DEBENTURE PURCHASE AGREEMENT
THIS AGREEMENT, dated as of September 15, 2001 , is by and between
GameCom, Inc., a Texas corporation, with its executive offices at 440
North Center, Arlington, TX 76011 (the "Company"), and Olympic Holdings
LLC, a_____limited liability company with its principal place of business
at_____ (the "Purchaser").
The Company desires to issue and sell to the Purchaser and the Purchaser
desires to purchase $1 million in principal amount of the Company's 6%
Convertible Subordinated Debentures in the form of Exhibit A (the "Debentures").
Capitalized terms which are not proper nouns are defined in Section 6.
The parties therefore agree as follows:
1. Purchase of Debentures; Closings.
(a) Subject to the terms and conditions set forth in this Agreement, the
Company shall issue and sell to the Purchaser, and the Purchaser shall purchase,
$1 million in principal amount of the Debentures on the Closing Dates and in the
amounts specified below. Each Debenture shall be payable one year from the
applicable Closing Date, and shall be convertible at a conversion price equal to
the average closing bid prices of the Company's Common Stock on the OTCBB for
the five business days immediately preceding the applicable Closing Date, as
reported by ________________. The principal amount of Debentures to be purchased
on each Closing Date shall be as indicated.
Closing Date Principal Amount
------------ ----------------
September 15, 2001 $250,000
On or before October 15, 2001 $375,000
On or before November 15, 2001 $375,000
(b) Each closing of the purchase and sale of the Debenture (a "Closing")
shall take place at the offices of the Escrow Agent The date of each Closing is
hereinafter referred to as a "Closing Date."
(c) At or before each Closing, the Company shall deliver to the Escrow
Agent:
(i) An original and duly executed Debenture with the initial
conversion price blank; and
(ii) all other documents, instruments and writings required to have
been delivered or necessary at or prior to Closing by the Company pursuant to
this Agreement.
(d) At or before each Closing, the Purchaser shall deliver to the Escrow
Agent:
(i) a sum equal to the principal amount of the Debentures to be
purchased at that Closing (the "Purchase Price") in United States dollars in
immediately available funds by wire transfer to an account designated in writing
by the Escrow Agent prior to the Closing; and
(ii) all documents, instruments, and writings required to have been
delivered or necessary at or prior to Closing by the Purchaser pursuant to this
Agreement.
(e) Upon receipt of all of the items set forth in subparagraphs 1(c) and
1(d) of this Section, the Escrow Agent shall
(i) confirm the agreement of both of the parties as to the initial
conversion price;
(ii) complete the Debenture being issued at that Closing by filling
in that conversion price;
(iii) deliver the Purchase Price to the Company in accordance with
its written instructions, less fees, if any, then due and owing to the Escrow
Agent; and
(iv) deliver the Debenture to the Purchaser in accordance with its
written or faxed instructions.
2. Representations and Warranties
(a) Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows, all of which survive
Closing:
(i) Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on (a) the results of operations,
assets, prospects, or financial condition of the Company, or (b) the Purchaser'
rights under this Agreement, the Escrow Agreement and the Debenture (a "Material
Adverse Effect").
(ii) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
(iii) Issuance of Debenture. The Debenture has been duly and validly
authorized for issuance, offer and sale pursuant to this Agreement and, when
issued and delivered as provided hereunder against payment in accordance with
the terms hereof, shall be valid and binding obligation of the Company
enforceable in accordance with its terms. The Company has and at all times while
the Debenture is outstanding has and will continue to maintain an adequate
reserve of shares of Common Stock to enable it to perform its obligations under
this Agreement and the Debenture. When
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issued in accordance with the terms hereof and the Debenture, the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable.
(iv) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of its or its subsidiaries' articles of incorporation, resolutions
or bylaws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company is subject (including Federal and State securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except in the case of each of clauses (ii) and (iii), such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority.
(v) Consents and Approvals. Except for a right of first refusal in
favor of Swartz Private Equity, L.L.C., which has been waived for this
transaction, neither the Company nor any subsidiary is required to obtain any
consent, permit, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, State, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement, other than the
applicable filings under State and federal securities laws (collectively, the
"Required Approvals").
(vi) Disclosure Documents. The Disclosure Documents are accurate and
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(b) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(i) Organization and Qualification. The Purchaser is a limited
liability company duly organized and validly existing and in good standing under
the laws of the jurisdiction of its incorporation.
(ii) Authorization; Enforcement. The execution and delivery of this
Agreement and the purchase of the Debenture by the Purchaser hereunder have been
duly authorized by all necessary action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser or on its behalf
and constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, liquidation,
fraudulent transfer, reorganization, moratorium and remedies or by other
equitable principles of general application or similar laws relating to or
affecting generally the enforcement of creditors' rights.
