AMENDMENT NO. 6 to AGREEMENT AND PLAN OF REORGANIZATION Dated February 19, 2007
Exhibit
10.33
AMENDMENT
NO. 6
to
Dated
February 19, 2007
THIS
AMENDMENT NO.6 (the "Amendment"), effective as of the 28th day
of
February, 2008, is made by and among Magnitude Information Systems, Inc.
("Magnitude"), Kiwibox Media, Inc. ("Kiwibox"), Xxxxxxx Xxxxxx, Xxx Xxx and
Xxxx
Xxxxxxx, individuals, who are the shareholders of Kiwibox (the "Kiwibox
Shareholders").
BACKGROUND:
WHEREAS,
Magnitude, Kiwibox and the Kiwibox Shareholders executed and delivered a certain
Agreement and Plan of Reorganization, dated February 19, 2007 (the "Agreement")
that scheduled the closing of the transactions described therein to take place
on or before March 31, 2007 and extended the closing date from on and about
March 31, 2007 to May 15, 2007 by virtue of Amendment No. 1 dated April 4,
2007;
and
WHEREAS,
due to certain delivery requirements, the parties further amended the Agreement
and rescheduled the closing date from on or about May 15, 2007 to June 18,
2007
by virtue of Amendment No. 2, and;
WHEREAS,
on July 30, 2007 the parties executed and delivered Amendment No. 3 to the
Agreement providing for (A) a new schedule for the payments due to the Kiwibox
Shareholders; (B) a new schedule for the overall investment of the $3.5 million
Magnitude has committed to raise and invest into Kiwibox; (C) certain penalty
provisions and termination rights in the event of an uncured default, and;
(D) a
new closing date of August 16, 2007;
WHEREAS,
the Kiwibox acquisition closed on August 16, 2007 and due to delays by Tell
Capital AG in its payments commitments, the parties further amended the
Agreement through Amendment No. 4 (December 3, 2007) and Amendment No. 5
(December 31, 2007), extending certain Magnitude investment deadlines for
Kiwibox and providing for certain cash payments to the Kiwibox
Shareholders;
WHEREAS,
the parties now desire to further amend the Agreement to provide, among other
things, a mutually beneficial platform, permitting Magnitude to more easily
identify funding for their operations by removing certain impediments to the
fund raising efforts that exist by virtue of the current and applicable
investment deadlines and penalty provisions, including the xxxxxxx of an
exercise by the Kiwibox Shareholders of their rights of rescission.
NOW,
THEREFORE, in consideration of the mutual promises and covenants made by the
parties to each other, the parties agree as follows:
A.
Amendment of Agreement: The
parties hereto agree to amend the Agreement, as amended by Amendment Xx. 0,
Xxxxxxxxx Xx. 0 and Amendment No.5 to the Agreement effective as of the date
set
forth above, as follows:
1.
Magnitude $3.5 million Investment. Sections
3D, 3E, 3F, and the last paragraph of Section 3 of Amendment No. 3, Section
3G
inserted by Amendment No. 4, and Sections 3H and 3I inserted by Amendment No.5,
together and currently read as follows:
(D)
On or
before January 1, 2007, Magnitude shall have an additional $625,000 for
the
$3.5
Investment into Kiwibox;
(E)
On or
before March 1, 2008, Magnitude shall have an additional $1,700,000 for
the
$3.5
Investment into Kiwibox;
(F)
On or
before August 16, 2008, Magnitude shall have an additional $300,000 for
the
$3.5
Investment into Kiwibox;
(G)
On or
before December 5, 2007, Magnitude shall make a payment of $50,000 to the
shareholders of Kiwibox. In the event that the $625,000 payment due pursuant
to
this Amendment No. 4 is not received on or before December 5, 2007, Magnitude
shall make an additional payment of $50,000 to the Kiwibox shareholders on
December 5, 2007. All Magnitude payments made under this Section 3(G) shall
be
disbursed 33 and 1/3% to each of the three Kiwibox shareholders.
(H)
On
the earlier date of January 31, 2008 or the date Magnitude receives sufficient
funds to make a payment of $50,000, Magnitude shall make a payment of $50,000
to
the shareholders of Kiwibox. In the event that the $1,340,000, representing
the
balance due of the $3 million commitment of Tell Capital AG made to Magnitude
(which amount includes the $625,000 Kiwibox Funding Amount due January 1, 2008),
is not received on or before January 31, 2008, Magnitude shall make an
additional payment of $50,000 to the Kiwibox shareholders on January 31, 2008,
and the due date for the receipt of the $1,340,000 shall be extended to February
5, 2008. All Magnitude payments made under this Section 3(H) shall be disbursed
33 and 1/3% to each of the three Kiwibox shareholders;
(I)
On or
before April 1, 2008, Magnitude shall make a payment of $50,000 to the
shareholders of Kiwibox. In the event that the $1,700,000 Kiwibox Funding Amount
is not received on or before April 1, 2008, Magnitude shall make an additional
payment of $50,000 to the Kiwibox shareholders on April 1, 2008, and the due
date for the receipt of the $1,700,000 shall be extended to April 5, 2008.
