EXHIBIT 10.7
INVESTMENT AGREEMENT
This Investment Agreement is made this 31st day of December, 1999, by
and between DIGITAL LAUNCH, INC., a Delaware corporation with its principal
office at 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 (the "Company"),
and Lancer Offshore Inc. with its principal office at Xxxx Xxxxxxxxx 0, Xxxxxxx,
Xxxxxxxxxxx Antillies ("Lender").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF NOTE.
1.1 AUTHORIZATION. The Company has duly authorized the
borrowing of $750,000 and the sale and issuance of its convertible promissory
note, in the original principal amount of $750,000 (the "Note"), with interest
accruing thereon.
1.2 SALE OF NOTE. Subject to the terms and conditions of this
Agreement, at the Closing the Company will sell and issue to the Lender, and the
Lender will purchase, the Note. The purchase price of the Note shall be $750,000
(the "Purchase Price"). The form of the Note is attached hereto as EXHIBIT A.
1.3 USE OF PROCEEDS. It is understood and agreed that the
Company will use all of the Purchase Price to make a loan to XxxxxxxXxxxx.Xxx
Inc., a Nevada corporation with offices at 0000 Xxxxxxxxx Xxxx XX, Xxxxx 0000,
Xxxxxxx, XX 00000 ("Global"), in advance of a proposed acquisition of Global by
the Company. It is further understood and acknowledged that, in the event such
acquisition is not consummated, none of the Purchase Price will be available to
the Company for its business or operations because it shall have been loaned to
Global.
2. THE CLOSING. The closing ("Closing") of the sale and purchase of the
Note under this Agreement shall take place on the date first set forth above, or
on such other date as is mutually agreeable to the Company and the Lender. At
the Closing, Lender will deliver to the Company $750,000 by wire transfer, and
the Company will deliver to the Lender the executed Note.
3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants to the Lender as follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to conduct its
business as presently conducted and to enter into and perform this Agreement and
to carry out the transactions contemplated by this Agreement.
3.2 ISSUANCE OF NOTE. The issuance, sale and delivery of the
Note in accordance with this Agreement, have been, or will be on or prior to the
Closing, duly authorized by all necessary corporate action on the part of the
Company, and the Note when so issued, sold and delivered against payment
therefor in accordance with the provisions of this Agreement, will be duly and
validly issued, sold and delivered.
3.3 AUTHORITY FOR AGREEMENT. The execution, delivery and
performance by the Company of this Agreement and the Note have been duly
authorized by all necessary corporate action, and this Agreement,
and the Note as of the time of its delivery, have been duly executed and
delivered by the Company. This Agreement and, when executed and delivered, the
Note, constitute valid and binding obligations of the Company enforceable in
accordance with their respective terms. The execution of and performance of the
transactions contemplated by this Agreement and the Note and compliance with
their provisions by the Company will not violate any provision of law and will
not conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, its Certificate of Incorporation
or Bylaws or any indenture, lease, agreement or other instrument to which the
Company is a party or by which it or any of its properties is bound, or any
decree, judgment, order, statute, rule or regulation applicable to the Company.
4. REPRESENTATIONS BY THE LENDER. Lender represents and warrants to the
Company as follows:
(a) Lender has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Lender has also had the opportunity to ask questions
of and receive answers from, the Company and its management regarding the terms
and conditions of this investment. Lender also has received and reviewed a copy
of Global's Business Plan dated November 1999. Lender has been provided access
to all information requested in evaluating its investment. The Lender has relied
solely on the independent investigations made by the Lender in making this
investment. Without limiting the foregoing, Lender specifically acknowledges
that if the acquisition of Global is consummated, the Company will be launching
an entirely new line of business and will be exiting the skin-care business.
Therefore, the Company's historical financial statements and results do not
provide any indication of the Company's future prospects, costs, margins, risks
or potential.
(b) Lender is making its investment without being furnished
any offering literature or prospectus, and Lender has not been the subject of
any general solicitation. Lender has received and reviewed the Company's
unaudited financial statements for the years ended December 31, 1998 and 1997,
and for the period through September 30, 1999. It is understood and acknowledged
by Lender that as of the date hereof the Company has approximately $700,000 in
current liabilities, consisting principally of accounts payable to vendors,
suppliers, consultants and other third parties. The Company has agreed to sell
its entire skin-care business and related assets to a purchaser ("Purchaser")
that will agree to assume all of such liabilities and indemnify the Company
against all liabilities and claims related to the Company's skin-care business.
