EXHIBIT 10.116
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is entered into and
effective as of the ___ day of June, 2001, by and between Netgateway, Inc., a
Delaware corporation (the "Company"), and the person or entity listed on the
signature page attached hereto (the "Investor").
SECTION 1
SUBSCRIPTION AND SALE
1.1 Subscription and Sale. The Investor hereby
irrevocably subscribes for and irrevocably agrees to
purchase from the Company, and the Company shall
issue and sell to the Investor, the number of shares
(the "Shares") of common stock of the Company, par
value $.001 per share (the "Common Stock") for which
the Investor has subscribed as set forth below and
which the Company has agreed to sell, on the terms
and subject to the conditions set forth in this
Agreement.
1.2 Purchase Price. In full consideration of the issuance
by the Company of the Shares, the Investor shall pay
and deliver to the Company cash or other immediately
available funds in an amount equal to the number of
Shares multiplied by fifty cents (U.S. $.50) (the
"Purchase Price").
1.3 Closing. The purchase and sale of the Shares and the
consummation of the other transactions contemplated
by this Agreement (the "Closing") shall occur at the
offices of the Company, at 10:00 a.m., local time, on
the date of the Agreement (the "Closing Date").
1.4 Deliveries. At the Closing, the Company shall deliver
or cause to be delivered to the Investor a
certificate or certificates representing the Shares
being sold by the Company to the Investor hereunder,
and the Investor shall deliver or cause to be
delivered to the Company the Purchase Price payable
by the Investor and all of the documents, if any,
required to be delivered by the Investor pursuant to
this Agreement.
1.5 Acceptance of Subscription. The Investor understands
and agrees that the Company and any Placement Agent,
if involved, in their sole discretion reserve the
right to accept or reject this or any other
subscription in whole or in part, notwithstanding
prior receipt by the Investor or notice of
acceptance. If the Investor's subscription for Shares
is rejected by the Company or any Placement Agent
involved in whole or in part, the Company shall
promptly return all funds received from the Investor,
without interest, and this Agreement shall be of no
further force and effect.
SECTION 2
REPRESENTATIONS, WARRANTIES AND
CERTAIN AGREEMENTS OF THE INVESTOR
The Investor hereby represents and warrants to, and covenants and
agrees with, the Company, with the understanding that the Company and any
Placement Agent are relying on the accuracy and completeness of such
representations, warranties and covenants in complying with federal and state
securities laws and in entering into this Agreement, that:
2.1 Binding Transaction. The Investor has full power and
authority (and if a corporation, full corporate power
and authority) to execute and deliver this Agreement
and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Investor, enforceable in accordance
with its terms and conditions. The Investor further
acknowledges that the Investor may not, except as may
be specifically permitted by law, cancel, terminate
or revoke this Agreement, and that this Agreement
shall survive the death or disability of the Investor
and shall be binding upon and inure to the benefit of
the parties and their heirs, executors,
administrators, successors, legal representatives and
permitted assigns. If the Investor is more than one
person, the obligations of the Investor shall be
joint and several and the agreements,
representations, warranties and acknowledgements
herein contained shall be deemed to be made by and
binding upon each of such persons and their heirs
executors, administrators, successors, legal
representatives and permitted assigns.
2.2 Noncontravention. The execution, delivery and
performance of this Agreement and the consummation of
the transactions contemplated hereby will not (i)
conflict with or result in a breach or violation of
any term or provision of, or constitute a default
under (with or without notice or passage of time, or
both), or otherwise give any person a basis for
accelerated or increased rights or termination or
nonperformance under, any indenture, mortgage, deed
of trust, loan or credit agreement, lease, license or
other agreement or instrument to which the Investor
is a party or by which the Investor is bound or
affected or to which any of the property or assets of
the Investor is bound or affected, (ii) if the
Investor is an entity, result in the violation of the
provisions of the Investor's charter, bylaws or other
constructing documents, or any legal requirement
applicable to or binding upon it, (iii) result in the
creation or imposition of any lien upon any property
or asset of the Investor or (iv) otherwise materially
adversely affect the contractual or other legal
rights or privileges of the Investor.
