Exhibit 10.20
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FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT TO CONVERT DEBT
THIS FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT TO CONVERT DEBT (this
"Amendment") is entered into as of July 22, 2004 (the "Effective Date"), by and
between SBS INTERACTIVE, CO., a Florida corporation (the "Company"), and XXXXXX
XXXX (the "Stockholder" or the "Assignee").
WHEREAS, the Stockholder, through Karlgar Limited (the "Assignor"), loaned
an aggregate of $441,750 to the Company and its wholly-owned subsidiary, SBS
Interactive, Inc., a Nevada corporation (the "Subsidiary") on the terms and
conditions set forth in the following documents: $72,000 Convertible Secured
Debenture dated October 30, 2002, $30,000 Convertible Secured Debenture dated
March 14, 2003, $52,000 Secured Promissory Note dated July 23, 2003, 6%
Convertible Secured Debenture dated September 10, 2003, and Amendment No. 1
dated September 10, 2003 to the 6% Convertible Secured Debenture dated September
10, 2003 (collectively, the "Prior Loan Documents");
WHEREAS, the Stockholder, through the Assignor, loaned an additional
$400,000 to the Company and the Subsidiary, which loan was combined with the
aggregate amount outstanding on the loans under the Prior Loan Documents on the
terms and conditions set forth in that certain First Amended and Restated
Convertible Secured Debenture dated as of January 6, 2004 (the "Debenture"),
which provided, at the sole option of the Stockholder, through the Assignor, for
the conversion of the aggregate amount of $841,750 (excluding interest)
outstanding under the Debenture into shares of common stock, par value $0.001
per share of the Company (the "Common Stock") at a conversion price of $0.04 per
share;
WHEREAS, at the request of the Company and the Subsidiary, the Stockholder
and the Assignor agreed to convert the aggregate amount of $841,750 outstanding
under the Debenture into shares of Common Stock at a conversion price of $0.225
per share in lieu of the conversion price of $0.04 per share under the
Debenture, on the terms and conditions set forth in that certain Assignment and
Agreement to Convert Debt dated as of March 17, 2004 (the "Conversion
Agreement");
WHEREAS, for the Stockholder and Assignor agreed to the Conversion
Agreement, and the reduction in the conversion price from that effective under
the Debenture, which had the effect of reducing the number of shares of Common
Stock issued to the Stockholder on conversion from 21,043,750 shares of fully
paid Common Stock to 3,741,111 shares of fully paid Common Stock and warrants to
purchase 4,741,111 shares of Common Stock upon payment of additional
consideration, in reliance upon the agreement of the Company and the Subsidiary
that the Company and the Subsidiary would raise sufficient additional funds to
meet their future financing needs by issuing Common Stock at a per share price
of at least $.75 per share with warrants (at an exercise price of at least $1.00
per share) for a number of shares equal to or less than the number of shares of
Common Stock purchased in any such future financings (the "Financing Agreement")
and the continued accuracy as of the date of the Conversion Agreement of the
Company's disclosure regarding the number of shares of Common Stock issued and
outstanding as set forth in the Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 2003;
WHEREAS, the Company did not complete a financing on the terms of the
Financing Agreement and, as a result, the Stockholder has loaned an additional
$100,000 to the Company and the Subsidiary, which loan is comprised of a $45,000
loan to the Company on the terms and conditions set forth in the $45,000
Promissory Note (Unsecured) dated May 7, 2004 (the "$45,000 Promissory Note"),
and a $55,000 additional loan (the "Additional Loan") to the Company and the
Subsidiary which, as of June 7, 2004, was combined with the amount outstanding
under the $45,000 Promissory Note on terms and conditions, including conversion
rights, warrants and security interests, set forth in the Master Loan Agreement,
Promissory Note and Pledge and Security Agreement each dated as of July 22, 2004
between the Company, the Subsidiary and the Stockholder (collectively, the "Loan
Documents")
WHEREAS, without direct or indirect disclosure to the Stockholder or the
Assignor, the Company issued 4,250,000 shares of Common Stock to employees,
including officers of the Company, and service providers during the month prior
to the execution of the Conversion Agreement for no cash consideration and, also
without disclosure to the Stockholder or the Assignor, at the time of execution
of the Conversion Agreement, the Company planned to issue over 200,000
additional shares of Common Stock to service providers for no cash consideration
shortly after execution of the Conversion Agreement (collectively, the
"Additional Issuances"); and
WHEREAS, in accordance with Section 8(a) of the Conversion Agreement, the
Company and the Stockholder wish to amend the Conversion Agreement to settle any
claims of the Stockholder and the Assignor arising out of the Additional
Issuances and the Financing Agreement, and the Stockholder, on behalf of himself
and the other "Stockholder Affiliates" (as defined herein), wishes to release
the Company and the "Company Affiliates" (as defined herein) from liability in
connection with the Additional Issuances and the Financing Agreement, on the
terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated into, and made a part of this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. CAPITALIZED TERMS. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Conversion Agreement.
