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EXHIBIT 10.11
YOBON INC.
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NOTE AND WARRANT PURCHASE AGREEMENT
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YOBON INC.
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "AGREEMENT") is
made as of
the 19 day of October, 2004 (the "EFFECTIVE DATE") by and among
YOBON INC., a
California corporation (the "COMPANY"), and MATCHNET PLC, a
United Kingdom
public limited company ("PURCHASER").
RECITALS
To provide the Company with additional resources to conduct
its
business, Purchaser is willing to loan funds to the Company,
subject to the
conditions specified herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and conditions set forth
below, the
Company and Purchaser, intending to be legally bound, hereby
agree as follows:
1. AMOUNT AND TERMS OF THE LOAN; ISSUANCE OF WARRANTS
1.1 THE LOAN. Subject to the terms of this Agreement, Purchaser
agrees
to lend to the Company at the Closing (as hereinafter defined)
$250,000 (the
"LOAN Amount") against the issuance and delivery by the Company
of the senior
secured convertible promissory note attached hereto as EXHIBIT A
(the "NOTE").
1.2 ISSUANCE OF WARRANTS.
(a) At the Closing (as defined below), the Company shall issue
to
Purchaser the warrant attached hereto as Exhibit B (the
"WARRANT").
(b) The Company and the Purchaser, as a result of arm's
length
bargaining, agree that:
(i) Neither the Purchaser nor any affiliated company has
rendered any services to the Company in connection with this
Agreement;
(ii) The Warrant is not being issued as compensation; and
(iii) All tax returns and other information return of each
party relative to this Agreement and the Note and Warrant issued
pursuant hereto
shall consistently reflect the matters agreed to in (i) and (ii)
above.
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2. THE CLOSING
2.1 CLOSING DATE. The closing of the sale and purchase of the
Note and
Warrant (the "CLOSING") shall be on the Effective Date (the
"CLOSING DATE").
2.2 DELIVERY. At the Closing: (i) Purchaser shall deliver to the
Company
a check or wire transfer funds in the amount of the Loan Amount;
and (ii) the
Company shall issue and deliver to Purchaser (a) a Note in favor
of Purchaser as
specified in Section 1.1, and (b) a Warrant as specified in
Section 1.2.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a
corporation duly organized, validly existing and in good
standing under the laws
of the State of California. The Company has the requisite
corporate power to own
and operate its properties and assets and to carry on its
business as now
conducted and as proposed to be conducted. The Company is duly
qualified and is
authorized to do business and is in good standing as a foreign
corporation in
all jurisdictions in which the nature of its activities and of
its properties
(both owned and leased) makes such qualification necessary,
except for those
jurisdictions in which failure to do so would not have a
material adverse effect
on the Company or its business.
3.2 CORPORATE POWER. The Company will have at the Closing Date
all
requisite corporate power to execute and deliver this Agreement,
to issue the
Note, to issue the Warrant and to carry out and perform its
obligations under
the terms of this Agreement and under the terms of the Note and
Warrant.
3.3 AUTHORIZATION. All corporate action on the part of the
Company, its
directors and its stockholders necessary for the authorization,
execution,
delivery and performance of this Agreement by the Company and
the performance of
the Company's obligations hereunder, including the issuance and
delivery of the
Note and Warrant and the reservation of the equity securities
issuable upon
conversion of the Note and exercise of the Warrant has been
taken or will be
taken prior to the issuance of such equity securities. This
Agreement, the Note
and Warrant, when executed and delivered by the Company, shall
constitute valid
and binding obligations of the Company enforceable in accordance
with their
terms, subject to laws of general application relating to
bankruptcy,
insolvency, the relief of debtors and, with respect to rights to
indemnity,
subject to federal and state securities laws. The equity
securities of the
Company, when issued in compliance with the provisions of this
Agreement, the
Note or the Warrant will be validly issued, fully paid and
nonassessable and
free of any liens or encumbrances and issued in compliance with
all applicable
federal and securities laws.
3.4 GOVERNMENTAL CONSENTS. All consents, approvals, orders,
or
authorizations of, or registrations, qualifications,
designations, declarations,
or filings with, any governmental authority, required on the
part of the Company
in connection with the valid execution and delivery of this
Agreement, the
offer, sale or issuance of the Note, the Warrant, and the equity
securities
issuable upon conversion of the Note, exercise of the Warrant or
the
consummation of
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any other transaction contemplated hereby shall have been
obtained and will be
effective at the Closing.