2.3 Receipt of Information. The Investor has received
from the Company and reviewed the filings made by the
Company with the Securities and Exchange Commission,
including, without limitation, the Company's Annual
Report on Form 10-K filed on September 22, 2000,
Quarterly Reports on Form 10-Q filed on November 22,
2000, February 14, 2001 and May 15, 2001 and Current
Reports on Form 8-K filed on November 21, 2000,
December 19, 2000, January 9, 2001, January 16, 2001,
January 22, 2001, January 31, 2001, February 14,
2001, March 9, 2001 and April 13, 2001, including the
Exhibits thereto (together, the "SEC Filings"). The
Investor has received from the Company, and has
reviewed, the supplemental information on the
Supplemental Disclosure Statement attached hereto as
Exhibit A (the "Supplemental Disclosure Statement")
and the materials under the heading Business
Description And Management elsewhere in these
Subscription Materials (the "Additional Company
Information"). The Investor has received all the
information which it has requested and which it
considers necessary or appropriate to decide whether
to purchase the Shares to be purchased by it
hereunder. The Investor has had an opportunity to ask
questions and receive answers from the Company and
its officers and directors regarding the Company, the
financial statements of the Company, the Supplemental
Disclosure Statement, the SEC filings, Additional
Company Information and the terms and conditions of
the offering of the Shares. Neither the Investor nor
its investment advisors, legal counsel or accountants
("Investment Advisors") have been furnished any
offering literature on which it has relied other than
the SEC Filings, Additional Company Information and
Supplemental Disclosure Statement, and the Investor
and its investment advisors have relied only on the
SEC Filings, Additional Company Information and
Supplemental Disclosure Statement, and the
information furnished or made available to them by
the Company. At no time was the Investor presented
with or solicited by any leaflet, public promotion
meeting, newspaper or magazine article, radio,
television or Internet advertisement or any other
form of general advertising or general solicitation.
2.4 Investment Intent. The Investor is acquiring the
Shares for investment purposes only, for its own
account and not as a nominee or agent for any other
person, and not with a view to or for resale in
connection with any distribution thereof within the
meaning of the Securities Act of 1933, as amended
(the "Act"), and that the Investor has no present
intention of selling granting any participation in,
or otherwise distributing the same. By executing this
Agreement, the Investor further represents that the
Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell,
transfer or grant participations to such person or to
any third person with respect to the Shares to be
purchased by the Investor.
2.5 ERISA. If this subscription is being made on behalf
of an employee benefit plan or for a person's
individual retirement account, to the best of the
knowledge of the person executing this Agreement (i)
neither the Company nor any of its affiliates is a
fiduciary within the meaning of Section 3(21) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), with respect to such plan or
account, (ii) the Company is not a
"party-in-interest" or a "disqualified person" as
defined in ERISA Section 3(14) and Section 4975(e)(2)
of the Internal Revenue Code of 1986, respectively,
with respect to such plan or account, (iii) the
person executing this subscription has taken into
account the requirements of prudence, diversification
and other fiduciary responsibilities contained in
ERISA, to the extent applicable and (iv) is
permissible under the documents and instruments
governing such plan.
2.6 Accredited Investor. The information provided by the
Investor in Exhibit B or C hereto, as the case may
be, is accurate and complete and the Investor agrees
to notify the Company immediately if any material
change to any of this information occurs before the
acceptance of the Investor's subscription. The
Investor is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission under the Act.
2.7 Investment Experience and Nature of Investment. The
Investor has experience as an investor in securities
of companies in the development stage and in the
turn-around/restructuring stage and acknowledges that
it has no need for liquidity in the Shares, is fully
able to bear the economic risk of making an
investment in the Shares for an indefinite period of
time, has sufficient net worth and means of providing
for the Investor's current needs and contingencies to
sustain a complete loss of Investor's investment, and
has such knowledge and experience in financial or
business matters that it is capable of evaluating,
and has evaluated, the merits and risks of this
investment in the Shares. The Investor also
represents that it has not been organized for the
purpose of acquiring the Shares and that the amount
of this investment does not exceed 10% of such
Investor's net worth. The Investor understands,
acknowledges, agrees and is aware that there are
significant risks associated with an investment in
the Shares including without limitation those
discussed under the heading "Risk Factors" in the
Supplemental Disclosure Statement, that no federal or
state agency has passed upon the Shares or the
Supplemental Disclosure Statement, or made any
finding or determination as to the fairness of this
investment and that the Shares are highly speculative
investments which involve a high degree of risk.
