buyer shall comply
with any applicable prospectus delivery requirements of the 1933 Act
in connection with any such sale.
i. Intentional Acts or Omissions. Neither party shall
intentionally perform any act which if performed, or omit to perform
any act which if omitted to be performed, would prevent or excuse
the performance of this Agreement or any of the transactions
contemplated hereby.
j. No Shorting. As a material inducement for the Company
to enter into this Agreement, the Buyer represents that it has not
as of the date hereof, and covenants on behalf of itself and its
affiliates that neither Buyer nor any affiliate of Buyer will at any
time in which the Buyer or any affiliate of the Buyer beneficially
owns any of the Securities, engage in any short sales of, or hedging
or arbitrage transactions with respect to, the Common Stock, or sell
"put" options or similar instruments with respect to the Common
Stock. The Company acknowledges that a sale of Conversion Shares (or
Warrant Shares) on the date a conversion of the Notes (or exercise
notice for the Warrants) is made, even if such sale is made prior to
delivery of the notice of conversion with respect to such Conversion
Shares (or exercise notice with respect to such Warrant Shares), is
not a "short sale" for purposes of this Section 4(j).
k. Expenses. The Company agrees to pay to or at the
direction of the Buyer the sum of $2,500 at the Closing as
reimbursement for the attorney's fees and expenses of the Buyer
incurred by it in connection with the transactions contemplated by
this Agreement.
1. Conversion Restrictions. Notwithstanding
anything to the contrary set forth herein or in the Notes, in no
event shall any holder of the Notes be entitled to convert Notes in
excess of such portion of the principal of the Notes that, upon
giving effect to such conversion, would cause the aggregate number
of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 9.99% 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 holder and its affiliates shall include the number of
shares of Common Stock issuable upon conversion of the Notes with
respect to which the determination of such proviso is being made..
Except as set forth in the preceding sentence, for purposes of this
Section 2(a), 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 Section 4(l) on conversion
of Notes shall no longer apply, and the holder of the Notes may
convert all or any portion of the Notes, irrespective of the
resulting beneficial ownership of the Company's Common Stock, should
any of the following events occur: (I) The Company shall either:
(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 Company or for a substantial
part of its property or business without the Company'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 Company 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 Two Hundred Thousand United States Dollars (US$350,000.00) in the
aggregate shall be entered or filed against the Company or any of
its properties or assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any proposed
sale thereunder; 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 Company and, if instituted against the
Company, shall not be dismissed within sixty days after such
institution or the Company 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
m. Restriction on Below Market Issuance of
Securities. Until the date which is nine (9) months from the
Closing Date, the Company shall not issue or agree to issue {other
than (i) to the Buyer pursuant to the transactions contemplated
herein, (ii) pursuant to any employee stock option plan or employee
stock purchase plan of the Company established during the term of
this restriction for a legitimate business purpose and not to avoid
the restrictions imposed in this Section 4(m), (iii) pursuant to any
existing security, option, warrant, scrip, call or commitment or
right in each case as disclosed on Schedule 3(c) hereof, or (iv)
with the consent of the Buyer, not to be unreasonably withheld} any
equity securities of the Company (or any security convertible into
or exercisable or exchangeable, directly or indirectly, for equity
securities of the Company) or debt securities of the Company if such
securities are issued at a price (or provide for a conversion,
exercise or exchange price) which may be (i) less than the lesser of
(a) the market price on the date of issuance or (b) $.30 per share
(in the case of Common Stock) or (ii) $.30 per share on the date of
conversion, exercise or exchange (in the case of securities
convertible into or exercisable or exchangeable, directly or
indirectly, for Common Stock).
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. Transfer Agent Instructions. The Company shall instruct
its transfer agent to issue certificates, registered in the name of
the Buyer or its nominee, for the Conversion Shares,
the Warrant Shares and the Interest Shares (if any) in accordance
with the terms of the applicable Notes and Warrants and in such
amounts as specified from time to time by the Buyer to the Company, upon
conversion of the Notes or exercise of the Warrants (as applicable).
