NOTE AND WARRANT PURCHASE AGREEMENT

 

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                                                                   EXHIBIT 10.11

 

 

 

                                   YOBON INC.

 

 

                          ----------------------------

 

 

                       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

                                              ----------------------------------

                                       Name:   Philip Nelson

                                        Title: President

 

 

                                       MATCHNET PLC:

 

                                       -----------------------------------------

 

 

 

                                       By:      /s/ Mark G. Thompson

                                               ---------------------------------

                                       Name:    Mark G. Thompson

                                               ---------------------------------

                                        Title:   Chief Financial Officer

                                               ---------------------------------

                                       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