2.8 Restricted Securities. The Investor understands that
the Shares have not been registered under the Act or
under the laws of any jurisdiction; and that a
registration statement for a public offering of
common stock by the Company was filed and withdrawn,
effective as of February 3, 2001. The Investor
understands that as purchaser in this offering it
will not have the protection of Section 11 of the
Act. The Investor understands that the Shares are
characterized as "restricted securities" under the
Act inasmuch as they are being acquired from the
Company in a transaction not involving a public
offering and that under the Act and applicable laws
of other jurisdictions and applicable regulations
thereunder such Shares may be resold without
registration under the Act and applicable laws of
other jurisdictions only in certain limited
circumstances. In this connection, the Investor
represents that it is familiar with Rule 144
promulgated under the Act, as presently in effect,
and understands the resale limitations imposed
thereby and by the Act. The Investor acknowledges
that its investment in the Shares may be an illiquid
investment requiring the Investor to bear the
economic risk of the investment for an indefinite
period of time, that this Agreement contains
significant additional restriction on transfer and
that the Company may not always be able to comply
with the requirements of Rule 144. The Investor
further acknowledges that, until such time as the
Company registers the Shares under the Securities
Act, then the Shares issued hereunder shall continue
to be "Restricted Securities."
2.9 Residence or Place of Business. The residence or
principal place of business address of the Investor
set forth on the signature page hereto is the
Investor's true and correct residence or principal
place of business and is the only jurisdiction in
which an offer to sell the Shares was made to such
Purchaser and the Investor has no present intention
of moving its principal place of business to or of
becoming a resident of any other state or
jurisdiction.
SECTION 3
TRANSFER AND REGISTRATION RIGHTS
3.1 Limitations on Disposition. The Investor agrees not
to make any disposition of all or any portion of the
Shares unless and until:
(a) there is then in effect a registration statement
under the Act covering such proposed disposition and
such disposition is made in accordance with such
registration statement; or
(b) (i) the Investor shall have notified the Company
of the proposed disposition and shall have furnished
the Company with a statement of the circumstances
surrounding the proposed disposition, and (ii) the
Investor shall have furnished the Company with an
opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to the Company, that such
disposition will not require registration of the
Shares under the Act.
3.2 Legends. The Investor acknowledges and understands
that the certificates evidencing the Shares may bear
the legend set forth below (or substantially
equivalent legends), together with other legends
required by the laws of the State of Delaware or any
other state:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a certificate issued upon the
completion of a public distribution of the Shares represented thereby) shall
also bear such legends. The legend set forth above shall be removed by the
Company from any certificate evidencing the Shares upon delivery to the Company
of an opinion by counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, that a registration statement under the Act is at
that time in effect with respect to the legended security or that such security
can be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Shares were issued.
3.3 Registration Rights.
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(a) The Company shall prepare and file with the
Commission by September 30, 2001, a registration
statement relating to the offer and sale of the
Shares acquired by the Investors under this Agreement
and Shares issued to other persons by the Company and
shall use its reasonable efforts to cause the
Securities and Exchange Commission (the "Commission")
to declare such registration statement effective
under the Act as promptly as practicable. The Company
shall promptly notify the Investor when and if it
receives any comments from the Commission on the
registration statement. At such time after the filing
of the registration statement pursuant to this
Section 3.3(a) as the Commission indicates, either
orally or in writing, that it has no further comments
with respect to such registration statement or that
it is willing to entertain appropriate requests for
acceleration of effectiveness of such registration
statement, the Company shall promptly request that
the effectiveness of such registration statement be
accelerated within 48 hours of the Commission's
receipt of such request. The Company shall notify the
Investor by written notice that such registration
statement has been declared effective by the
Commission promptly after such declaration by the
Commission. To the extent the Investor's Shares are
not included in such registration, for any reason,
such Shares shall be subject to Section 3.6(a). The
Company shall have the right to terminate or withdraw
any registration initiated by it under this Section
3.3 prior to the effectiveness of such registration,
whether or not the Investor has elected to include
securities in such registration.
(b) In the case of each registration, qualification or
compliance effected by the Company pursuant to this
Section, the Company will keep the Investor advised
in writing as to the initiation of each registration,
qualification and compliance and as to the completion
thereof. At its expense the Company will:
(i) use its reasonable efforts to cause such registration
statement to become and remain effective until the
second anniversary of the date of this Agreement or
until the distribution described in the registration
statement has been completed; and
(ii) furnish to the Investors participating in such
registration such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such other documents as the Investors
may reasonably request in order to facilitate the
public offering of such securities.