All such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement only to the extent required by
applicable law and as specified in this Agreement and the Exhibits
and Addenda hereto. The Company warrants that no instruction other
than such instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof in the
case of the Conversion Shares, the Warrant Shares and the Interest
Shares (if any) prior to the registration of same under the 1933
Act, will be given by the Company to its transfer agent and that the
Conversion Shares, the Warrant Shares and the Interest Shares (if
any) shall otherwise be freely transferable on the books and records
of the Company as and to the extent permitted by applicable law and
provided by this Agreement, the Warrants and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the
Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Conversion Shares, the Warrant
Shares and/or the Interest Shares (if any). If the Buyer (x)
provides the Company with an opinion of counsel reasonably
satisfactory to Company that registration by the Buyer of the Notes,
the Warrants, the Warrant Shares, the Conversion Shares and/or the
Interest Shares (if any) is not required under the 1933 Act, or (y)
transfers Securities to an affiliate which is an accredited investor
(in accordance with the provisions of this Agreement) or in
compliance with Rule 144, then in either instance the Company shall
permit the said transfer, and if applicable promptly (and in all
events within two (2) trading days) instruct its transfer agent to
issue one or more certificates in such name and in such
denominations as specified by the Buyer.
b. Removal of Legends. The Legend shall be removed and the
Company shall issue a certificate without such Legend to the holder
of any Security upon which it is stamped, and a certificate for a
security shall be originally issued without the Legend, if, unless
otherwise required by state securities laws, (x) the sale of such
Security is registered under the 1933 Act, or (y) such holder
provides the Company with an opinion by counsel reasonably
satisfactory to the Company, that is in form, substance and scope
reasonably satisfactory to the Company, to the effect that a public
sale or transfer of such Security may be made without registration
under the 1933 Act or (z) such holder provides the Company with
assurances reasonably satisfactory to the Company and its counsel,
that such Security can be sold pursuant to Rule 144. The Buyer
agrees that its sale of all Securities, including those represented
by a certificate(s) from which the Legend has been removed, or which
were originally issued without the Legend, shall be made only
pursuant to an effective registration statement (and to deliver a
prospectus in connection with such sale) or in compliance with an
exemption from the registration requirements of the 1933 Act. In
the event the Legend is removed from any Security or any Security is
issued without the Legend and thereafter the effectiveness of a
registration statement covering the sales of such Security is
suspended or the Company determines that a supplement or amendment
thereto is required by applicable securities laws, then upon
reasonable advance notice to the holder of such Security, the
Company shall be entitled to require that the Legend be placed upon
any such Security which cannot then be sold pursuant to an
effective registration statement or Rule 144 or with respect to
which the opinion referred to in clause (y) next above has not been
rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 (or such
holder provides the opinion with respect thereto described in clause
(y) next above.
c. Conversion of Notes. The Buyer shall have the right to
convert the Notes sold hereunder by delivering via facsimile an
executed and completed Notice of Conversion (as defined in the
Notes) to the Company and delivering within two (2) business days
thereafter the original Notice of Conversion and (once it has been
fully converted) the original Note being converted by express
courier to the Company. Each date on which a Notice of Conversion is
telecopied to the Company in accordance with the provisions hereof
shall be deemed a "Conversion Date." The Company will transmit the
certificates representing the shares of Common Stock issuable upon
conversion of any Notes (along with a replacement Note representing
the amount of principal of said Note not so converted, if
applicable) to the Buyer via express courier, within three (3)
business days after the relevant Conversion Date (with respect to
each conversion, the "Deadline"). Time is of the essence with
respect to the requirements of the immediately preceding sentence.
d. Injunctive Relief for Breach. The Company acknowledges
that a breach of its obligations under Sections 5(a), 5(b) and 5(c)
above will cause irreparable harm to the Buyer by vitiating the
intent and purpose of the transactions contemplated hereby.