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(iii) Investment Intent. The Purchaser is acquiring the Debentures
and the Underlying Shares for its own account for investment purposes only and
not with a view to or for distributing or reselling such Debenture or Underlying
Shares or any part thereof or interest therein, without prejudice, however, to
the Purchaser' right, subject to the provisions of this Agreement, at all times
to sell or otherwise dispose of all or any part of such Debenture or Underlying
Shares in compliance with applicable federal and State securities laws.
(iv) Purchaser Status. At the time the Purchaser was offered the
Debenture, it was, and at the date hereof, it is, and at each Closing Date, it
will be, an "accredited investor" as defined in Rule 501(a) under the Securities
Act.
(v) Ability of Purchaser to Bear Risk of Investment. The Purchaser
is able to bear the economic risk of an investment in the Debenture and, at the
present time, is able to afford a complete loss of such investment.
(vi) Prohibited Transactions. The Debentures to be purchased by the
Purchaser are not being acquired, directly or indirectly, with the assets of any
"employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
(vii) Access to Information. The Purchaser acknowledges receipt of
the Disclosure Documents and further acknowledges that it has been afforded (i)
the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Debenture and the merits and risks of
investing in the Debenture; (ii) access to information about the Company and the
Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment in
the Debenture; and (iii) the opportunity to obtain such additional information
which the Company possesses or can acquire which is necessary to make an
informed investment decision with respect to the Debenture.
(viii) Reliance. The Purchaser understands and acknowledges that (i)
the Debentures are being offered and sold, and the Underlying Shares are being
offered, to it without registration under the Securities Act in a transaction
that is exempt from the registration provisions of the Securities Act and (ii)
the availability of such exemption, depends in part on, and that the Company
will rely upon the accuracy and truthfulness of, the foregoing representations
and the Purchaser hereby consents to such reliance.
3. Conditions Precedent to the Obligation of Purchaser to Purchase Debentures.
The obligation of the Purchaser to purchase the Debentures at each of the
Closings is subject to the satisfaction, on or prior to the applicable Closing
Date, of the following conditions, any one or more of which may be waived by the
Purchaser in writing:
(a) Representations and Covenants. The representations and warranties of
the Company contained in this Agreement shall be true and complete in all
material respects, except for changes in the ordinary course of business, on and
as of the Closing with the same force and effect as though made on and as of
such date.
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(b) Performance of Agreements. The Company shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by the Company on or prior to
such date.
(c) Status of Ferris Merger. The Agreement of Merger dated May 3, 2001
between the Company and Ferris Productions, Inc., a Delaware corporation, shall
be in full force and effect and neither party to that Agreement shall have
notified the other of any intention not to complete the merger contemplated
thereby (or such merger shall have been completed).
4. Conditions Precedent to the Obligation of the Company to Issue Debentures.
The obligation of the Company to issue the Debentures at each of the Closings is
subject to the satisfaction, on or prior to the applicable Closing Date, of the
following conditions, any one or more of which may be waived by the Company in
writing:
(a) Representations and Covenants. The representations and warranties of
the Purchaser contained in this Agreement shall be true and complete in all
material respects, except for changes in the ordinary course of business, on and
as of the Closing with the same force and effect as though made on and as of
such date.
(b) Performance of Agreements. The Purchaser shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by the Purchaser on or prior to
such date.
5. Other Agreements of the Parties.
(a) Manner of Offering. The Debenture is being issued pursuant to Rule 506
of Regulation D of the Securities Act. The Debenture will bear restrictions on
transfer, and will carry a restrictive legend with respect to the exemption from
registration under the Securities Act. The transfer and resale of the Debenture
and the Underlying Shares may be made only pursuant to registration under the
Securities Act or an exemption from such registration.
(b) Quotation of Common Stock. The Company shall use its best efforts to
maintain the quotation for its Common Stock on the OTCBB or other market on
which the Common Stock is quoted or listed during the period that the Debentures
may be converted hereunder by the Purchaser, and shall provide to the Purchaser
evidence of such continued quotation or listing.
(c) Holding Period. Notwithstanding the earlier expiration with respect to
certain of the Debentures of the holding period required under the SEC's Rule
144 for sales of the Common Stock issuable upon conversion of the Debentures,
the Purchaser shall not sell or otherwise dispose of the Common Stock issuable
upon such conversion of the Debentures before the first anniversary of the last
Closing Date contemplated by this Agreement.
6. Certain Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
(a) "Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to direct
or
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cause the direction of the management and policies of such Person, whether
through the ownership of voting securities by contract or otherwise.
(b) "Agreement" shall mean this Debenture Purchase Agreement.
(c) "Business Day" means any day except Saturday, Sunday and any day which
is a legal holiday or a day on which banking institutions in the State of Texas
are authorized or required by law or other government actions to close, between
the hours of 9:30 a.m. and 6:00 p.m. Central Standard Time.
(d) "Debenture" means the Company's 6% Convertible Subordinated Debenture
Due December 1, 2001.
(e) "Closing" shall have the meaning set forth in Section 1(b).