Expenses of registration pursuant to this Section 3.3 shall be borne by the
Company. Unless otherwise stated, all other selling expenses relating to
securities registered on behalf of the holders thereof shall be borne by the
holders of the registered securities included in such registration pro rata on
the basis of the number of shares so registered.
(c) The Investor shall promptly furnish to the Company
such information regarding the Investor, the Shares
held by it and the distribution proposed by the
Investor as the Company may request in writing and as
shall be required in connection with any
registration, qualification or compliance referred to
in this Section 3.3. The Investor agrees to cooperate
with the Company in connection with the Company's
obligations under this Article 3. If at least three
business days prior to the anticipated filing date of
a registration statement, the Company has not
received all requested information from the Investor
then the Company may file the registration statement
without including such Investor's shares, have no
further obligations to the Investors and such
Investor's Shares shall be subject to Section 3.6(a).
(d) The Investor agrees that, upon receipt of any notice
from the Company of the occurrence necessary of any
event, as a result of which the prospectus included
in the registration statement, as then in effect,
includes an untrue statement of a material fact or
omits to state a material fact required to be stated
therein in order to make the statement therein, in
light of the circumstances under which they were
made, not misleading, or if the Commission should
issue a stop order or suspend the effectiveness of
the registration statement, it shall immediately
discontinue its disposition of Shares pursuant to the
registration statement covering such Shares until
such Investor's receipt of copies of a supplemented
or amended Prospectus and, if so directed by the
company, such Investor shall deliver to the Company
(at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the
prospectus covering such Shares current at the time
of receipt of such notice.
3.4 Indemnification.
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(a) The Company will indemnify the Investor, each of its
officers and directors and partners, and each person
controlling the Investor within the meaning of
Section 15 of the Act, with respect to which
registration, qualification or compliance has been
effected pursuant to this Section 3, against all
expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of
a material fact contained in any registration
statement, prospectus, offering circular or other
document, or any amendment or supplement thereto,
incident to any such registration, qualification or
compliance, or based on any omission (or alleged
omission) to state therein a material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances in
which they were made, not misleading, or any
violation by the Company of any rule or regulation
promulgated under the Act applicable to the Company
in connection with any such registration,
qualification or compliance, and the Company will
reimburse the Investor, each of its officers and
directors, and each person controlling the Investor,
for any legal and any other expenses reasonably
incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability
or action, as such expenses are incurred, provided
that the Company will not be liable in any such case
to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in
conformity with written information furnished to the
Company by an instrument duly executed by the
Investor, controlling person or underwriter and
stated to be specifically for use therein.
(b) The Investor will, if Shares held by the Investor are
included in the securities as to which such
registration, qualification or compliance is being
effected, indemnify the Company, each of its
directors and officers, each person who controls the
Company within the meaning of Section 15 of the
Securities Act, and each other person whose shares
are included in the registration statement, each of
its officers and directors and each person
controlling such person within the meaning of Section
15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material
fact contained in any such registration statement,
prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances in which they were made, not
misleading, and will reimburse the Company, such
persons, such directors, officers, persons,
underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss,
damage, liability or action, as such expenses are
incurred, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering
circular or other document in reliance upon and in
conformity with written information furnished to the
Company by an instrument duly executed by such holder
and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this
Section 3.4 (the "Indemnified Party") shall give
notice to the party required to provide
indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate
in such defense at such party's expense; provided,
however, that an Indemnified Party (together with all
other Indemnified Parties which may be represented
without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and
expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing
interests between such Indemnified Party and any
other party represented by such counsel in such
proceeding. The failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this
Section 3.4 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's
ability to defend such action. No Indemnifying Party,
in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into
any settlement which does not include as an
unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or
litigation.
3.5 Rule 144 Reporting. With a view to making available
the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of
the Shares to the public without registration, the
Company agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under
the Act;
(b) File with the Commission in a timely manner all
reports and other documents required of the Company
under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"); and
(c) So long as the Investor owns any registrable
securities, to furnish to the Investor forthwith upon
request a written statement by the Company as to its
compliance with the reporting requirements of said
Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and
documents of the Company and other information in the
possession of or reasonably obtainable by the Company
as the Investor may reasonably request in availing
itself of any rule or regulation of the Commission
allowing the Investor to sell any such securities
without registration.
