Exhibit 10.41
THIS EXCHANGE AGREEMENT (this "Agreement"), dated as of November 24, 1998,
by and between Outlook Sports Technology, Inc., a Delaware corporation
("Outlook"), and the individual whose signature is set forth on the signature
page hereto ("Offeree"),
WITNESSETH THAT:
WHEREAS, Outlook plans to make an initial public offering (the "Offering")
of shares of its Class A Common Stock, $.01 par value per share ("Class A Common
Stock"), and Redeemable Class A Common Stock Purchase Warrants ("Warrants");
WHEREAS, Outlook has been informed by its underwriters that the substantial
amount of its debt (the "Bridge Debt") owed to its existing investors (the
"Bridge Debt Investors") will, as a practical matter, make it difficult or
impossible to consummate the Offering;
WHEREAS, Outlook's obligation to repay $6,062,500 of the Bridge Debt has
matured and Outlook's payments to the purchasers of such portion of the Bridge
Debt are currently past due;
WHEREAS, Outlook wishes to convert the Bridge Debt into shares of Class A
Common Stock and Warrants to be held by the current Bridge Debt Investors; and
WHEREAS, the undersigned has indicated a desire to convert its portion of
the Bridge Debt to equity in such manner;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. THE EXCHANGE. Upon execution of this Agreement by Offeree and Outlook,
the entire principal amount together with accrued interest of the Bridge Debt
held by Offeree, including all notes received by Offeree in all private
placements of Outlook in which Offeree participated, will be converted (the
"Exchange") as follows: for every five dollars of the principal amount and
interest of Bridge Debt, Offeree will receive one share of Class A Common Stock
and one Warrant to purchase one share of Class A Common Stock, which warrant
will be substantially in the form attached hereto as EXHIBIT A (the "Warrant").
2. DELIVERY OF DEBT INSTRUMENTS BY OFFEREE. Upon execution of this
Agreement, Offeree will immediately return to Outlook's counsel in the enclosed
FedEx envelope all notes that Offeree has received from Outlook as payment for
all loans made by Offeree in all the private placements in which Offeree
participated (the "Debt Instruments").
3. DELIVERY OF STOCK CERTIFICATES AND WARRANTS BY OUTLOOK. As promptly as
practicable upon receipt by Outlook of all Debt Instruments held by Offeree
prior to its execution of this Agreement, Outlook will deliver to Offeree a
Class A Common Stock certificate and a Warrant registered in the name of Offeree
and representing the number of shares of Class A Common
Stock and Warrants equivalent to the total principal amount and accrued interest
of the Bridge Debt held by Offeree divided by five; PROVIDED, HOWEVER, that if
any law or regulation or order of the Securities and Exchange Commission or any
other body having jurisdiction in the premises shall require Outlook or Offeree
to take any action in connection with the shares of Class A Common Stock and
Warrants then being exchanged, the date for the delivery of such certificate and
Warrant shall be extended for the period necessary to take and complete such
action. Outlook may imprint upon said certificate the legends contemplated by
Section 6 herein or such other legends as counsel for Outlook may consider
appropriate. Delivery by Outlook of such certificate and Warrant shall be deemed
effected for all purposes when Outlook or a stock transfer agent of Outlook
shall have deposited such certificate and Warrant in the United States mail,
addressed to Offeree, at the address specified in this Agreement. Outlook will
pay all fees or expenses necessarily incurred by Outlook in connection with the
issuance and delivery of such certificate and Warrant.
4. OUTLOOK'S REPRESENTATIONS. Outlook represents to Offeree as follows:
a. Outlook is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite corporate power
and authority to (i) own, lease and operate its properties and to carry on its
business as now being conducted, and (ii) to execute, deliver and perform its
obligations under this Agreement, and to consummate the transactions
contemplated hereby. The Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and where failure to so qualify could have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company.
b. This Agreement has been duly and validly authorized, executed and
delivered by Outlook and this Agreement is the valid and binding agreement of
Outlook enforceable in accordance with its 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.
c. Outlook will reserve and keep available, out of shares of its
authorized and unissued Class A Common Stock or shares of Class A Common Stock
held in treasury, a sufficient number of shares of its Common Stock to satisfy
the requirements of this Agreement.
d. All shares of Class A Common Stock agreed to be issued pursuant to
this Agreement will, upon issuance, be duly and validly issued, fully paid and
non-assessable.
