RESCISSION AGREEMENT
This Rescission Agreement (the "Agreement") is entered into and
effective as of February 1, 2002, by and between Netgateway, Inc., a Delaware
corporation (the "Corporation"), SBI-E2Capital USA Ltd. ("SBI"), Xxxxxx Xxxxxxx
("Xxxxxxx"), Xxx Xxxxxxx ("Xxxxxxx"), Xxxxxxx XxXxxxxx ("XxXxxxxx"), and Xxxxxx
XxXxxxx ("McCleer") (each of SBI, Singhal, Buttles, XxXxxxxx and XxXxxxx shall
be referred to herein collectively as the "Investors," and individually as an
"Investor").
RECITALS
WHEREAS, pursuant to that certain engagement letter ("Engagement
Letter") between SBI and the Corporation, SBI was entitled to receive 2,333,333
shares of the Corporation's common stock (the "Stock") as consideration for
certain financial services (the "Services") performed by SBI;
WHEREAS, SBI directed that the shares be distributed to the Investors
(the "Designation") in the amounts set forth on Schedule A attached hereto;
WHEREAS, the Parties entered into an Investor Representation Agreement
dated as of November 13, 2001 with respect to the Designation;
WHEREAS, the business combination transaction between the Corporation
and Category Five Technologies, Inc. with respect to which the Services were to
be provided pursuant to the Engagement Letter was never consummated (the
"Termination") and the parties to the Agreement and .Plan of Merger with respect
to such transaction entered into a Termination Agreement dated as of January 14,
2002; and
WHEREAS, the Parties wish to rescind and nullify the issuance of Stock
pursuant to the Engagement Letter and the related Designation
AGREEMENT
1. Rescission. The Parties hereby agree that because of the failure of the
Merger to be completed and other conditions precedent to and anticipated
consideration for the issuance of the Stock and the Designation before today's
date, including, without limitation, the inability because of the Termination to
complete the provision of the Services, and because of the parties mutual
desires to nullify ab initio the legal, contractual and business relationship
with respect to the issuance of the Stock and the Designation, the issuance of
the Stock and the Designation is rescinded and nullified ab initio and therefore
is of no force and effect from the outset.
2. Return of Stock Certificates. Simultaneously with the execution of this
Agreement the Investors shall return to the Corporation the certificates
representing all of the Stock, together with all necessary documentation to
transfer legal title in the Stock back to the Corporation. The Investors hereby
disclaim any interest whatsoever in the Stock. Upon receipt of the certificates
representing the Stock the Corporation shall direct its transfer agent to cancel
the Stock from its books and records.
3. Representations and Warranties of the Investor. Each Investor hereby
represents and warrants to, and covenants and agrees with, the Corporation, with
the understanding that the Corporation is relying on such representations,
warranties and covenants in entering into this Agreement, that:
3.1 Ownership. Investor owns all legal and beneficial ownership of the
number of shares of the Stock specified opposite his or her name on Schedule A
hereto and that such shares have not been pledged or hypothecated and are not
subject to any lien, security interest or restriction on the ability of Investor
to transfer such shares of Stock to the Corporation.
3.2 Investment Experience. Investor acquired the Stock for investment
purposes only, for Investor's 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"). Investor has experience as an investor in securities of
companies and acknowledges that Investor and has such knowledge and experience
in financial or business matters that Investor is capable of evaluating the
merits and risks of entering into this Agreement, is an "accredited investor",
that the Stock involves a high degree of risk and that the Corporation cannot
predict whether its business will be successful. Investor further represents
that the value of the Stock to Investor does not exceed 10% of Investor's net
worth.
3.3 Receipt of Information. Investor has received all the information
that Investor considers necessary or appropriate for deciding whether to enter
into this Agreement. Investor has had an opportunity to ask questions and
receive answers from the Corporation and its officers and directors regarding
the Corporation, the financial statements of the Corporation and the terms and
conditions of this Agreement.
4. Survival of Representations and Warranties. The representations, warranties
and covenants made herein by Investors and in any document or certificate
delivered by Investors pursuant to this Agreement shall be deemed to have been
relied upon by the Corporation, 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.
5. Consultation with Counsel. The Parties understand that the execution of this
Agreement creates certain legal rights and responsibilities between the Parties.
The Parties represent and warrant that they have had an opportunity to consult
with legal counsel regarding the legal effect of this transactions and acts
contemplated herein, and that they have consulted with counsel prior to entering
into this transaction, or have voluntarily chosen not to consult with counsel.
6. Miscellaneous. This Agreement constitutes the entire agreements (including
all representations and promises made) among the parties with respect to the
subject matter hereof and no modification or waiver shall be effective unless in
writing and signed in writing by the party to be charged. This Agreement shall
be binding upon and inure to the respective benefit of the parties hereto and
their respective successors, heirs, assigns, executors, administrators and legal
representatives. This Agreement may be executed in one or more counterparts,
each of which shall be deemed and original, but all of which shall constitute
one and the same agreement. 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 provisions or rules (whether of the State of Utah or
other jurisdiction) which would cause the application of any law, rule or
regulation other than the State of Utah.
IN WITNESS WHEREOF, the Investors and the Company have executed this
Agreement as of the date first written above.
NETGATEWAY, INC. SBI-E2 CAPITAL USA LTD.
By: /s/ Xxx Xxxxx By: /s/ Xxxxxx Xxxxxxx
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Name: Xxx Xxxxx Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer Title: Executive Vice President
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxxx XxXxxxxx
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Xxxxxx Xxxxxxx Xxxxxxx XxXxxxxx
/s/ Xxxx Xxxxxxx /s/ Xxxxxx XxXxxxx
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Xxx Xxxxxxx Xxxxxx XxXxxxx
SCHEDULE A
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NAME NUMBER OF SHARES
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SBI-E2 CAPITAL USA LTD. 1,633,333
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Xxxxxx Xxxxxxx 315,000
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Xxx Xxxxxxx 157,500
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Xxxxxxx XxXxxxxx 157,500
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Xxxxxx XxXxxxx 70,000
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