Accordingly the Company agrees that the remedy at law for a breach
of its obligations under such Sections would be inadequate and
agrees, in the event of a breach or threatened breach by the Company
of the provisions of such Sections, the Buyer shall be entitled, in
addition to all other remedies at law or in equity, to an injunction
restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without
any bond or other security being required.
e. Liquidated Damages for Non-Delivery of
Certificates. In addition to the provisions of Section 5(d) above,
the Company understands and agrees that a delay in the issuance of
the Certificates beyond the Deadline will result in substantial
economic loss and other damages to the Buyer. As partial
compensation to the Buyer for such loss, the Company agrees to pay
liquidated damages (and which the Company acknowledges is not a
penalty) to the Buyer for issuance and delivery of the Certificates
after the Deadline, in accordance with the following schedule (where
"No. Business Days Late" is defined as the number of business days
beyond five (5) business days from the date of delivery by the Buyer
to the Company of a facsimile Notice of Conversion (or, if later,
from the date on which all other necessary documentation duly
executed and in proper form required for conversion of Notes as
described in this Agreement, including the original Notice of
Conversion, all in accordance with this Agreement only if such
necessary documentation has not been delivered to the Company within
the two (2) business day period after the facsimile delivery to the
Company of the Notice of Conversion required in this Agreement)):
No. Business Days Late Liquidated Damages
(in US$)
1 $300
2 $400
3 $500
4 $600
5 $700
6 $800
7 $900
8 $1,000
9 $1,000
10 $1,500
11+ $1,500 + $500 for
each Business Day Late
beyond 11 days
The Company shall pay the Buyer any liquidated damages
incurred as called for under this Section 5(e) by certified or
cashier's check upon the earlier of (i) issuance of the Certificates
to the Buyer or (ii) each monthly anniversary of the receipt by the
Company of the Buyer's Notice of Conversion. Nothing herein shall
limit the Buyer's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Buyer in
accordance with the terms of this Agreement or for breach by the
Company of this Agreement.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell Notes at the Closing
is subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at
any time in its sole discretion:
a. The parties shall have executed this Agreement, the
Registration Rights Agreement and the Escrow Agreement, and the
parties shall have delivered the respective documents or signature
pages thereof (via facsimile or otherwise as permitted in the Escrow
Agreement) to the Escrow Agent.
b. The Buyer shall have delivered to the Escrow Agent on
behalf of the Company the Purchase Price for the Notes and Warrants
purchased at the Closing, by wire transfer of immediately available
funds pursuant to the wiring instructions provided by the Escrow
Agent.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date made and as
of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date),
and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Buyer at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction or any self regulatory organization having authority
over the matters
contemplated hereby which restricts or prohibits
the consummation of any of the transactions contemplated herein.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer to purchase Notes and Warrants is
subject to the satisfaction, on or before the Closing Date, of each
of the following conditions, provided that these conditions are for
the sole benefit of the Buyer and may be waived by the Buyer at any
time in its sole discretion:
a. The parties shall have executed this Agreement, the
Registration Rights Agreement and the Escrow Agreement, the parties
shall have delivered the respective documents or signature pages
thereof (via facsimile or otherwise as permitted in the Escrow
Agreement) to the Escrow Agent on behalf of each other.
b. The representations and warranties of the Company shall
be true and correct in all material respects as of the date made and
as of Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Buyer may
require a certificate, executed by the Chief Executive Officer of
the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the
Buyer.
c. With respect to the Closing, the Company shall have
issued and have duly executed by the authorized officers of the
Company, and delivered to the Escrow Agent on behalf of the Buyer,
the Note and Warrant being sold at the Closing (via facsimile or
otherwise as required by the Escrow Agreement, provided that any
permitted facsimile of such documents shall be followed with
physical delivery to the Escrow Agent of the original instrument or
security within one (1) business day after facsimile of same to the
Escrow Agent).
d. The Common Stock shall be authorized for quotation on the
OTC Bulletin Board Market (or another national securities exchange
or market) and trading in the Common Stock on such market shall not
have been suspended by the SEC or other relevant regulatory agency.
e. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction or any self regulatory organization having authority
over the matters contemplated hereby which restricts or prohibits
the consummation of any of the transactions contemplated herein.
f. The Escrow Agent shall have received on behalf of the
Buyer the opinion of Company counsel, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit E.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware
without regard to the principles of conflict of laws. In the event
of any litigation regarding the interpretation or application of
this Agreement, the parties irrevocably consent to jurisdiction in
any of the state or federal courts located in the State of Delaware
and waive their rights to object to venue in any such court,
regardless of the convenience or inconvenience thereof to any party.