3.5 COMPLIANCE WITH LAWS. To its knowledge, the Company is not
in
violation of any applicable statute, rule, regulation, order or
restriction of
any domestic or foreign government or any instrumentality or
agency thereof in
respect of the conduct of its business or the ownership of its
properties, which
violation of which would materially and adversely affect the
business, assets,
liabilities, financial condition, operations or prospects of the
Company.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation
or default of any term of its certificate of incorporation or
bylaws, or of any
provision of any mortgage, indenture or contract to which it is
a party and by
which it is bound or of any judgment, decree, order or writ,
other than such
violation(s) that would not have a material adverse effect on
the Company. The
execution, delivery and performance of this Agreement, the Note
and the Warrant,
and the consummation of the transactions contemplated hereby or
thereby will not
result in any such violation or be in conflict with, or
constitute, with or
without the passage of time and giving of notice, either a
default under any
such provision, instrument, judgment, decree, order or writ or
an event that
results in the creation of any lien, charge or encumbrance upon
any assets of
the Company or the suspension, revocation, impairment,
forfeiture, or nonrenewal
of any material permit, license, authorization or approval
applicable to the
Company, its business or operations or any of its assets or
properties. Without
limiting the foregoing, the Company has obtained all waivers
reasonably
necessary with respect to any preemptive rights, rights of first
refusal or
similar rights, including any notice or offering periods
provided for as part of
any such rights, in order for the Company to consummate the
transactions
contemplated hereunder without any third party obtaining any
rights to cause the
Company to offer or issue any securities of the Company as a
result of the
consummation of the transactions contemplated hereunder.
3.7 OFFERING. Assuming the accuracy of the representations
and
warranties of the Purchasers contained in Section 4 hereof, the
offer, issue,
and sale of the Note and Warrant are and will be exempt from the
registration
and prospectus delivery requirements of the Securities Act of
1933, as amended
(the "ACT"), and have been registered or qualified (or are
exempt from
registration and qualification) under the registration, permit,
or qualification
requirements of all applicable state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 PURCHASE FOR OWN ACCOUNT. Purchaser represents that it is
acquiring
the Note and the equity securities issuable upon conversion of
the Note, the
Warrant and the equity securities issuable upon exercise of the
Warrant
(collectively, the "SECURITIES") solely for its own account and
beneficial
interest for investment and not for sale or with a view to
distribution of the
Securities or any part thereof, has no present intention of
selling (in
connection with a distribution or otherwise), granting any
participation in, or
otherwise distributing the same, and does not presently have
reason to
anticipate a change in such intention.
4.2 INFORMATION AND SOPHISTICATION. Without lessening or
obviating the
representations and warranties of the Company set forth in
Section 3, Purchaser
hereby: (i)
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acknowledges that it has received all the information it has
requested from the
Company and it considers necessary or appropriate for deciding
whether to
acquire the Securities, (ii) represents that it has had an
opportunity to ask
questions and receive answers from the Company regarding the
terms and
conditions of the offering of the Securities and to obtain any
additional
information necessary to verify the accuracy of the information
given the
Purchaser and (iii) further represents that it has such
knowledge and experience
in financial and business matters that it is capable of
evaluating the merits
and risk of this investment.
4.3 ABILITY TO BEAR ECONOMIC RISK. Purchaser acknowledges
that
investment in the Securities involves a high degree of risk, and
represents that
it is able, without materially impairing its financial
condition, to hold the
Securities for an indefinite period of time and to suffer a
complete loss of its
investment.
4.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting the
representations set forth above, Purchaser further agrees not to
make any
disposition of all or any portion of the Securities except in
accordance with
any terms and conditions of the Securities nor 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) Purchaser shall have notified the Company of the
proposed
disposition and shall have furnished the Company with a detailed
statement of
the circumstances surrounding the proposed disposition, and if
reasonably
requested by the Company, Purchaser shall have furnished the
Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such
disposition will not require registration under the Act or any
applicable state
securities laws, provided that no such opinion shall be required
for
dispositions in compliance with Rule 144, except in
extraordinary circumstances.
4.5 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited
investor" as
such term is defined in Rule 501 under the Act.
4.6 FURTHER ASSURANCES. Purchaser agrees and covenants that at
any time
and from time to time it will promptly execute and deliver to
the Company such
further instruments and documents and take such further action
as the Company
may reasonably require in order to carry out the full intent and
purpose of this
Agreement and to comply with state or federal securities laws or
other
regulatory approvals.
5. MISCELLANEOUS
5.1 BINDING AGREEMENT. The terms and conditions of this
Agreement shall
inure to the benefit of and be binding upon the respective
successors and
assigns of the parties. Nothing in this Agreement, expressed or
implied, is
intended to confer upon any third party any rights, remedies,
obligations, or
liabilities under or by reason of this Agreement, except as
expressly provided
in this Agreement.
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5.2 NO ASSIGNMENT. Except pursuant to a redomiciling of
Purchaser or a
transfer of all or substantially all of Purchaser's business and
assets (whether
by merger, sale of assets, sale of stock, or otherwise),
Purchaser may not
assign or transfer, by operation of law or otherwise, any of its
rights under
this Agreement without the written consent of the Company, which
consent shall
not unreasonably be withheld.
5.3 GOVERNING LAW. This Agreement shall be governed by and
construed
under the laws of the State of California as applied to
agreements among
California residents, made and to be performed entirely within
the State of
California, without giving effect to conflicts of laws
principles.
5.4 COUNTERPARTS. This Agreement may be executed in two or
more
counterparts, each of which shall be deemed an original, but all
of which
together shall constitute one and the same instrument.
