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CALLABLE SECURED CONVERTIBLE NOTE

Convertible Promissory Note

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GOLF TWO INC

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Title: CALLABLE SECURED CONVERTIBLE NOTE
Governing Law: Delaware     Date: 10/24/2005

CALLABLE SECURED CONVERTIBLE NOTE, Parties: golf two inc
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GOLF TWO, INC.

 

 

 


 

Securities Purchase Agreement

 


 

Common Stock

 


 

 

 

 


 

 

CONFIDENTIAL

 


 

NOTICE TO OFFEREES

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS SECURITIES PURCHASE AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THERE IS NO ESTABLISHED MARKET FOR THE SECURITIES AND THERE CAN BE NO ASSURANCE THAT SUCH A MARKET WILL EVER DEVELOP OR, IF IT DOES, THAT IT WILL CONTINUE.

 

THE SECURITIES ARE BEING SOLD FOR INVESTMENT PURPOSES ONLY, WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED, RESOLD OR OFFERED FOR RESALE EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS SECURITIES PURCHASE AGREEMENT OR ANY OF THE OTHER OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

INVESTORS MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH THEY PURCHASE, OFFER OR SELL THE SECURITIES AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER OR SALE BY IT OF THE SECURITIES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES. THE COMPANY SHALL NOT HAVE ANY RESPONSIBILITY WITH RESPECT TO INVESTOR COMPLIANCE THEREWITH.

 

THE DESCRIPTION OF THE COMPANY AND THE OFFERING CONTAINED IN THIS SECURITIES PURCHASE AGREEMENT AND THE EXHIBITS HERETO, INCLUDING THE SUMMARY INVESTMENT MEMORANDUM ATTACHED HERETO AS EXHIBIT A (COLLECTIVELY, THE “OFFERING MATERIALS”) HAVE BEEN PREPARED BY THE COMPANY SOLELY FOR THE PURPOSE OF DESCRIBING THE SECURITIES. THE OFFERING MATERIALS CONTAIN SUBSTANTIAL INFORMATION CONCERNING THE SECURITIES AND THE COMPANY, AND INVESTORS INTERESTED IN PURCHASING THE SECURITIES ARE URGED TO REVIEW THE OFFERING MATERIALS IN THEIR ENTIRETY.

 


THE INFORMATION CONTAINED IN THE OFFERING MATERIALS IS ACCURATE ONLY AS OF OCTOBER 6, 2005. THE DELIVERY OF THE OFFERING MATERIALS SUBSEQUENT TO THAT DATE DOES NOT IMPLY THAT INFORMATION CONTAINED THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THAT DATE. NO PERSON HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE OFFERING MATERIALS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.

 

THE OFFERING MATERIALS CONTAIN SUMMARIES OF CERTAIN PROVISIONS OF DOCUMENTS RELATING TO THE PURCHASE OF THE SECURITIES AS WELL AS SUMMARIES OF VARIOUS PROVISIONS OF RELEVANT STATUTES AND REGULATIONS. THOSE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE ORIGINAL DOCUMENTS, STATUTES, AND REGULATIONS, A COPY OF EACH OF WHICH IS AVAILABLE ON REQUEST.

 

THIS OFFERING IS MADE SUBJECT TO WITHDRAWAL, CANCELLATION OR MODIFICATION BY THE COMPANY WITHOUT NOTICE AND IS SPECIFICALLY MADE SUBJECT TO THE TERMS DESCRIBED IN THE OFFERING MATERIALS. THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART OR TO ALLOT TO ANY INVESTOR LESS SECURITIES THEN ORIGINALLY SUBSCRIBED FOR BY SUCH INVESTOR.

 

INVESTORS ARE EXPECTED TO CONDUCT AN INDEPENDENT INVESTIGATION OF THE RISKS POSED BY AN INVESTMENT IN THE SECURITIES. AN OFFICER OF THE COMPANY IS AVAILABLE TO ANSWER QUESTIONS CONCERNING THE COMPANY AND WILL, UPON REQUEST, MAKE AVAILABLE SUCH OTHER INFORMATION AS QUALIFIED, POTENTIAL INVESTORS MAY REASONABLY REQUEST AND THAT CAN BE PROVIDED BY THE COMPANY WITHOUT UNREASONABLE EFFORT OR EXPENSE.