However, the Company has not consummated such transaction, and the Company has
not obtained releases from the foregoing liabilities from such vendors and
creditors. The Company intends to work with the Purchaser to obtain such
releases, but no assurances can be made, and no representations have been made
by the Company, that any releases will be obtained. Therefore, the extent to
which the Company may be relieved of such liabilities likely will depend upon
the Purchaser's financial condition, about which no representations are made by
the Company, and its ability to honor its agreement to assume such liabilities.
In addition, the sale of the skin-care business to the Purchaser will require
the approval of the Company's shareholders. If such approval is not obtained,
the transaction will not be consummated, and the Purchaser will not assume the
Company's liabilities relating to the skin-care business.
(c) Lender recognizes that the Note, and any shares received
on conversion of the Note, are being offered and sold pursuant to the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), afforded by Section 4(2), and that the Note and such shares have
not been registered under the Act or under the securities laws of any state and,
therefore, cannot be sold or otherwise transferred unless they are registered
under the Act and applicable state securities laws, or unless an exemption from
registration is available. The Lender has no right to require such registration.
Lender recognizes that no public agency has passed upon the accuracy or adequacy
of the information received by the Lender, or the fairness of the terms of the
offering.
(d) Lender is acquiring the Note, and the shares which may be
delivered upon conversion of the Note, for its own account for investment and
not with a view to, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling the same; and Lender
has no present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
(e) Lender is an "accredited investor" as defined in Rule 501
under the Act.
(f) Lender recognizes that the Company is a high-risk,
speculative venture, and that the total amount of funds tendered are placed at
the risk of the business and may be completely lost. Lender acknowledges and
understands that the Company will need to raise additional capital to survive,
and that if it fails to do so Lender's entire investment likely will be lost.
(g) Lender confirms and represents that it (i) is able to bear
the economic risk of its investment, (ii) is able to hold the Note, and any
shares which may be delivered upon conversion of the Note, for an indefinite
period of time, and (iii) can afford a complete loss of its investment without
any material change in lifestyle, and has available other personal liquid assets
to insure that the investment will not cause any undue financial difficulties or
affect its ability to provide for its current needs and possible personal
financial contingencies.
(h) Lender understands that any transfer of the Note and any
shares which may be delivered upon conversion of the Note will be restricted by
applicable U.S. law and may be restricted by applicable state securities laws
(including investment suitability standards). Lender understands that any
transferee may be required to represent to the Company that such transferee
meets the suitability standards required of an initial subscriber and, under the
circumstances, the transfer would not violate applicable laws. Lender
acknowledges that the Note and certificates representing any shares which may be
delivered upon conversion of the Note will bear a restrictive legend to the
effect that the Note and shares have been issued and sold under an exemption
from registration under federal and state law, and that the Note and shares may
not be transferred in the absence of an opinion of counsel satisfactory to the
Company that such transfer is in compliance with all applicable laws.
(i) All information which the Lender has provided to the
Company concerning the Lender's financial position and knowledge of financial
and business matters is correct and complete as of the execution date hereof. If
there should be any material change in such information prior to the Closing,
the Lender will immediately provide the Company with such information.
4. INDEMNIFICATION. Lender agrees to indemnify and hold harmless the
Company from and against all damages, losses, costs and expenses (including
reasonable attorneys' fees) which may be incurred by reason of the inaccuracy or
breach of any representations or warranties made by the Lender herein or in
connection with the purchase of the Note or any shares which may be delivered
upon conversion of the Note, or in any document provided by the Lender to the
Company.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the respective successors and assigns
of the parties hereto.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
7. EXPENSES. Each party shall bear its own expenses in connection with
the preparation of this Agreement and the closing of the transactions
contemplated hereby.
8. ENTIRE AGREEMENT. This Agreement, together with the Note, embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
9. AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Lender. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. HEADINGS. The headings of the sections, subsections, and paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part of this Agreement.
12. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.
DIGITAL LAUNCH, INC.
By /s/ Xxxxxxxx X. XxXxxxx
Title: CEO
LENDER:
/s/ Xxxxxxx Xxxxx
By: Lancer Offshore Inc.
Name: Xxxxxxx Xxxxx
Title: Investment Manager
EXHIBIT A
FORM OF CONVERTIBLE PROMISSORY NOTE