3.6 Market Standoff Agreement.
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(a) In the event the Investor elects not to participate
in the registration contemplated by this Article 3
the Investor agrees until the second anniversary of
this Agreement that it will not offer, sell, contract
to sell, make any short sale of, loan, grant any
option for the purchase of, pledge, hypothecate, or
otherwise dispose of, directly or indirectly, any of
the Shares. In the event part of the Investor's
shares are not included in such registration, for any
reason, only such unincluded Shares shall be subject
to this Section 3.6(a).
(b) To the extent the Investor elects to participate in
the registration contemplated by this Article 3, the
Investor agrees that during a period of twelve (12)
months commencing on the effective date of the
registration statement for such registration, the
Investor will not offer, sell, make any short sale
of, loan, grant any option for the purchase of,
pledge, hypothecate, or otherwise dispose of,
directly or indirectly, including, without limitation
through such registration, more than five percent
(5%) of the Shares acquired by it under this
Agreement during any one month period and that all
sales will be pursuant to such registration
statement; provided, however, that, to the extent the
Investor sells less than such maximum amount such
unutilized permitted amount may be carried forward to
successive months.
(c) The Investor agrees in connection with any
registration of the Company's securities (other than
a registration of securities in a Rule 145
transaction or with respect to an employee benefit
plan) that, upon request of the Company or the
underwriters managing any underwritten offering of
the Company's securities, not to offer, sell,
contract to sell, make any short sale of, loan, grant
any option for the purchase of, pledge, hypothecate,
make any short sale of or otherwise dispose of,
directly or indirectly, any of the Shares (other than
those included in the registration) or other capital
stock of the Company or securities exchangeable or
convertible into capital stock of the Company without
the prior written consent of the Company or such
underwriters, as the case may be, for such period of
time (not to exceed one hundred eighty (180) days
from the date of the final prospectus used in such
registration, unless the managing underwriter and the
Company determine that it is in the best interests of
the Company in which case it may be extended for an
period not to exceed an additional 180 days) as may
be requested by the Company or such managing
underwriters. The Investor agrees to enter into the
underwriter's standard form of market standoff
agreement to further evidence its obligations under
this Section 3.6(c).
(d) The certificates for the Shares shall contain, for so
long as the market standoff provisions contained in
this Section 3.6 remain in place, a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER INCLUDING
A MARKET STANDOFF AGREEMENT BETWEEN THE COMPANY AND
THE ORIGINAL SHAREHOLDER THAT PROHIBITS SALE OR
TRANSFER OF SUCH SHARES FOR A PERIOD OF UP TO 180
DAYS FOLLOWING THE DATE OF THE FINAL PROSPECTUS FOR
THE INITIAL PUBLIC OFFERING OF THE ISSUER'S COMMON
STOCK. A COPY OF THE AGREEMENT IS ON FILE WITH THE
SECRETARY OF THE ISSUER.
In order to enable the Company to enforce the aforesaid restrictions on
transfer, the Investor hereby agrees that the Company may impose stop-transfer
instructions with respect to the securities of the Company owned beneficially or
of record by the Investor.
SECTION 4
GENERAL PROVISIONS
4.1 Access to Records. The Company has given the
Investor, its counsel, agents, accountants and
representatives reasonable access during normal
business hours during the period prior to the
Closing, to all of the Company's officers, directors,
properties, books, contracts, commitments and records
relating to the Company, and has furnished the
Investor or made available to the Investor at the
Company's offices during such period all information
concerning the business as the Investor has
requested.
4.2 Survival of Representations and Warranties. The
representations, warranties and covenants made herein
by the Investor and in any document or certificate
delivered by the Investor pursuant to this Agreement
shall be deemed to have been relied upon by the
Company, shall survive until the expiration of the
applicable statute of limitations, or any extensions
thereof, and shall be and continue in effect
notwithstanding any investigation made by any party.
4.3 Indemnification. The Investor agrees to indemnify and
hold harmless the Company, its officers, managers,
members, employees, agents and affiliates against any
and all loss, liability, claim, damage and expense
whatsoever (including without limitation any and all
expenses reasonably incurred in investigating,
preparing or defending against any litigation
commenced or threatened or any claim whatsoever)
arising out of or based upon any false representation
or warranty or breach or failure by the undersigned
to comply with any covenant agreement made by the
Investor herein or in any other document furnished by
the Investor to any of the foregoing in connection
with this transaction.