 

INVESTORS ARE EXPECTED TO CONSULT THEIR OWN INVESTMENT, LEGAL, TAX AND ACCOUNTING ADVISORS TO DETERMINE WHETHER THE SECURITIES CONSTITUTE APPROPRIATE INVESTMENTS FOR THEM AND THE APPLICABLE LEGAL, TAX, REGULATORY AND ACCOUNTING TREATMENT OF THE SECURITIES. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

SOME OF THE INFORMATION AND OBLIGATIONS OF THE PARTIES REFERENCED HEREIN ARE SET FORTH IN AND WILL BE GOVERNED BY CERTAIN DOCUMENTS DESCRIBED HEREIN OR ATTACHED HERETO, AND ALL OF SUCH INFORMATION AND OBLIGATIONS ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH DOCUMENTS.

 

ii


 

CONFIDENTIALITY

 

By receiving the Offering Materials, each investor acknowledges and agrees that all of the information contained herein is of a confidential nature and may be regarded as material non-public information under Regulation FD under the Securities Exchange Act of 1934, as amended, and that the Offering Materials have been furnished to the investor by the Company solely for the purpose of enabling the investor to consider and evaluate an investment in the Company. Each investor further agrees that he, she or it will treat such information in a confidential manner, will not use such information for any purpose other than evaluating an investment in the Company, and will not, directly or indirectly, disclose or permit his, her or its agents or affiliates to disclose any of such information without the prior written consent of the Company. Each investor also agrees to make his, her or its representatives aware of the terms of this paragraph and to be responsible for any breach of this agreement by such representatives. Likewise, without the prior written consent of the Company, no investor will, directly or indirectly, make any statements, any public announcements, or any release to any trade publication or to the press with respect to the subject matter of the Offering Materials. If the investor decides to not pursue further investigation of the Company or to not participate in the Offering, the investor agrees to promptly return the Offering Materials and any accompanying documentation to the Company. Each investor understands that the United States securities laws provide severe civil and criminal penalties for those persons trading in securities of the Company while in possession of material non-public information.

 

 

iii


 

CONFIDENTIAL

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), entered into as of the date indicated on the signature page hereof, by and between GOLF TWO, INC., a Delaware corporation (the "Company"), and the purchaser or purchasers identified on the signature page hereof ("Purchaser").

 

R E C I T A L S:

 

WHEREAS, Purchaser desires to purchase and the Company desires to sell shares of common stock on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto hereby agree as follows:

 

The Offering .

 

Private Offering . The securities offered by this Agreement are being offered in a private offering (the "Offering") of up to 2,400,000 shares (“Shares”) of common stock, $.001 par value per share (“Common Stock”); provided, however, that in the event of any over-allotments of Shares during the offering period, the Company reserves the right to sell in excess of 2,400,000 Shares to cover such over-allotments. The Shares will be sold on a reasonable “best efforts” basis at a purchase price of $.44 per Share (“Purchase Price”) pursuant to Rule 506 of Regulation D and Regulation S (to non-U.S. persons), each under the Securities Act of 1933, as amended (the “Securities Act”). The Shares are being offered solely to a limited number of “accredited investors” (including certain non-U.S. persons) as that term is defined in Rule 501(a) of the Securities Act during an offering period that will terminate at the sole discretion of the Company. The Shares are sometimes referred to herein as the “Securities.” The business of the Company and certain material risk factors applicable to the Company, its business and this Offering are described in the Summary Investment Memorandum attached hereto and made a part hereof as Exhibit A.  

 

Use of Proceeds . Assuming all 2,400,000 Shares are sold, the net proceeds to the Company are estimated to be approximately $1,000,000 (after deducting offering expenses payable by the Company estimated at $3,200 and assuming payment of the maximum amount of fees to brokers and dealers of up to $52,800). The Company intends to use the net proceeds for general working capital purposes and other general corporate purposes, including acquiring a company operating in the logistics business.

 

Placement and Finder’s Fees . The Company reserves the right to pay fees to brokers and dealers in connection with the sale of the Securities in an amount equal to up to five percent (5%) of the Purchase Price of such Securities.