All
Magnitude payments made under this Section 3(I) shall be disbursed 33 and 1/3%
to each of the three Kiwibox shareholders.
Section
3.5 shall be further amended by inserting the following provisions at the end
thereof:
In
the
event Magnitude does not receive into its bank account a Kiwibox Funding
Amount
on
or
before its corresponding Kiwibox Funding Date, Magnitude shall pay to the
Kiwibox
Shareholders a penalty consisting of 60,000 restricted Magnitude
common
shares
for each day following the Kiwibox Funding Date a Kiwibox Funding Amount is
in
arrears.
For example, if the $300,000 Kiwibox Funding Amount due on September 1,
2007,
is
not
received by Magnitude until September 5, 2007, then Magnitude shall pay the
penalty
by
issuing 300,000 Magnitude restricted common shares to the Kiwibox Shareholders,
one-
third
to
each Kiwibox Shareholder, within thirty (30) days of the receipt of the subject
Kiwibox
Funding Amount. In the event that a Kiwibox Funding Amount is more than thirty
(30)
days
in arrears, the Kiwibox Shareholders shall have the right and option to send
a
notice
of
rescission in writing (the “Notice of Rescission”) to Magnitude who shall have
an
additional
five (5) days following receipt of such Notice of Rescission to cure such
default
(the
“Cure Period”) by providing sufficient documentary evidence to Kiwibox and to
the
Kiwibox
Shareholders that such delinquent Kiwibox Funding Amount has been received
within
such five (5) day Cure Period; in the event that Magnitude has does not provide
to
Kiwibox
and to the Kiwibox Shareholders sufficient documentary evidence that it has
received
such Kiwibox Funding Amount within such five (5) day Cure Period, then and
in
such
event Magnitude shall deliver and transfer ownership of the Kiwibox business
back to
the
Kiwibox Shareholders by transferring to them all of the one hundred sixty (160)
outstanding
common shares of its subsidiary, Kiwibox Media, Inc., within thirty (30) days
of
the
expiration of the Cure Period. The right of rescission granted to the Kiwibox
Shareholders
under this Section 3.5 shall be in addition to any rights and remedies that
they
shall
have at law or in equity. Any and all sums paid by Magnitude to Kiwibox and
the
Kiwibox
Shareholders prior to any exercise of their rights of rescission under this
Section
3.5
shall
be deemed earned and non-refundable.
THE
ABOVE PROVISIONS OF SECTION 3.5 OF THE AGREEMENT AND AS MODIFIED BY AMENDMENTS
NOS. 3, 4 AND 5 SHALL BE DELETED IN THEIR ENTIRETY, AND THE FOLLOWING NEW
SECTION 3.5 SHALL BE SUBSTITUTED IN LIEU THEREOF:
3.5
Magnitude
Investment and Commitment.
(A)
Magnitude agrees to raise no less than $1,500,000 on or before March 7, 2008,
of
which $700,000 shall be committed to invest in the Kiwibox business
and,
in
addition,
$150,000
of which shall be paid to the three Kiwibox Shareholders, $50,000 each, in
partial consideration for their agreement to the terms and provisions of this
Amendment No. 6; in addition and as further consideration to the Kiwibox
Shareholders, Magnitude shall execute and deliver its promissory note, dated
the
date hereof, in the principal amount of $225,000, payable $75,000 each to the
three Kiwibox Shareholders, accruing interest at the rate of five (5%) percent,
per annum, secured by all 160 outstanding shares of Kiwibox Media, Inc., whose
principal balance and accrued interest shall be due and payable on the earlier
date of June 15, 2008, or on the date Magnitude received proceeds from any
debt
or equity financing subsequent to the anticipated investment of $1,500,000,
due
on or before March 7, 2008. If this promissory note is not paid on or before
June 15, 2008, Magnitude shall reserve $150,000 in funds and transfer same
to
Kiwibox.
(B)
In
the event Magnitude raises the $1,500,000 on or before March 7, 2008, then
any
and all current or future (i) rights of rescission heretofore granted to the
Kiwibox Shareholders to rescind the merger transaction between Magnitude and
Kiwibox, and the Kiwibox Shareholders and (ii) obligations of Magnitude to
raise
any additional funds for Kiwibox, shall automatically terminate and no longer
be
of any further force or legal effect.