4.4 Governing Law. The rights and obligations of the
parties pursuant to this Agreement shall be governed
by and construed in accordance with the laws of the
State of Utah, without giving effect to any choice or
conflict of law rule or provision (whether of the
State of Utah or other jurisdiction) which would
cause the application of any law or rule other than
of the State of Utah.
4.5 Waiver; Remedies. No failure on the part of any party
to exercise, and no delay in exercising a right,
remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy,
power or privilege, and no waiver whatever shall be
valid, unless in writing signed by the other party or
parties to be charged and then only to the extent
specifically set forth in such writing. All remedies,
rights, powers and privileges, either under this
Agreement or by law or otherwise afforded to the
parties to this Agreement, shall be cumulative and
shall not be exclusive of any remedies, rights,
powers and privileges provided by law. Each party
hereto may exercise all such remedies afforded to it
in any order of priority.
4.6 Notices. Any notice required or permitted under this
Agreement shall be in writing and sufficient if
delivered personally, by facsimile or mailed by
registered or certified mail, postage prepaid and
return receipt requested, addressed to the
appropriate recipient, or at such other address as
the recipient shall designate by written notice, as
herein provided, from time to time as follows:
If to the Investor: If to the Company:
The address set forth on the Netgateway, Inc.
signature pagehereto 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxx, Xxxx 00000
Any notice which is personally delivered or delivered by facsimile
shall be deemed effective upon the date of delivery (or refusal to accept
delivery). Any notice which is mailed shall be deemed delivered on the second
day after mailing.
4.7 Successors. This Agreement shall be binding upon and
inure to the benefit of the respective heirs,
personal representatives, successors and assigns of
the parties. The provisions of this Agreement shall
be binding upon all subsequent holders of the Shares
who acquire the Shares, directly or indirectly from
the Investor in a transaction or series of
transactions not involving a public offering. No
party shall delegate its or their duties or
obligations hereunder without the written consent of
the other parties, which consent shall not be
unreasonably withheld.
4.8 Severability. Should any term or provision of this
Agreement or the application thereof to any
circumstance, in any jurisdiction and to any extent,
be invalid or unenforceable, such term or provision
shall be ineffective as to such jurisdiction to the
extent of such invalidity or unenforceability without
invalidating or rendering unenforceable such term or
provision in any other jurisdiction, the remaining
terms and provision of this Agreement or the
application of such terms and provisions to
circumstances other than those as to which it is held
invalid or unenforceable.
4.9 Expenses. Except as otherwise expressly provided
herein, the parties shall bear their own expenses,
including the fees and expenses of any attorneys,
accountants or others engaged by them incurred in
connection with this Agreement and the transaction
contemplated hereby.
4.10 Entire Agreement. This Agreement, together with its
exhibits, constitutes the entire agreement among the
parties pertaining to the subject matter herein and
supersedes all prior and contemporaneous agreements,
representation and understandings of the parties in
connection with the transactions contemplated hereby.
No supplement, modification or amendment shall be
binding unless executed in writing by all parties.
4.11 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be
considered an original instrument and all of which
together shall be considered one and the same
agreement. Delivery and receipt of executed pages by
facsimile transmission shall constitute effective and
binding execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed or caused this
Agreement to be signed in their respective names as of the day and date first
above written.
SECURITIES
Number of shares subscribed for _______
multiplied by $.50 per Share equals: $_____________________
(amount of immediately available funds to be transferred herewith)
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Please PRINT the exact name(s)(registration) Purchaser(s) desire(s)for the
Shares
(-----) --------------------------------
Telephone No.
-------------------------
Social Security or Tax I.D. Number
-------------------------
Date of Birth
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Street Address
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City State Zip
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NETGATEWAY, INC. INVESTOR
By: _________________________________ _____________________________________
Name: _______________________________ Print Name:_________________________
Title: ______________________________
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SPOUSAL CONSENT
The undersigned is the spouse of the aforesaid Purchaser and
acknowledges that he/she has read the foregoing Subscription Agreement and
related Purchaser Questionnaire ("Agreement") and understands its provisions.
The undersigned is aware that, by the provisions of the Agreement, he/she and
his/her spouse have agreed to purchase Shares in the Company, in accordance with
the terms and provisions of the Agreement. The undersigned hereby expressly
approves and agrees to be bound by the provisions of the Agreement in its
entirety, including, but not limited to, those provisions relating to the
Purchase of Shares and the restrictions thereon.
