Letter Agreement re: Modification to August Restructuring Agreement
This is to confirm the agreement reached on February 13, 2002 by
Netgateway, Inc. (the "Company"), a Delaware corporation, and King William LLC
("King William") pursuant to which the parties agreed to amend certain terms of
the Second Restructuring Agreement, dated as of July 11, 2001 (the "Second
Agreement") pursuant to which King William converted its convertible promissory
note for certain consideration which included the issuance by the company of a
new promissory note in the amount of $400,000 (the "New Note").
1. The New Note is amended (a) to provide for a final maturity on July
10, 2006 and (b) to provide that interest shall accrue at the rate stated in the
New Note and be added to the principal balance thereof until August 13, 2002 and
that thereafter interest shall be payable as provided in the New Note except
that the Company may pay interest in either cash or common stock of the Company,
said common stock to be valued at an amount equal to the average closing bid
price of the Company's common stock during the five trading days prior to the
date the interest payment is made.
2. Notwithstanding any other agreements between the Company and King
William (a) the Company shall not be required to file a registration statement
with respect to the common stock of the Company currently held by King William
or acquirable by it upon exercise of the warrants held by it, and the New Note
is hereby amended to delete any reference to any requirement that the Company
must file any registration statement and to eliminate all provisions that
contain or refer to any defaults, penalties or other consequences as a result of
the failure to file a registration statement; and (b) the Company agrees that if
it files a registration statement for resale of its common stock by its
stockholders that it will include in such registration statement the shares of
common stock of the Company held by King William including shares underlying any
warrants or as payment of interest.
3. The Company shall issue 100,000 shares of restricted, legend 144
stock within ten business days of the signing agreement. No additional warrants
or stock shall be issued or cash paid as a result of the failure by the Company
to register the common stock of the Company held by King Williams as
contemplated by the Second Agreement.
4. King William hereby waives any default by the Company under the
Second Agreement and the New Note associated with its failure to pay interest
and failure to file the registration statement.
5. The selling limitations in Section 4 of the Second Agreement shall
no longer be in effect. King William shall be bound only by the limitations
under Rule 144 relating to the resale of any securities. Should the common
shares, including any common shares underlying warrants and as payment of
interest, be registered as part of King William's piggyback registration rights,
King William shall have no selling limitations with respect to the resale of
such shares.
6. This agreement is effective upon receipt by the Company of a
$1,000,000 equity investment by March 15, 2002. If such investment is not
received by March 15, 2002, this agreement shall be null and void.
7. All other terms of the Second Agreement shall remain in full force
and effect.
8. This Agreement shall be governed by and construed in accordance with
the laws of the state of California and may only be amended by a written
agreement signed by an authorized representative of the parties. All of the
provisions relating to section 9 of the Second Agreement relating to choice of
law and venue shall apply to this agreement. In addition, each party agrees to
waive its right to a trial by jury.
Sincerely,
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Initial Initial
Netgateway, Inc.
By:______________________
Accepted and Agreed
King William, LLC
By:______________________