(C)
In
the event Magnitude does not have the $1,500,000 on or before March 7, 2008,
the
Kiwibox Shareholders shall have the right to exercise a right of rescission,
effective on March 7, 2008, by written notice to Magnitude and upon receipt
of
such notice of rescission, Magnitude shall transfer to the Kiwibox Shareholders
all of the 160 outstanding shares of its subsidiary, Kiwibox Media, Inc. as
soon
as practicable; in addition, Magnitude shall reserve $150,000 in funds and
transfer same to the Kiwibox in such event;
(D)
In
partial consideration of the agreement of Kiwibox and the Kiwibox Shareholders
to the terms and provisions set forth in this Amendment No. 6:
(i)
Magnitude hereby grants to the Kiwibox Shareholders a limited reset right,
based
upon the issuance of the 30,000,000 Magnitude common shares, originally issued
to the three Kiwibox Shareholders at the closing of the Agreement on August
16,
2007, 11,804,632 Common Shares to Lin Dai, 9,638,213 Common Shares to Xxxx
Xxxxxxx and 7,807,155 Common Shares to Xxxxxxx Xxxxxx. This limited reset right
shall require Magnitude to issue, in the same proportion they received their
original 30,000,000 Magnitude common shares on August 16, 2007, an addition
20,000,000 common shares to the three Kiwibox Shareholders as follows: 8,071,544
Common Shares to Lin Dai, 6,590,231 Common Shares to Xxxx Xxxxxxx, and 5,338,225
Common Shares to Xxxxxxx Xxxxxx. The Kiwibox Shareholders shall have the
election to receive the 20,000,000 reset shares in the form of stock options,
the number of which shall be determined by Magnitude’s auditors and based upon
equivalent value. Magnitude shall issue the amount of shares or stock options
due to the Kiwibox Shareholders under this Reset Right within ten (10) days
of
receipt of written notice accompanied, in the event the Kiwibox Shareholders
elect to take some or all of the 20,000,000 reset shares in the form of stock
options, by a statement setting forth the calculations used to determine the
number of stock options, and;
(ii)
Magnitude shall issue to the Kiwibox Shareholders an aggregate 2,100,000
restricted common shares as well as the 8,700,000 shares previously due through
January 31, 2008. The Kiwibox Shareholders shall have the election to receive
the penalty shares in the form of stock options, the number of which shall
be
determined by Magnitude’s auditors and based upon equivalent value. Magnitude
shall issue the amount of penalty shares or stock options due to the Kiwibox
Shareholders within ten (10) days of receipt of written notice accompanied,
in
the event the Kiwibox Shareholders elect to take some or all of the penalty
shares in the form of stock options, by a statement setting forth the
calculations used to determine the number of stock options.
(iii) Magnitude
shall obtain an opinion from its auditors or similarly qualified accounting
firm
as to the equivalent value of the reset 20,000,000 common shares and the penalty
shares referenced in Section 3.5(D)(i) and (ii) above, if the Kiwibox
Shareholders elected to take such securities in the form of stock options on
or
before the 20th
day
following the date of this Amendment. Magnitude shall furnish such opinion
to
the Kiwibox Shareholders upon receipt. In the event the Kiwibox Shareholders
elect to take part or all of the subject reset 20,000,000 common shares and/or
the penalty shares in the form of stock options, such stock options shall
contain a provision permitting cashless exercise.
B.
Reconfirmation. The
parties hereto reconfirm and acknowledge the legal viability of the Agreement,
including Amendments Xx. 0, Xx. 0, Xx. 0, Xx. 0, Xx.0 and this Amendment No.
6
thereto between them as well as all of the terms and provisions of the Agreement
and amendments not modified by this Amendment.
IN
WITNESS WHEREOF, the parties have signed this Amendment as of the day, month
and
year first above written.
| Kiwibox Media, Inc. | Magnitude Information Systems, Inc. | ||
| By: /s/ Lin Dai | By: /s/ Xxxxxx X. Xxxxxx | ||
|
Xxx Xxx, President |
Xxxxxx X. Xxxxxx, President |
| /s/ Xxxx Xxxxxxx | /s/ Xxxxxxx Xxxxxx | /s/ Lin Dai | ||||
| Xxxx Xxxxxxx | Xxxxxxx Xxxxxx | Xxx Xxx | ||||
| Kiwibox Shareholder | Kiwibox Shareholder | Kiwibox Shareholder |