Dated: _______________, 2001 By:___________________________________
Name:
SUPPLEMENT TO SUBSCRIPTION AGREEMENT
AND CONFIDENTIAL PURCHASER QUESTIONAIRE
This Supplement to the Subscription Agreement and Confidential
Purchaser Questionnaire (the "Supplement") is entered into on June __, 2001
simultaneously with the execution of the Subscription Agreement and Confidential
Purchaser Questionnaire (the "Subscription Agreement") between Netgateway, Inc.,
a Delaware company, and the person or entity listed on the signature page hereto
(the "Investor"). Terms used herein with initial capital letters and not defined
herein shall have the meanings assigned to them in the Subscription Agreement.
Whereas, the Company has changed the offering price per Share from $.50
per to $.30; and
Whereas certain of the information contained in the Subscription
Agreement is to be modified and updated in connection with that change.
Now, therefore, in consideration of the foregoing premises and of the
mutual covenants and agreements contained herein and the Subscription Agreement
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The parties confirm that the Investor is acquiring a total of
______________ Shares at a purchase price of $.30 per Share for a total
consideration of $__________________.
2. Section 1.2 of the Subscription Agreement is amended to read in its
entirety as follows:
1.2 Purchase Price. "In full consideration of the issuance by
the Company of the Shares, the Investor shall pay and deliver to the
Company cash or other immediately available funds in an amount equal to
the number of Shares multiplied by thirty cents ($.30) (the "Purchase
Price").
3. The signature page of the Subscription Agreement is amended to
replace the words "multiplied by $.50 per Share equal" with the words
"multiplied by $.30 per Share equal".
4. The Investor acknowledges the following modifications to the
Supplemental Disclosure Statement attached to the Subscription Agreement as
Exhibit A:
o Section 2 Use of Proceeds. This section is amended to change the entry
for the use of proceeds for working capital from $910,000 to $455,000
and to amend the fourth and fifth sentences thereof to read as follows
"The warrants have an exercise price of $___ per share and a term of
four years. Assuming that 6,666,667 shares of common stock are sold in
this offering at $.30 per share, and costs and expenses associated
with this offering of $15,000, the Company will receive $1,805,000 of
net proceeds.
o Section 4 Forward Looking Statements and Risk Factors. The risk factor
captioned CERTAIN REGISTRATION RIGHTS AND FUTURE SALES OF COMMON STOCK
BY OUR EXISTING SECURITYHOLDERS COULD ADVERSELY AFFECT OUR STOCK PRICE
AND ABILITY TO RAISE CAPITAL BY ISSUING STOCK is amended in its
entirety to read as follows.
We have entered into registration rights agreements pursuant
to which certain holders of our common stock, warrants to
purchase our common stock and holders of notes and a debenture
convertible into our common stock have been granted rights,
under various circumstances, to have such common stock
registered for sale in accordance with the registration
requirements of the Securities Act. Approximately 14,000,000
shares, in addition to the shares to be offered in this
offering and the shares required to be registered with respect
to the King Xxxxxxx convertible debenture, are potentially
registrable. In addition, 5,049,657 shares of our common stock
issuable upon the exercise of stock options granted under our
stock option plans will be eligible for resale in the public
market from time to time subject to vesting. Such a
registration statement and sales may have a material adverse
effect on the market price of our common stock and ability to
raise capital by issuing additional shares because of the
increased number of free trading shares of our common stock in
the market.
5. This Supplement, together with the Subscription Agreement and its
exhibits, constitutes the entire agreement among the parties pertaining to the
subject matter herein and supersedes all prior and contemporaneous agreements,
representation and understandings of the parties in connection therewith. No
supplement, modification or amendment shall be binding unless executed in
writing by all parties. This Supplement may be executed in one or more
counterparts, each of which shall be considered an original instrument and all
of which together shall be considered one and the same agreement. Delivery and
receipt of executed pages by facsimile transmission shall constitute effective
and binding execution and delivery of this Supplement. The rights and
obligations of the parties pursuant to this Supplement shall be governed by and
construed in accordance with the laws of the State of Utah, without giving
effect to any choice or conflict of law rule or provision (whether of the State
of Utah or other jurisdiction) which would cause the application of any law or
rule other than of the State of Utah.
IN WITNESS WHEREOF, the parties hereto have signed or caused this
Supplement to be signed in their respective names as of the day and date first
above written.
NETGATEWAY, INC. INVESTOR
By: ______________________________ ___________________________________
Name: ____________________________ Print Name:________________________
Title: ___________________________
