EXHIBIT 10.1
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (the "Agreement") is made as of January 1,
2001 by and between SALES ONLINE DIRECT, INC., a Delaware corporation (the
"Company") and the AUGUSTINE FUND, L.P. (The "Buyer").
WITNESSETH
On March 23, 2000 (the "Transaction Date"), the Company and the Buyer
entered into a Securities Purchase Agreement (the "Purchase Agreement") pursuant
to which the Buyer purchased from the Company a Series A Eight Percent
Convertible Note (the "Note") convertible into shares of the Company's common
stock, par value $.001 per share (the "Common Stock"), with the first payment of
interest to be made on September 30, 2000 (the "Interest Due Date").
In connection with the issuance of the Note, the Buyer was also granted
a five-year warrant to purchase 300,000 shares of the Company's Common Stock and
the placement agent, Delano Group Securities, LLC, was granted a warrant to
purchase 100,000 shares (collectively, the "Warrants").
In connection with the issuance of the Note and the Warrants, the
Company and the Buyer executed a Registration Rights Agreement, pursuant to
which the Company agreed to file with the Securities and Exchange Commission
(the "Commission") within 180 days after the closing date (the "Filing Date") a
Registration Statement for the resale of the shares of Common Stock issuable
upon the conversion of the Note and the exercise of the Warrants (the Purchase
Agreement, the Note, the Warrants, and the Registration Rights Agreement are
collectively referred to herein as the "Transaction Documents"). The
Registration Rights Agreement further provides that the Registration Statement
shall be declared effective by the Commission by September 30, 2000 (the
"Effectiveness Date") and if such Registration Statement is not filed by the
Filing Date or declared effective by the Effectiveness Date, the Company shall
pay certain liquidated damages to the Buyer.
The Company and the Buyer agreed as of September 19, 2000 to extend (i)
the Interest Due Date from September 30, 2000 to October 31, 2000, (ii) the
Filing Date from the 180th day following the closing date to October 25, 2000,
and (iii) the Effectiveness Date from September 30, 2000 to December 15, 2000.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agrees as follows:
1. Recitals; Definitions. The recitals set forth above are true and
correct in every respect and are incorporated herein by reference. Any
capitalized terms contained herein not defined herein shall have the meaning
assigned to such term in the Purchase Agreement, Note, or Registration Rights
Agreement.
2. Amendment to Note. Section 3 of the Note is hereby amended by
establishing the Applicable Percentage at 73%, provided that the Applicable
Percentage shall decrease to 50% if the Registration Statement is not effective
by July 15, 2001.
3. Amendment to Registration Rights Agreement. Section 7(e) captioned
Failure to File Registration Statement and Other Events is hereby amended
waiving all of the liquidated damages except $30,000, provided such liquidated
damages shall begin to accrue again on July 15, 2001 in the event the
Registration Statement is not effective by that date.
4. Grant of Security Interest. As consideration for the Buyer's
financial accommodations in Sections 2 and 3 above, the Company agrees to grant
a security interest in all of its assets as security for the Company's
obligations under the Purchase Agreement. The terms of such grant of security
interest shall be set forth separately.
5. Not a Novation. The Company and the Buyer each ratifies and confirms
all of its liabilities and obligations under the Transaction Documents and
agrees that, except as expressly modified by this Agreement, the Transaction
Documents continue in full force and effect. The Company and the Buyer agree
that this Agreement shall not be construed as an agreement to extinguish the
Company's original obligations under the Note and other Transaction Documents
and shall not constitute a novation as to the obligations of the Company under
the Note.
6. Registration Rights Agreement and Note. The term "Registration
Rights Agreement" shall hereinafter mean the Registration Rights Agreement dated
the Transaction Date, as amended and modified by this Agreement. The term "Note"
shall hereinafter mean the Series A Eight Percent Convertible Note dated the
Transaction Date, as amended and modified by this Agreement.
7. Amendment. The Transaction Documents may not be further amended,
altered or extended without, in each instance, the prior written consent of the
parties.
8. Counterparts. This Agreement may be executed in any number of
counterparts, all of which when taken together shall constitute one Agreement.
9. Successors and Assigns. Whenever used herein the words "Company" and
"Buyer" shall be deemed to include their respective successors and assigns. All
words used herein shall be deemed to refer to the singular, plural, masculine,
feminine or neuter as the identity of the person or entity or the context may
require.
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IN WITNESS WHEREOF, the Company and the Buyer have caused this
Agreement to be executed under seal as of the date above written.
WITNESS/ATTEST: SALES ONLINE DIRECT, INC.
- --------------------------- By:/s/Gregory Rotman
---------------------------------
Name:Gregory Rotman
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Title:President and CEO
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AUGUSTINE FUND, LLP
By:Augustine Capital Management, LLC
/s/David Matteson
- --------------------------- By:/s/John Porter
General Counsel ---------------------------------
Name:John Porter
--------------------------------
Title:President
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