5. OFFEREE'S REPRESENTATIONS. Offeree represents to Outlook as follows:
a. Offeree's status as an "accredited investor," as that term was
defined in the Subscription Agreements signed by Offeree in connection with all
bridge loans previously made by Offeree, has not changed.
b. Offeree has received and reviewed carefully the letter from Xxx
Xxxxxxx (the "Xxxxxxx Letter") (enclosed herewith) and Outlook's Preliminary
Prospectus (enclosed herewith), including all risk factors therein.
c. Offeree understands that its participation in the Exchange will
result in the subordination of its interest as a creditor of Outlook to the
interests of all holders of Outlook's debt, including to those Bridge Debt
Investors who choose not to participate in the Exchange. Offeree further
understands that, in the event Outlook seeks bankruptcy or other similar
protection, Offeree's participation in the Exchange will adversely impact its
rights as a creditor as compared to its current rights as a Bridge Debt
Investor.
d. Offeree understands that there is no minimum number of participants
in the Exchange. Outlook will accept all Bridge Debt that agrees to participate
in the Exchange. There can be no assurance that a sufficient aggregate principal
amount of Bridge Debt will be exchanged to permit the Offering.
e. Offeree understands that if Outlook is not able to convert a
sufficient aggregate principal amount of Bridge Debt, Outlook may be unable to
consummate the Offering in which event Outlook may have to seek protection under
the bankruptcy laws, in which case Offeree should not expect any payment on its
securities.
f. Offeree understands that Bridge Debt Investors who choose not to
participate in the Exchange will have greater rights in a bankruptcy proceeding
or liquidation of Outlook than Bridge Debt Investors who participate.
g. Offeree understands that although Outlook intends to pursue the
Offering, there can be no assurance that it will be successful. If it is not
successful, it may have to seek protection under the bankruptcy laws (see Risk
Factors set forth in the Preliminary Prospectus enclosed herewith).
h. Offeree has had an opportunity to ask questions of and receive
answers from Outlook concerning Outlook and all other matters pertinent to the
Exchange, and all such questions have been answered to the full satisfaction of
Offeree. Offeree has been given access to Outlook's books and records and all
other documents and information that Offeree has requested relating to the
Exchange.
i. Except as set forth herein, no representations or warranties have
been made to Offeree by Outlook or any agent, employee or affiliate thereof, and
no oral or written information furnished to Offeree or its advisors, if any, was
in any way inconsistent with this Agreement, the
Xxxxxxx Letter and the Preliminary Prospectus. In entering into this
transaction, the undersigned is not relying upon any information other than that
contained in these three documents and the results of the undersigned's own
investigation.
6. OUTLOOK'S COVENANT. Outlook will file and use its best efforts to go
effective on a concurrent registration of the Class A Common Stock and Warrants
received by Offeree in the Exchange.
7. OFFEREE'S COVENANT. Offeree agrees that for a period of twelve months
following the closing of the Offering, Offeree will not sell, transfer, assign,
hypothecate, pledge or otherwise dispose of any beneficial interest in (either
pursuant to Rule 144 or the regulations under the Securities Act of 1933, as
amended, or otherwise) the Warrants and 50% of the Class A Common Stock received
by Offeree in the Exchange. In addition, Offeree agrees that for a period of six
months following the closing of the Offering, Offeree will not sell, transfer,
assign, hypothecate, pledge or otherwise dispose of any beneficial interest in
(either pursuant to Rule 144 or the regulations under the Securities Act of
1933, as amended, or otherwise) the remaining 50% of the Class A Common Stock
received by Offeree in the Exchange. Offeree understands and agrees that Outlook
will place legends in substantially the following form on all certificates for
shares of Class A Common Stock issued pursuant to this Agreement.
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under
the provisions of any applicable state securities laws, and may not be
sold, pledged, hypothecated or otherwise transferred unless (i) a
registration statement with respect thereto is effective under the
Securities Act or (ii) the Company has received an opinion of counsel
reasonably satisfactory to the Company that such registration is not
required.
The securities represented hereby are subject to a lock-up agreement
set forth in an Exchange Agreement, dated November 24, 1998.
8. MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance
with the laws of Delaware.
b. This Agreement may be executed in counterparts and by the parties
hereto on separate counterparts, all of which together shall constitute one and
the same instrument. A facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
c. The headings, captions and footers of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. 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 any
other jurisdiction.
e. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement.
f. This Agreement sets forth the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
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Offeree
Name:
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Address:
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OUTLOOK SPORTS TECHNOLOGY, INC.
By:
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Name:
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Title:
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