Sample Business Contracts


Private Placement Services Agreement - vFinance Investments Inc. and Netgateway Inc.

Services Forms


                                                                 [logo] vFinance
                                                               Investments, Inc.

March 22, 2002

Netgateway, Inc.
754 E. Technology Avenue
Orem, UT   84097

Attention:        Don Danks
                  Chairman of the Board of Directors
                  and Chief Executive Officer

Gentlemen:

     Reference  is made to the letter dated as of February 18, 2002 (the "Letter
of  Intent")  between  vFinance  Investments,  Inc.,  ("VFIN" or the  "Placement
Agent"),  and  Netgateway,  Inc.,  its  successors,   subsidiaries,  or  assigns
(collectively,  the "Company").  It is hereby understood that the Company wishes
to  increase  the dollar  amount of the Private  Placement  as set forth in this
amendment to the Letter of Intent (the "Amendment").  The Amendment will confirm
the entire  understanding  and  agreement  (the  "Agreement")  between  vFinance
Investments, Inc. and Netgateway, Inc., as follows:

     1.  Dollar  Amount of Private  Placement:  A minimum of  $300,000.00  and a
         ------  ------ -- -------  ---------
maximum of $2,400,000.00

     2.  Retention of VFIN:  The Company  hereby  engages VFIN, and VFIN accepts
such engagement as the Company's  exclusive  financial  advisor,  for six months
from the date of this letter,  in  connection  with the  management of a private
placement (the "Private  Placement") of equity securities of the Company,  which
will  include  shares of common  stock (the  "Shares")  of the  Company  and may
include  warrants  to  purchase  common  stock (the  "Warrants")  of the Company
(collectively, the "Units"), on a best efforts basis.

3.       The Private Placement:
         ---------------------

     a. The Private  Placement shall be structured as a transaction  exempt from
Section 5 of the Securities Act of 1933, as amended (the "Securities  Act"), and
shall comply with Section 4(2) of the Securities Act and Regulation D thereunder
and state securities law.

     b. The Private  Placement shall be structured in that there may be multiple
closings  upon  the  receipt  and  acceptance  by  the  Company  of  irrevocable
subscriptions.  The  feasibility  of the Private  Placement will depend upon the
results of our investigation of the Company,  information about the Company that
VFIN may receive including, but not limited to, due diligence reports concerning
the Company's operations, management, and business plan, and the continuation of
the operation of the Company without material adverse change.

     c. The  Company  will use all  reasonable  efforts  to  promptly  prepare a
Confidential  Offering  Memorandum (the  "Memorandum")  substantially  in a form
acceptable  to the  Placement  Agent  relating to the  offering  and sale of the
Shares.  In connection  with the Memorandum and other matters  pertaining to the
Private Placement, the Company and its officers,  accountants, and counsel shall
furnish  to the  Placement  Agent and the  counsel to the  Placement  Agent such
information  and  documents as shall be reasonably  requested.  The Company will
also endeavor in good faith, in cooperation with the Placement Agent and counsel
to the Placement  Agent,  whenever  requested by the Placement Agent, to qualify
the Shares and the securities  included therein and issuable upon the conversion
thereof,  the  Placement  Agent's  Warrants  (as  hereinafter  defined)  and the
securities  issuable upon the exercise of the Placement Agent's Warrants and all
underlying securities for offer and sale under the applicable securities laws of
such  jurisdictions  as  Placement  Agent may  reasonably  designate,  provided,
however,  that the  Company  shall not be  required  thereby  to  qualify  to do
business in any jurisdiction in which it is not otherwise engaged in business.

     4. Placement Agent's Compensation: The Placement Agent shall be compensated
        --------- ------- -------------
for its services in connection with the proposed offering herein contemplated as
follows:

     a. For its role as Placement  Agent,  the Company  shall pay or cause to be
paid to the Placement Agent a cash fee of $60,000, which shall be payable in two
installments:  (1) $40,000 upon the first  Closing of the Private  Placement and
(2) $20,000 upon the second Closing of the Private Placement.  In addition,  the
Placement  Agent shall be paid a cash  commission  of five  percent  (5%) on the
gross  proceeds  sold in the  placement.  It is hereby  understood  between  the
parties that the Placement Agent intends to pay certain finders a portion or all
of the above mentioned commission on any sales of the placement sold through the
finder. In addition,  the Placement Agent shall be entitled at each closing,  to
reimbursements  for the expenses  incurred by it in connection  with the Private
Placement.