Service of process in any civil action relating to or arising out
of this Agreement (including also all Exhibits or Addenda hereto) or
the transaction(s) contemplated herein may be accomplished in any
manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts
have been signed by each party and signature pages from such
counterparts have been delivered to the Escrow Agent on behalf of
the other party. In the event any signature page is delivered by
facsimile transmission (which the parties agree is an acceptable
form of delivery), the party using such means of delivery shall
cause three (3) additional originally executed signature pages to be
physically delivered to the Escrow Agent on behalf of the other
party within two (2) business days of the execution and delivery
hereof.
c. Headings; Gender, Etc. The headings of this Agreement
are for convenience of reference and shall not form a part of, or
affect the interpretation of this Agreement. As used herein, the
masculine shall refer to the feminine and neuter, the feminine to
the masculine and neuter, and the neuter to the masculine and
feminine, as the context may require. As used herein, unless the
context clearly requires otherwise, the words "herein," "hereunder"
and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date
specified herein falls upon a Saturday, Sunday or public or legal
holidays, the date shall be construed to mean the next business day
following such Saturday, Sunday or public or legal holiday. For
purposes of this Agreement, a "business day" is any day other than a
Saturday, Sunday or public or legal holiday.
d. Severability. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein
and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by U. S. Mail or
delivered personally or by courier or via facsimile (if via
facsimile, to be followed within three (3) business days by an
original of the notice document via U.S. Mail or courier) and shall
be effective five (5) days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon
receipt, if delivered personally or by courier or by facsimile, in
each case properly addressed to the party to receive the same. The
addresses for such communications shall be:
If to the Company:
Go Online Networks Corporation
0000 Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxxx Xxxxxxxx, President & CEO
With a copy to:
Xxxxxx Law Group
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 949.719.1988
Attention: Mr. M. Xxxxxxx Xxxxxx, Esq.
If to the Buyer, at the address on the signature page of this
Agreement. Each party shall provide written notice to the other
party of any change in address.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. Neither the Company nor the Buyer shall
assign this Agreement or any rights or obligations hereunder without
the prior written consent of the other (which consent shall not be
unreasonably withheld), and in any event any assignee of the Buyer
shall be an accredited investor (as defined in Regulation D), in the
written opinion of counsel who is reasonably satisfactory to the
Company and in form, substance and scope reasonably satisfactory to
the Company. Notwithstanding the foregoing, if applicable, any of
the entities constituting the Buyer (if greater than one (1) entity)
may assign its rights hereunder to any of its "affiliates," as that
term is defined under the 1934 Act, without the consent of the
Company; provided, however, that any such assignment shall not
release such assigning entity from its obligations hereunder unless
such obligations are assumed by such affiliate and the Company has
prior to such assignment and assumption consented in writing to the
same; and no such assignment shall be made unless it is made in
accordance with any applicable securities laws of any applicable
jurisdiction. Any request for an assignment made hereunder by the
Buyer shall be accompanied by a legal opinion in form, substance and
scope reasonably satisfactory to the Company, that such assignment
is proper under applicable law. Notwithstanding anything herein to
the contrary, Buyer may pledge the Securities as collateral for a
bona fide loan pursuant to a security agreement with a third party
lender, and such pledge
shall not be considered an assignment in
violation of this Agreement so long as it is made in compliance with
all applicable law.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 8(1), the representations and warranties of the Company and
the Buyer contained in Sections 2 and 3 and the agreements and
covenants set forth in Sections 4, 5 and 8 shall survive the Closing
of the purchase and sale of Securities purchased and sold hereby.