 


 

Sale and Purchase of Securities . Subject to the terms and conditions hereof, the Company agrees to sell, and Purchaser agrees to purchase, the number of Shares specified on the signature page of this Agreement at a purchase price of $.44 per Share. The aggregate purchase price for the Shares shall be as set forth on the signature page hereto (the "Purchase Price") and shall be payable upon execution hereof by check or wire transfer of immediately available funds. All funds representing the Purchase Price will be held in a segregated account on behalf of the Company (and not available for general application) until all closing conditions are satisfied. The closing conditions consist of: (i) the Company’s acceptance of an executed Agreement; and (ii) the occurrence of the “Change of Control Transactions” referred to within the Summary Investment Memorandum attached hereto and made a part hereof as Exhibit A. This Offering will automatically terminate if the closing conditions do not occur by November 1, 2005. Thereafter, any funds being held on behalf of the Company representing the Purchase Price will be returned to all Purchasers.

 

Subscription Procedure . In order to purchase Securities, Purchaser shall deliver to the Company, at its principal executive office identified in Section 16 hereof: (i) one completed and duly executed copy of this Agreement; and (ii) immediately available funds in an amount equal to the Purchase Price. Execution and delivery of this Agreement shall constitute an irrevocable subscription for that number of Securities set forth on the signature page hereto. Payment for the Securities may be made by wire transfer to an account designated by the Company or on behalf of the Company or by check made payable to: Golf Two, Inc., 1604 Locust Street, Third Floor, Philadelphia, PA 19103. The minimum purchase that may be made by a Purchaser is 113,636 Shares for a purchase price of $50,000, although the Company may, in its sole discretion, accept Agreements for a lesser number of Shares. This Agreement may be rejected by the Company, in whole or in part, in its sole discretion, in which event the Purchase Price will be returned (by mail) to Purchaser within ten (10) business days thereafter. Unless the Offering is otherwise terminated by the Company, as soon as possible after the receipt and acceptance by the Company of this Agreement and collection of the funds paid therefor, the Company will issue certificates for the Shares to Purchaser.

 

Representations and Warranties of Purchaser . Purchaser represents and warrants to the Company as follows:

 

Organization and Qualification . If Purchaser is an entity, Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with the corporate or other entity power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a material adverse effect on Purchaser, and Purchaser is duly qualified as a foreign corporation or other entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not have a material adverse effect on it.

 


If Purchaser is an entity, the address of its principal place of business is as set forth on the signature page hereto, and if Purchaser is an individual, the address of its principal residence is as set forth on the signature page hereto.

 

Authority; Validity and Effect of Agreement . If Purchaser is an entity, Purchaser has the requisite corporate or other entity power and authority to execute and deliver this Agreement and perform its obligations under this Agreement. The execution and delivery of this Agreement by Purchaser, the performance by Purchaser of its obligations hereunder and all other necessary corporate or other entity action on the part of Purchaser have been duly authorized by its board of directors or similar governing body, and no other corporate or other entity proceedings on the part of Purchaser is necessary for Purchaser to execute and deliver this Agreement and perform its obligations hereunder.

 

This Agreement has been duly and validly authorized, executed and delivered by Purchaser and, assuming it has been duly and validly executed and delivered by the Company, constitutes a legal, valid and binding obligation of Purchaser, in accordance with its terms.

 

No Conflict; Required Filings and Consents . Neither the execution and delivery of this Agreement by Purchaser nor the performance by Purchaser of its obligations hereunder will: (i) if Purchaser is an entity, conflict with Purchaser’s articles of incorporation or bylaws, or other similar organizational documents; (ii) violate any statute, law, ordinance, rule or regulation, applicable to Purchaser or any of the properties or assets of Purchaser; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of Purchaser under, or result in the creation or imposition of any lien upon any properties, assets or business of Purchaser under, any material contract or any order, judgment or decree to which Purchaser is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a material adverse effect on its obligation to perform its covenants under this Agreement.

 

Accredited Investor .   Purchaser is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D under the Securities Act. If Purchaser is an entity, Purchaser was not formed for the specific purpose of acquiring the Securities, and, if it was, all of Purchaser’s equity owners are “accredited investors” as defined above.

 

No Government Review . Purchaser understands that neither the United States Securities and Exchange Commission (“SEC”) nor any securities commission or other governmental authority of any state, country or other jurisdiction has approved the issuance of the Securities or passed upon or endorsed the merits of the Securities, this Agreement, the Summary Investment Memorandum or any of the other documents relating to the proposed Offering (collectively, the “Offering Documents”), or confirmed the accuracy of, determined the adequacy of, or reviewed this Agreement, the Summary Investment Memorandum or the other Offering Documents.