     b. The Company will  authorize,  and the  Placement  Agent or its designees
shall be entitled to receive at the Closing,  purchase  warrants (the "Placement
Agent's  Warrants") for the purchase of a number of Shares equal to five percent
(5%) of the  number of  shares  sold in the  Private  Placement.  The  Placement
Agent's  Warrants will be exercisable at a price per Share equal to the offering
price  per  Share.   Such  Warrants  will  contain  standard  net  issuance  and
anti-dilution provisions.

     c. The Placement  Agent's Warrants shall not be exercisable for a period of
one  year  from  the  date  of the  Initial  Closing  and  shall  thereafter  be
exercisable for a period of four years.

     d. The  Company  agrees,  at its  expense,  to  register  the  shares  (the
"Underlying  Shares")  of  common  stock of the  Company  (the  "Common  Stock")
issuable  upon  conversion  of the  Shares  issuable  upon the  exercise  of the
Placement  Agent's  Warrants  for resale at any time  during  the entire  period
between the first and fifth  anniversaries  of the date of the Initial  Closing.
The  Company  will bear all the costs of such  demand  registration,  except for
customary underwriting discounts and commissions.  In addition, the Company will
take all actions necessary,  and bear all expenses required to permit holders of
the Underlying  Shares,  including the holders of the Placement Agent's Warrants
and the  Shares,  to  "piggyback"  such  Underlying  Shares on any  registration
statement  filed by the Company under the  Securities  Act during such four year
period.  The Company  shall not enter into any  agreement or take any other step
that would impair the registration rights of any such holders granted hereby.

     5. Expenses:  The Placement Agent shall be entitled to reimbursement of out
of  pocket  expenses  incurred  in  connection  with  this  Private   Placement.
Reimbursement  of expenses shall be duly documented and paid monthly and at each
closing, upon submission of a duly documented invoice. In addition,  the Company
shall pay all of its costs  and  expenses  incident  to the  purchase,  sale and
delivery of the Shares and the securities included therein and issuable upon the
conversion  thereof,  including  without  limitation,  all fees and  expenses of
filings with the Securities and Exchange Commission and the National Association
of Securities Dealers,  Inc., in each case if applicable;  all blue sky fees and
expenses;  all fees of the counsel to the Placement  Agent,  fees of counsel and
accountants  for the Company;  printing  costs,  including costs of printing the
Memorandum and any amendments, supplements, or exhibits thereto, any preliminary
drafts thereof or amendments thereto, all private placement documents,  blue sky
memoranda and a reasonable  quantity of Memoranda as determined by the Placement
agent;  the Company's  road show costs and  expenses;  and the cost of preparing
four bound volumes of the Private  Placement  documents for the Placement  Agent
and counsel to the Placement Agent.

     6. Conditions of the Placement Agent's Obligation:  Corporate Changes:  The
        ---------- -- --- --------- ------- -----------  --------- --------
financial   condition   and   prospects  of  the  Company  shall  be  reasonably
satisfactory to the Placement Agent.

     7.  Conditions,  Representations  and  Covenants:  The Company  represents,
         -----------  ---------------  ---  ---------
warrants, and covenants that:

     a. There will be included in the Memorandum audited financial statements of
the Company for the three  fiscal  years  preceding  the date of the  Memorandum
(reported  on  by a  national  accounting  firm  reasonably  acceptable  to  the
Placement  Agent) and, if requested by the Placement  Agent,  current  unaudited
comparative interim financial statements.  The financial statements will present
fairly the financial  condition of the Company and the results of its operations
at the time and for the periods covered by such financial  statements,  and such
statements  will be  substantially  as heretofore  represented  to the Placement
Agent.

     b. The Company has prepared and delivered to the  Placement  Agent its most
recent  financial  statements  and,  if  requested,   will  deliver  projections
constituting  its best  estimate of  revenues,  earnings and cash flow and shall
update such estimates on a monthly basis during the registration period.