j. Publicity. The Company and the Buyer shall have the
right to review before issuance by the other, any press releases or
any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be
entitled, without prior consultation with or approval of the Buyer,
to make any press release or other public disclosure with respect to
such transactions as is required by applicable law and regulations.
k. Further Assurance. Each party shall do and perform, or
cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing shall not
have occurred on or before ten (10) business days from the date
hereof, this Agreement shall terminate at the close of business on
such date. Neither party may unilaterally terminate this Agreement
after the Closing for any reason other than a material breach of
this Agreement by the non-terminating party, other than as specified
in Section 4(l) above. Such termination shall not be the sole remedy
for a breach of this Agreement by the non-terminating party, and
each party shall retain all of its rights hereunder at law or in
equity. Notwithstanding anything herein to the contrary, a party
whose breach of a covenant or representation and warranty or failure
to satisfy a condition prevented the Closing shall not be entitled
to terminate this Agreement.
m. Remedies. No provision of this Agreement providing for
any specific remedy to a party shall be construed to limit such
party to the specific remedy described, and any other remedy that
would otherwise be available to such party at law or in equity shall
be so available. Nothing in this Agreement shall limit any rights a
party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date
first written above.
[SIGNATURE PAGE FOLLOWS]
List of Exhibits
Exhibit A Form of Note
Exhibit B Warrant to Purchase Common Stock
Exhibit C Registration Rights Agreement
Exhibit D Escrow Agreement
Exhibit E Opinion of Counsel for Go Online Networks Corporation
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT DATED
AS OF SEPTEMBER 20, 1999]
COMPANY:
GO ONLINE NETWORKS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
Xx. Xxxxxx X. Xxxxxxxx, President &
Chief Executive Officer
BUYER:
TRITON PRIVATE EQUITIES FUND, L.P.
By: Triton Capital Management, L.L.C., a
General Partner
By: /s/ Xxxx X. Xxxxxxx
Xx. Xxxx X. Xxxxxxx, Managing Member
BUYER'S ADDRESS:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxx 00000
Telephone: 000.000.0000
Telecopier: 316.262.6801
SECURITIES PURCHASE AGREEMENT
Schedule 3(c)
Outstanding Options to Purchase Common Stock:
None
Outstanding Warrants to Purchase Common Stock:
Option to Purchase 1,000,000 shares at an exercise price of $.50 per
share until December 31, 2000 issued to Xxxxxxx Xxxx
Promissory Notes Convertible Into Common Stock:
None
Commitments to Sell and Register Common Stock:
Commitment to sell 666,667 shares of common stock to Xxxxxxx Xxxx
for $200,000.00, including piggyback registration rights.
Commitment to sell 83,334 shares of common stock to Xxxx Xxxxx for
$25,000, including piggyback registration rights.
Commitment to issue 135,000 shares of common stock to Xxxxxx Law
Group or assigns in consideration for legal fees relating to SB-2
registration statement, including piggyback registration rights.
SECURITIES PURCHASE AGREEMENT
Schedule 3(g)
Registration of all the Registrable Securities under the Securities
Act of 1933, as amended, requires the filing of a registration
statement with the Securities and Exchange Commission and a
declaration of effectiveness of the registration statement by the
Securities and Exchange Commission.
See also Schedule 3(c)
Schedule 3(j)
Litigation:
The Company is presently a plaintiff in an action
entitled Xxxxx Xxxxxxxx Entertainment, Inc. v. AmeriNet Financial
Systems, Inc. filed in the California Superior Court. The action
relates to the Company's claim for the value of securities issued to
the Company in connection with the Company's sale of Real Estate
Television Network, Inc. ("RETN") to AmeriNet. The Company also
seeks damages (up to $60 million) for diminution of its market value
and other damages from AmeriNet's breaches. AmeriNet has
counterclaimed in the action for up to $200,000 that AmeriNet
provided to RETN while AmeriNet ran RETN. The Company believes that
AmeriNet's counterclaims are frivolous and are vigorously
prosecuting the primary action and defending the counterclaim.
