Note Purchase Agreement [Amendment No. 1] - Youbet.com Inc.
FIRST AMENDMENT TO
NOTE PURCHASE AGREEMENT
This First Amendment to Note Purchase Agreement ("the AMENDMENT") is
entered into as of February __ , 2000, by and among Youbet.com, Inc., a Delaware
corporation (the "COMPANY"), and the party whose name appears on the signature
line below (the "PURCHASER").
WHEREAS, the Company and the Purchaser are parties to one of the Note
Purchase Agreements dated as of April 5, 1999 (the "PURCHASE AGREEMENTS")
pursuant to which, among other things, the Company issued $45,500,000 aggregate
principal amount of its 11% Senior Convertible Discount Notes due 2004 (the
"CONVERTIBLE NOTES"). Capitalized terms used herein without definitions shall
have the meanings ascribed thereto in the Purchase Agreement.
WHEREAS, the Company desires to acquire and operate off-track betting
and bingo facilities or similar or ancillary businesses (the "ADDITIONAL
BUSINESSES").
WHEREAS, on January 13, 2000, the Company and the Los Angeles County
District Attorney entered into a Stipulation for Entry of Final Judgment (the
"Stipulation") pursuant to which a Final Judgment Pursuant to Stipulation (the
"JUDGMENT") was entered in the Superior Court of the State of California for the
County of Los Angeles in THE PEOPLE OF THE STATE OF CALIFORNIA V. YOUBET.COM
INC., (Case No. BC223065). The Judgment, among other things, enjoins the Company
from engaging in certain business activities in the State of California.
WHEREAS, the parties desire to (i) make certain amendments to the
Purchase Agreement to permit the Company to acquire and operate the Additional
Businesses, including incurring indebtedness to finance the payment of the
purchase price therefor, and (ii) waive any defaults which may have arisen under
the Purchase Agreements or the Convertible Notes as a result of the Company's
business activities in the State of California prior to the date hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Amendment the parties agree as follows:
1. Section 6.4 of the Purchase Agreement is hereby amended and restated
to provide as follows:
Section 6.4 LIMITATIONS ON INDEBTEDNESS. The Company and the
Subsidiaries shall not, directly or indirectly, create, assume, incur,
guarantee, or otherwise become directly or indirectly liable with
respect to Indebtedness for Borrowed Money; PROVIDED, that the Company
may incur (i) Indebtedness for Borrowed Money in an amount not to
exceed $7,500,000 at any time outstanding from a reputable commercial
lender, and (ii) Indebtedness in respect of capital leases and
conditional sales of equipment and other property used in the ordinary
course of business ("Permitted Property"), incurred in the ordinary
course of
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business in an amount not to exceed $4,000,000 at any time outstanding;
provided, however, that if the Company shall acquire the stock or
assets of an Additional Business on or before September 30, 2000, the
Company may incur (x) Indebtedness for Borrowed Money in an amount not
to exceed $15,000,000 and (y) Indebtedness in respect of capital leases
and conditional sales of Permitted Property incurred in the ordinary
course of business in an amount not to exceed $4,000,000.
2. Section 7.17(k) of the Note Purchase Agreement is hereby amended and
restated to provide as follows:
(k) "PERMITTED BUSINESS" shall mean (i) any internet-related
gaming or wagering system operated in compliance with applicable law
(the "Original Business"), (ii) any other business ancillary or
reasonably related to the Original Business, such as a track or other
content provider, a licensed wagering facility, a merchandising
business targeted to customers and prospective customers of the
Original Business, and (iii) if the Company shall acquire the stock or
assets of an Additional Business and upon such acquisition, the
operations of off-track betting and bingo facilities and similar or
ancillary businesses.
3. If the Company shall acquire the stock or assets of an Additional
Business on or prior to September 30, 2000 and if Purchaser shall have executed
this Amendment, the Conversion Price of Purchaser's Convertible Note shall be
reset on June 30, 2001 to the lesser of (a) $10.00 per share of Common Stock and
(b) the average of the last trading price of the Company's Common Stock on the
principal exchange, upon which the Common Stock is traded (or if not traded on
an exchange on The Nasdaq Stock Market) for the twenty trading days ending on
June 30, 2001. If the Company shall acquire the stock or assets of an Additional
Business on or prior to September 30, 2000, the Company shall deliver to the
Purchaser an Allonge in the form of EXHIBIT A hereto (the "ALLONGE") within 10
days of the date such acquisition is consummated.