     c.  Except  in   connection   with   acquisitions,   strategic   commercial
transactions  or  pursuant  to the  exercise  of  warrants,  options,  or  other
securities  outstanding prior to Closing,  and the Company's right to maintain a
stock  option plan of Common  Stock and the grant of options to, or the issuance
of Common Stock upon  exercise of options by is officers,  employees,  directors
and  consultants  under such Plan at an exercise  price equal to the fair market
value, the Company will not, without the Placement Agent's prior written consent
(1) sell any  shares of  capital  stock or issue  warrants  or  options,  except
pursuant to the Company's employee benefit plans described in the Memorandum, or
(2)  purchase  any shares of capital  stock of the Company  during the six month
period  following the Closing of the Private  Placement,  except pursuant to the
Company's employee benefit plans described in the Memorandum.

     d. The Company will use its best efforts to cause two persons to be elected
to the Company's  Board of Directors who are deemed by the Placement Agent to be
independent of the Company's management,  who are reasonably acceptable to VFIN,
as well as make any  management  changes  mutually  agreeable to the Company and
VFIN.

     e. The  Company  shall  secure  Director  and Officer  Liability  Insurance
(provided that such insurance can be obtained at a reasonable cost as determined
by the  Company  and the  Placement  Agent)  in an  amount  and from an  insurer
reasonably  satisfactory  to the  Placement  Agent,  provided that the amount of
coverage  shall not exceed that which is customary  for  companies of comparable
size and in the same industry as the Company.

     f. For a  three-year  period  from the date of the  Initial  Closing of the
Private Placement,  VFIN shall have a right to appoint a designee as an observer
to the Board of  Directors.  Such  observer  will  have the right to attend  all
meetings of the Board.  Such observer shall have no voting rights,  but shall be
entitled to receive  reimbursement  for all  reasonable  out-of-pocket  expenses
incurred in attending such meetings, including, but not limited to food, lodging
and transportation. VFIN shall be given notice of such meetings at the same time
and in the same manner as Directors of the Company are  informed.  VFIN and such
observer shall be indemnified to the same extent as the other directors.

     g. The Company agrees to indemnify the Placement  Agent in accordance  with
the indemnification  provisions (the  "Indemnification  Provisions") attached to
this Agreement as Exhibit A, which  Indemnification  Provisions are incorporated
herein and made a part hereof.

     8. Statement of Intent: It is understood that VFIN's undertaking to conduct
the proposed  Private  Placement is subject to the  Memorandum,  all amendments,
supplements and exhibits thereto or other documentation  related thereto,  being
reasonably  satisfactory  to the  Placement  Agent and counsel to the  Placement
Agent.

     The  Placement  Agent  intends  to  proceed  with  the  Private   Placement
immediately after availability of the required final documentation and the terms
of this  letter  of Intent  have been  satisfied;  provided,  however,  that the
Placement Agent reserves the right not to proceed with the Private Placement if,
in its sole judgment,  market  conditions  are unsuitable for such offering,  or
information  comes to its attention  relating to the Company,  its management or
its  position in the  industry,  which  could,  in the  Placement  Agent's  sole
judgment, preclude a successful offering of the Shares.

     9.  Legally  Binding:  As  described  in  Paragraph  9, the Company and the
         -------  -------
Placement Agent agree that the following  provisions shall be legally binding on
the Company:

     a. If the Company or the  Placement  Agent  decides not to proceed with the
Private  Placement  for any reason  whatsoever,  all  expenses  incurred  by the
Placement Agent in connection  with the Private  Placement will be paid promptly
by the Company in accordance with all provisions described herein.

     b. If, after  executing this Letter of Intent and prior to final closing of
the offering,  the Company elects not to expeditiously proceed with the offering
even  though the  Placement  Agent is ready,  willing  and able to  conduct  the
Private Placement,  then the Company agrees that (1) it will not sell any of its
capital stock through  another  placement agent for a period of at least six (6)
months,  or (2) if it does so, then the Company shall pay to the Placement Agent
$100,000  in addition to the  amounts  paid to it pursuant to  subparagraph  (a)
hereof,   which  the  Company  and  the  Placement  Agent  agree  will  be  fair
compensation to the Placement  Agent for services  performed with respect to the
proposed Private Placement.

     c. If prior to the final  Closing  of the  Private  Placement  and within a
period of twelve  (12)  months from the date  hereof,  the Company is  acquired,
merges,  sells all or  substantially  all of its assets or  otherwise  effects a
corporate  reorganization with any other entity (collectively,  a "Transaction")
and, as a result, the Private Placement  contemplated hereby is abandoned by the
Company,  then,  in addition to any amounts paid to it pursuant to  subparagraph
(a) hereof,  the Company shall pay the Placement Agent a cash fee of 2.0% of the
aggregate  amount of Consideration  given upon the closing of such  Transaction,
which the Company and the  Placement  Agent  agree is fair  compensation  to the
Placement  Agent for services  performed  with  respect to the proposed  Private
Placement.