 


Investment Intent . The Securities are being acquired for the Purchaser’s own account for investment purposes only, not as a nominee or agent and not with a view to the resale or distribution of any part thereof, and Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, Purchaser further represents that Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or third person with respect to any of the Securities.

 

Restrictions on Transfer . Purchaser understands that the Securities are “restricted securities” as such term is defined in Rule 144 under the Securities Act and have not been registered under the Securities Act or registered or qualified under any state securities law, and may not be, directly or indirectly, sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and registration or qualification under applicable state securities laws or the availability of an exemption therefrom. In any case where such an exemption is relied upon by Purchaser from the registration requirements of the Securities Act and the registration or qualification requirements of such state securities laws, Purchaser shall furnish the Company with an opinion of counsel stating that the proposed sale or other disposition of such securities may be effected without registration under the Securities Act and will not result in any violation of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and opinion to be satisfactory to the Company. Purchaser acknowledges that it is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and that its overall commitment to investments that are not readily marketable is not disproportionate to its net worth.

 

Investment Experience . Purchaser has such knowledge, sophistication and experience in financial, tax and business matters in general, and investments in securities in particular, that it is capable of evaluating the merits and risks of this investment in the Securities, and Purchaser has made such investigations in connection herewith as it deemed necessary or desirable so as to make an informed investment decision without relying upon the Company for legal or tax advice related to this investment. In making its decision to acquire the Securities, Purchaser has not relied upon any information other than information provided to Purchaser by the Company or its representatives and contained herein and in the other Offering Documents.

 

Access to Information . Purchaser acknowledges that it has had access to and has reviewed all documents and records relating to the Company, including, but not limited to, the Company’s Schedule 14f filed with the SEC on September 28, 2005, that it has deemed necessary in order to make an informed investment decision with respect to an investment in the Securities; that it has had the opportunity to ask representatives of the Company certain questions and request certain additional information regarding the terms and   conditions of such investment and the finances, operations, business and prospects of the Company and has had any and all such questions and requests   answered to its satisfaction; and that it understands the risks and other considerations relating to such investment.

 


Reliance on Representations .   Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Securities. Purchaser represents and warrants to the Company that any information that Purchaser has heretofore furnished or furnishes herewith to the Company is complete and accurate, and further represents and warrants that it will notify and supply corrective information to the Company immediately upon the occurrence of any change therein occurring prior to the Company's issuance of the Securities. Within five (5) days after receipt of a request from the Company, Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is subject.

 

No General Solicitation . Purchaser is unaware of, and in deciding to participate in the Offering is in no way relying upon, and did not become aware of the Offering through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media, or broadcast over television or radio or the internet, in connection with the Offering.

 

Placement and Finder’s Fees .   No agent, broker, investment banker, finder, financial advisor or other person acting on behalf of Purchaser or under its authority is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in connection with the Offering, and no person is entitled to any fee or commission or like payment in respect thereof based in any way on agreements, arrangements or understanding made by or on behalf of Purchaser.

 

Investment Risks . Purchaser understands that purchasing Securities in the Offering will subject Purchaser to certain risks, including, but not limited to, those set forth under the caption “Risk Factors” in the Summary Investment Memorandum.

 

Legends . (i) The certificates and agreements evidencing the Securities shall have endorsed thereon the following legend (and appropriate notations thereof will be made in the Company's stock transfer books), and stop transfer instructions reflecting these restrictions on transfer will be placed with the transfer agent of the Securities:

 

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT   SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF   1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE SECURITIES LAWS.”

 


(ii) With respect to Shares purchased under Regulation S, I acknowledge that all certificates representing Shares will be endorsed with the following legend in accordance with Regulation S promulgated under the Securities Act:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND HAVE BEEN ISSUED IN RELIANCE ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT”

 

Shares Purchased by Non-U.S. Persons   (i) With respect to Shares purchased under Regulation S, Purchaser agrees that the Company will refuse to register any transfer of the Shares that is not made in accordance with the provisions of Regulation S of the Act, pursuant to registration under the  Securities Act, or pursuant to an available exemption from registration;(ii) With respect to Shares purchased under Regulation S, Purchaser is not a “U.S. Person” as defined by Regulation S promulgated under the Securities Act and Purchaser is not acquiring the Shares  for the acc


 
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