(f) "Closing Date" shall mean the date of a Closing, as set forth in
Section 1(b).
(g) "Commission" means the United States Securities and Exchange
Commission.
(h) "Common Stock" means shares now or hereafter authorized of the class
of common stock, no par value, of the Company and stock of any other class into
which such shares may hereafter have been reclassified or changed.
(i) "Company" shall have the meaning set forth in the introductory
paragraph.
(j) "Disclosure Documents" means the Company's most recent Annual Report
on Form 10-K filed with the Commission, its most recent Quarterly Report on Form
10-Q, its most recent proxy statement filed with the Commission and all reports
and other documents subsequently filed by the Company with the Commission under
the Securities and Exchange Act of 1934.
(k) "Escrow Agent" means Raice Paykin & Krieg LLP, 185 Madison Avenue, New
York, New York 10016; Tel: 212-725-4423; Fax: 212-684-9022 .
(l) "Event of Default" shall have the meaning set forth in the Debenture.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(n) "Material" shall mean having a financial consequence in excess of
$100,000.
(o) "OTCBB" shall mean the OTC Bulletin Board.
(p) "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
(q) "Debenture" means one of the Company's 6% Convertible Subordinated
Debentures issued pursuant to in this Agreement.
(r) "Purchase Price" shall have the meaning set forth in Section 1(a).
(s) "Purchaser" shall have the meaning set forth in the introductory
paragraph.
(t) "Required Approvals" shall have the meaning set forth in Section
2(a)(v).
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(u) "Securities Act" means the Securities Act of 1933, as amended.
(v) "Subsidiaries" shall have the meaning set forth in Section 2(a)(i).
(w) "Trading Day" means (a) a day on which the Common Stock is quoted on
Nasdaq, the OTCBB or the principal stock exchange on which the Common Stock has
been listed, or (b) if the Common Stock is not quoted on Nasdaq, the OTCBB or
any stock exchange, a day on which the Common Stock is quoted in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices).
(x) "Underlying Shares" means the shares of Common Stock into which the
Debenture is convertible in accordance with the terms thereof.
7. Miscellaneous.
(a) Fees and Expenses. Except as set forth above, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay the fees of the Escrow Agent and all stamp and other taxes and duties
levied in connection with the issuance of the Debenture (and upon conversion
thereof, the Underlying Shares) pursuant hereto. The Purchaser shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement. Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company shall pay all costs, expenses, fees and all
taxes incident to and in connection with: (A) the issuance and delivery of the
Debenture and, upon conversion thereof, the Underlying Shares, and (B) the
exemption from registration of the Debentures and, upon conversion thereof, the
Underlying Shares for offer and sale to the Purchaser under the securities or
Blue Sky laws of the applicable jurisdiction.
(b) Entire Agreement; Amendments. This Agreement, together with the
Exhibits, Annexes and Schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
This Agreement shall be deemed to have been drafted and negotiated by both
parties and no presumptions as to interpretation, construction or enforceability
shall be made by or against either party in such regard.
(c) Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been made
a)three Business Days after depositing same into the United States mail, postage
prepaid, certified mail, return receipt requested, addressed to the party at the
address below, or 2) the next Business Day after depositing same with a
nationally-recognized overnight courier service, fees prepaid and addressed to
the party at the address below. The addresses for such communications shall be:
If to the Company: GameCom, Inc.
440 North Center,
Arlington, TX 76011
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Attn: L. Kelly Jones, Chief Executive Officer
With copies to: Raice Paykin & Krieg LLP
185 Madison Avenue
New York, NY 10016
Attn: David C. Thomas, Esq.
Tel: (212) 725-4423
Fax: (212) 983-9210
If to the Purchaser: Olympic Holdings, LLC
-------------------
If to Escrow Agent: Raice Paykin & Krieg LLP
185 Madison Avenue
New York, NY 10016
Attn: David C. Thomas, Esq.
Tel: (212) 725-4423
Fax: (212) 684-9022
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
(d) Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser, or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
(e) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
(f) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
assignment by a party of this Agreement or any rights hereunder shall not affect
the obligations of such party under this Agreement.
(g) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties and their respective permitted successors and assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
(h) Governing Law; Venue; Service of Process. The parties acknowledge that
the transactions contemplated by this Agreement and the exhibits hereto bear a
reasonable relation to the State of Texas. The internal laws of the State of
Texas shall govern this Agreement and the exhibits
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hereto. Any action to enforce the terms of this Agreement or any of its exhibits
shall be exclusively brought in the State and/or federal courts in the State of
Texas.
(i) Survival. The representations, warranties and covenants of the parties
in this Agreement shall survive the Closing (or any earlier termination of this
Agreement).
(j) Counterpart Signatures. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
(k) Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first indicated above.
Company:
GAMECOM, INC.
By: ______________________________
L. Kelly Jones, Chief Executive Officer
Purchaser:
Olympic Holdings LLC
By: ________________________
Name:
Title:
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