     For purposes of this Agreement, "Consideration" shall include the aggregate
amount of cash,  securities,  or other  assets  received  by the  Company or its
shareholders in connection with a Transaction, plus (i) the present value of any
payments  made  or  to  be  made  pursuant  to  installment   notes,   covenants
not-to-compete,  or  other,  similar  arrangements  (but  excluding  any  future
compensation for future employment in an amount consistent with that paid by the
Company  prior  to the  Transaction;  (ii) the  face  amount  of any debt of the
company or the Company's  shareholders (but excluding  operating  leases,  trade
payables and normal accruals) which is assumed otherwise borne by the purchaser;
and (iii)  the  amount  of any  dividends  or other  extraordinary  payments  or
distributions made by the Company to its shareholders,  officers,  directors, or
employees in anticipation of the Transaction. The "present value of any payments
made or to be made" shall be  determined  using the face amount of the payments,
and a discount rate equal to the yield of 5-year  Treasuries  plus 1% at the end
of the day immediately  preceding the close of this Transaction.  Any securities
or other non-cash  consideration,  received as consideration  shall have a value
equal to the cash  equivalent  value,  as reasonably  determined by VFIN. If the
Transaction  takes  the  form of a  purchase  of  assets  and an  assumption  of
liabilities,  then  Consideration,  shall  include the fair market  value of the
assets purchased from the Company,  its  shareholders,  or their affiliates (but
excluding operating leases,  trade payables and normal accruals) that is assumed
by the  purchaser.  If  all or any  portion  of  the  consideration  payable  in
connection with the Transaction  includes  contingent future payments,  then the
Company shall pay to VFIN, upon  consummation of the Transaction,  an additional
cash fee determined in accordance  with this Paragraph 9( c), when, and if, such
contingency  payments  are  received.  However,  in the event of an  installment
purchase at a fixed price and a fixed time schedule the Company agrees to pay to
VFIN, upon consummation of the Transaction,  a cash fee determined in accordance
with this Paragraph 2 based upon the present value of such installment  payments
using a discount rate referenced above.

     If the  Company's  Board of  Directors  authorizes  the Company to pursue a
merger/acquisition opportunity involving the sale of all or substantially all of
the Company's assets during the period after the Memorandum has been distributed
by the  Placement  Agent,  the  Placement  Agent  shall  have the right of first
refusal  to act as the  Company's  investment  banker or  financial  advisor  in
connection  with any such  merger/acquisition,  rendering  such  services as are
customary in connection therewith in consideration for a fee which is considered
customary for such services.

     d. Pending completion of the Private  Placement,  the Company shall refrain
for a period of six (6) months from the date hereof  from  negotiating  with any
other placement agent or investment  banker or other person regarding a possible
public or private offering of any of the Company's securities.

     e. The Placement Agent and the Company agree that any  controversy  arising
out of or relating to this  letter of intent or proposed  offering  contemplated
hereby,  shall be settled by  arbitration  in accordance  with the rules then in
effect on the National Association of Securities Dealers, Inc.

     f. For the three-year  period  commencing on the date of the Closing,  VFIN
shall have the right of first  refusal (on terms at least as favorable as can be
obtained  from other  sources)  to act as lead  manager,  co-manager,  placement
agent,  or investment  banker with respect to any proposed  underwritten  public
distribution  or private  placement of the  Company's  securities or any merger,
acquisition, or disposition of assets of the Company, if the Company uses a lead
manager,  co-manager,  placement  agent,  investment  banker,  or  other  person
performing such functions for a fee. VFIN will advise the Company promptly,  but
in no event later than 15 days  following the  submission to VFIN writing of any
such proposed transaction(s),  of VFIN's election to exercise said right. If any
such  proposal is not  accepted by VFIN,  but later  modified,  the Company will
re-submit such proposal to VFIN.  Should VFIN elect, at any time not to exercise
said right this will not affect preferential rights for future financings.