5.5 TITLES AND SUBTITLES. The titles and subtitles used in
this
Agreement are used for convenience only and are not to be
considered in
construing or interpreting this Agreement.
5.6 NOTICES. All notices required or permitted hereunder shall
be in
writing and shall be deemed effectively given: (a) upon personal
delivery to the
party to be notified, (b) when sent by confirmed telex,
electronic mail or
facsimile if sent during normal business hours of the recipient,
if not, then on
the next business day, (c) five (5) days after having been sent
by registered or
certified mail, return receipt requested, postage prepaid, or
(d) one (1) day
after deposit with a nationally recognized overnight courier,
specifying next
day delivery, with written verification of receipt. All
communications shall be
sent to the Company at 1605 Emory Street, San Jose, California,
95126, and to
Purchaser at the address set forth below the signature page for
Purchaser or at
such other address as the Company or Purchaser may designate by
ten (10) days
advance written notice to the other parties hereto.
5.7 MODIFICATION; WAIVER. No modification or waiver of any
provision of
this Agreement or consent to departure therefrom shall be
effective unless in
writing and approved by the Company and the Purchaser. Any
provision of the
Notes may be amended or waived by the written consent of the
Company and
Purchaser.
5.8 EXPENSES. The Company and Purchaser shall each bear its
respective
expenses and legal fees incurred with respect to this Agreement
and the
transactions contemplated herein.
5.9 DELAYS OR OMISSIONS. It is agreed that no delay or omission
to
exercise any right, power or remedy accruing to Purchaser, upon
any breach or
default of the Company under this Agreement, Note, or Warrant
shall impair any
such right, power or remedy, nor shall it be construed to be a
waiver of any
such breach or default, or any acquiescence therein, or of or in
any similar
breach or default thereafter occurring; nor shall any waiver of
any single
breach or default be deemed a waiver of any other breach or
default theretofore
or thereafter occurring. It is further agreed that any waiver,
permit, consent
or approval of any kind or character by Purchaser of any breach
or default under
this Agreement, or any waiver by Purchaser of any provisions or
conditions of
this Agreement must be in writing and shall be effective only to
the
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extent specifically set forth in writing and that all remedies,
either under
this Agreement, or by law or otherwise afforded to the
Purchaser, shall be
cumulative and not alternative.
5.10 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto, the
Note and
the Warrant constitute the full and entire understanding and
agreement between
the parties with regard to the subjects hereof and no party
shall be liable or
bound to any other party in any manner by any representations,
warranties,
covenants and agreements except as specifically set forth
herein.
IN WITNESS WHEREOF, the parties have executed this NOTE AND
WARRANT
PURCHASE AGREEMENT as of the date first written above.
COMPANY:
YOBON INC.
By: /s/ Philip Nelson
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Name: Philip Nelson
Title: President
MATCHNET PLC:
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By: /s/ Mark G. Thompson
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Name: Mark G. Thompson
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Title: Chief Financial Officer
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Address: 8383 Wilshire Blvd.
Beverly Hills, CA 90211
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EXHIBITS
Exhibit A: Senior Secured Convertible Promissory Note
Exhibit B: Warrant
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EXHIBIT A
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
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THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED
EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE
REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER,
SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
$250,000 OCTOBER 19, 2004
SAN JOSE, CALIFORNIA
For value received, YOBON INC., a California corporation,
("PAYOR"),
promises the following to MATCHNET PLC, a United Kingdom public
limited company,
or its permitted assigns ("HOLDER"):
1. This note (the "NOTE") is issued pursuant to the terms of
that
certain Note and Warrant Purchase Agreement (the "AGREEMENT")
dated of even date
herewith (the "AGREEMENT DATE").
2. In the event that Payor issues and sells equity ("EQUITY") in
a round
of equity financing to investors (the "INVESTORS") for an
aggregate price of at
least $1,000,000 (excluding the aggregate principal and interest
under this
Note) ("TRIGGERING ROUND") prior to the date that is eighteen
months following
the Agreement Date (the "INVESTMENT DEADLINE DATE"), this Note
will
automatically convert into a number of shares of Equity (on the
same terms and
conditions as those given to the Investors in the Triggering
Round) in an amount
equal to: (a) all accrued and unpaid interest plus the
outstanding and unpaid
principal amount; divided by (b) the price per share paid by the
Investors
purchasing the Equity in the Triggering Round.
3. In the event that Payor does not issue and sell shares of
Equity to
Investors with an aggregate price of at least $1,000,000 prior
to the Investment
Deadline Date, then this Note shall become due and payable in
full on the first
business day following the Investment Deadline Date in an amount
equal to all
accrued and unpaid interest plus the outstanding and unpaid
principal amount.
4. If prior to the Investment Deadline Date, the Company shall
sell all
or substantially all of its assets or consolidate or merge with
or into another
corporation or other business organization (other than a merger
in which either
the Company is the surviving corporation or a majority of the
stockholders of
the Company prior to such merger remain as the majority of the
stockholders
following such merger), this Note shall become due and payable
in full in an
amount equal to all accrued and unpaid interest plus the
outstanding and unpaid
principal amount due hereunder.
5. This
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