4. The Purchaser hereby waives any defaults which may have occurred
under the Purchase Agreement or the Convertible Notes prior to the date this
Amendment becomes effective as a result of the Company's operations in the State
of California. The Purchase Agreement and Convertible Notes shall be waived only
to the extent set forth herein. This waiver shall be limited precisely as
written and shall not be deemed to be a waiver of, or consent to any
modification of, any other provisions of the Purchase Agreement or the
Convertible Notes.
5. The Company represents and warrants to the Purchaser as follows:
5.1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
The Company does not have any Subsidiaries. The Company is duly
licensed or qualified to transact business in all jurisdictions in
which the nature of the business transacted by the Company or the
character of the properties owned or leased thereby requires that the
Company qualify to do business as a foreign corporation, except where
the
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failure to be so licensed or qualified would not have a Material
Adverse Effect. The Company has the corporate power and authority to
own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted. The Company has the
corporate power and authority to execute and deliver this Amendment and
the Allonge and to perform its obligations hereunder and thereunder.
5.2. The execution and delivery by the Company of this
Amendment and the Allonge and the performance by the Company of its
obligations hereunder and thereunder have been duly authorized by all
requisite corporate action and will not violate (i) any provision of
any law, order of any court or other agency of government applicable to
the Company, the Certificate of Incorporation of the Company, or the
By-Laws of the Company, as amended, or (ii) any provision of any
indenture, agreement or other instrument to which the Company or any of
its properties or assets is bound, or (iii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or
(iv) result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of
the properties or assets of the Company, which in the cases of clauses
(ii), (iii) and (iv) would have a Material Adverse Effect.
5.3. This Amendment has been, and if the stock or assets of an
Additional Business are acquired by the Company, the Allonge will be,
duly executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to laws of general application from time to
time in effect affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
6. The Purchaser represents and warrants to the Company, for itself
only, as follows:
6.1. If the Purchaser is a corporation, partnership, trust or
other entity, (i) the individual executing this Agreement on its behalf
has been duly authorized to execute and deliver this Amendment, (ii)
the signature of such individual is binding upon such partnership,
corporation, trust and other entity, (iii) the Purchaser is duly
organized, validly existing and in good standing in its jurisdiction of
incorporation or organization and has all requisite power and authority
to execute and deliver this Amendment, and (iv) the execution and
delivery of this Amendment and the amendment of the Convertible Note
hereunder as provided in the Allonge will not result in the violation
of, constitute a breach or default under, or conflict with, any term or
provision of the charter, bylaws or other governing document of the
Purchaser or, to its knowledge, constitute a material breach or default
under any agreement, judgment, decree, order, statute or regulation by
which it is bound or applicable to it.
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6.2. This Amendment constitutes the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms,
subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
7. Prior to May 31, 2000 the Company shall purchase in the open market
or in negotiated transactions no less than $4,000,000 aggregate principal amount
of Convertible Notes.
8. This Amendment (and the waivers and obligations herein) shall not be
effective unless and until the holders of at least 66 2/3% of the outstanding
principal amounts of Convertible Notes (including the Purchaser) execute this
Amendment or a document substantially similar to this Amendment (the "Requisite
Consents"). This Amendment shall become effective, if at all, on the date the
Company shall have received the Requisite Consents. If the Company receives the
Requisite Consents, the provisions of this Amendment shall be binding on all
holders of Convertible Notes and their successors and assigns; provided that
only those holders of Convertible Notes who execute this Amendment or a document
substantially similar to this Amendment by February ___, 2000 shall have the
benefit of Section 3 of this Amendment or such substantially similar document.
9. This Amendment, including the exhibit hereto, constitutes the sole
and entire agreement of the parties with respect to the subject matter hereof.
Except as amended hereby, the Purchase Agreement shall remain in full force and
effect.
10. This Agreement may be executed in one or more counterparts, each of
which shall be deemed and original, but all of which together shall constitute
one and the same instrument.
11. If any provision of this Amendment shall be declared void or
unenforceable by any judicial or administrative authority, the validity of
another provision and of the entire Amendment shall not be affected thereby.
12. Capitalized terms used herein without definition shall have the
meanings set forth in the Purchase Agreement.
13. From and after the date of this Amendment, upon the request of a
Purchaser or the Company, the Company and the Purchaser shall execute and
deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carryout and to effectuate fully the
intent and purpose of this Amendment.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
YOUBET.COM, INC., a Delaware corporation
By:
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Name:
Title:
By:
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Name:
Title:
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Name of Purchaser
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Signature of Purchaser
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Principal Amount of Notes Held
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