     If the foregoing  correctly  sets forth the  understand we have  heretofore
reached  regarding the proposed  Private  Placement,  please sign and return the
enclosed  copy of this letter by February 29, 2002.  If this Letter of Intent is
not signed by February 29, 2002,  and an extension has not been mutually  agreed
upon in writing by the Company and the  Placement  Agent,  this Letter of Intent
will be considered  void. By accepting  this letter,  the Company agrees to keep
this  letter  and all  terms  confidential  and not to  "shop" it with any other
placement agents or underwriters.

Very truly yours,

VFINANCE INVESTMENTS, INC.

By:      [signature]
         --------------------------------------------
         Jon Buttles
         Principal

ACCEPTED AND AGREED TO
This 27th day of March in, 2002

NETGATEWAY, INC.

By:      [signature]
         --------------------------------------------
         Don Danks
         Chairman and Chief Executive Officer



<PAGE>


                                    EXHIBIT A

     The  Placement  Agent  will be acting on behalf of  Netgateway,  Inc.  (the
"Company")  in  connection  with the services or matters that are subject of the
Agreement to which this Exhibit A is attached.  Accordingly,  the Company agrees
to  indemnify  and hold  harmless  each  Placement  Agent and  their  respective
affiliates,  their respective  directors,  officers,  agents,  and employees and
affiliates,  and each other person, if any, controlling any such Placement Agent
or any of their respective affiliates  (collectively the "Indemnified Persons"),
from and  against any  losses,  claims,  damages,  liabilities  or expenses  (or
actions,  including  shareholder  actions,  in respect  thereof)  relating to or
arising out of such  engagement  or the  Placement  Agent's  role in  connection
therewith,  and  will  reimburse  the  Indemnified  Persons  for all  reasonable
expenses  (including  out-of-pocket  expenses and Placement Agent's counsel fees
and expenses) as they are incurred by the Indemnified Persons in connection with
investigating,  preparing or defending any such action or claim,  whether or not
in connection with pending or threatened litigation in which any Placement Agent
or any  Indemnified  Person  is a party.  The  Company  will  not,  however,  be
responsible to any particular Placement Agent for any losses,  claims,  damages,
liabilities,  or  expenses  which  are  finally  judicially  determined  to have
resulted  primarily from such Placement Agent's willful misconduct or bad faith.
The  Company  also agrees that none of the  Indemnified  Persons  shall have any
liability  to the  Company  for or in  connection  with the  services or matters
pertaining to the Agreement  except for any such  liability for losses,  claims,
damages,  liabilities or expenses incurred by the Company that results primarily
from any Placement  Agent's  willful  misconduct  or bad faith.  If the forgoing
indemnity  is  unavailable  or  insufficient  to hold  the  Indemnified  Persons
harmless, then the Company shall contribute to the amount paid or payable by the
Indemnified Persons, in respect of the Indemnified Persons, for losses,  claims,
damages,  liabilities,  or expenses in such proportion as appropriately reflects
the relative  benefits  received by, and fault of, the Company,  on the one hand
and the Indemnified  Persons, on the other, in connection with the matters as to
which such looses,  claims,  damages,  liabilities or expenses  relate and other
equitable  consideration;   provided,  however,  the  Company  agrees  that  the
aggregate contribution of all Indemnified Persons shall in all cases be not more
than the amount of fees  actually  received  by the  Placement  Agents for their
services.  It is hereby further agreed that the relative benefits to the Company
on the one hand and the  Indemnified  Persons on the other  with  respect to any
transaction  contemplated  by the  Agreement  shall be  deemed to be in the same
proportion  as (i) the  total  value of the  transaction  bears to (ii) the fees
actually  paid to the  Placement  Agents with respect to such  transaction.  The
foregoing  Agreement shall be in addition to any rights that any Placement Agent
or any  Indemnified  Person may have at common  law or  otherwise.  The  Company
hereby consents to personal  jurisdiction  and service and venue in any court in
which any claim  which is  subject to this  Agreement  is  brought  against  any
Placement Agent or any other Indemnified Person. If any action,  proceeding,  or
investigation   is  commenced  as  to  which  an   Indemnified   Person  demands
indemnification,  the Indemnified  Person shall have the right to retain counsel
of its own choice to represent it, the Company shall pay the reasonable fees and
expenses of such counsel,  and such counsel shall to the extent  consistent with
its  professional  responsibilities  cooperate  with the Company and any counsel
designated by the Company;  provided  that the Company shall not be  responsible
for the fees and expenses of more than one counsel.





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