2. AMENDMENT. The Conversion Agreement is hereby amended as follows:
(i) By deleting the reference to "3,741,111" in Section 2(a)(i)
thereof, and substituting, in lieu thereof, "11,054,444";
(ii) By deleting the reference to "Schedule 13G and the Form 3" in
Section 2(c) thereof and substituting, in lieu thereof, "Schedule 13D, Form 3
and Form 4 and any amendments thereto."
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(iii) By deleting the reference to "December 31, 2004" in the second
sentence of Section 3(a) thereof and substituting, in lieu thereof, "that date
which is four months following the date of the written request from the
Assignee"
(iv) By deleting Section 3(b) thereof in its entirety and including the
following in lieu thereof:
(b) Piggyback Registration. If the Company proposes to register
(including for this purpose a registration effected by the Company for
a stockholder or stockholders of the Company other than the Assignee
("Other Stockholders")) securities under the Securities Act on Form
X-0, X-0, X-0 or SB-2 (or any replacement or successor forms) (a
"Piggyback Registration"), the Company shall cause to be included in
such registration statement and use reasonable efforts to be
registered under the Securities Act all the Registrable Securities
that the Assignee shall request to be registered; provided, however,
that, unless the registration statement includes Other Stockholders,
such right of inclusion shall not apply to any registration statement
covering an underwritten offering unless the underwriter or its agent
agrees in writing to the inclusion of the Registrable Securities. The
Company shall have the absolute right to withdraw or cease to prepare
or file any registration statement for any offering referred to in
this Section 3 without any obligation or liability to the Assignee.
(v) By deleting the reference to "Form 3 and a Form 13G" in Section
3(c) thereof and substituting, in lieu thereof, "Schedule 13D, Form 3 and Form 4
and any amendments thereto."
(vi) By renumbering Section 8 thereof as Section 9, and inserting the
following as new Section 8:
"8. Company's Covenants.
The parties acknowledge that the Assignee resides in Switzerland
and has substantial other business interests and, as a result, the
Assignee is not in a position to supervise his investment in the
Company. Accordingly, the Company agrees that the following covenants
are reasonable and necessary to provide the Assignee the ability to
protect his investment in the Company. Accordingly, the Company makes
the following covenants:
(a) Affirmative Covenants. As long as the Assignee holds ten
percent (10%) or more of the issued and outstanding shares of Common
Stock of the Company, the Company shall ensure that:
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(1) The Company's periodic reports to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Periodic Reports"),
comply in all material respects with the provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
promulgated thereunder and do not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein (in light of the
circumstances under which they were made) not misleading.
(2) The Periodic Reports include all certifications and
statements required, if any, by (i) the Commission's Order dated June
27, 2002 pursuant to Section 21(a)(1) of the Exchange Act (File No.
4-460), (ii) Rule 13a-14 or 15d-14 under the Exchange Act, and (iii)
18 U.S.C. ss. 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002),
and each of such certifications and statements contain no
qualifications or exceptions to the matters certified therein other
than a knowledge qualification, permitted under such provision.
(3) The Company and the Subsidiary complies with all of the
provisions of the Xxxxxxxx-Xxxxx Act of 2002, and the provisions of
the Exchange Act and the Securities Act of 1933, as amended, relating
thereto, applicable to the Company and the Subsidiary.
(4) The financial statements (including related notes, if any)
contained in the Periodic Reports: (i) comply as to form in all
material respects with the published rules and regulations of the
Commission applicable thereto; (ii) are prepared in accordance with
United States generally accepted accounting principles applied on a
consistent basis throughout the periods covered; and (iii) fairly
present in all material respects the consolidated financial position
of the Company and the Subsidiary as of the respective dates thereof
and the consolidated results of operations and cash flows of the
Company and the Subsidiary for the periods covered thereby.
(5) The Company keeps, and causes the Subsidiary to keep,
adequate records and books of account with respect to its business
activities and properties, in which proper entries are made in
accordance with customary accounting practices reflecting all
financial transactions.
(6) Promptly after the sending or filing thereof, as the case may
be, of copies of any Periodic Reports, proxy or information
statements, registration statements or other documents with the
Commission or any governmental authority which may be substituted
therefor, the Company shall provide such documents to the Assignee.
(b) NEGATIVE COVENANTS. As long as the Assignee holds ten percent (10%) or
more of the issued and outstanding shares of Common Stock of the Company, the
Company shall not, unless otherwise consented to in writing by the Assignee:
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(1) Issue, or permit the Subsidiary to issue, any shares of
capital stock, or rights, options or warrants to purchase capital
stock, or securities convertible into capital stock; provided,
however, that, without such consent, the Company shall be permitted to
issue, in the aggregate, up to three-hundred and fifty thousand
(350,000) shares of Common Stock (subject to adjustment for stock
splits, combinations and similar transactions).
(2) Merge or consolidate, or permit the Subsidiary to merge or
consolidate, with any person or entity; nor acquire, nor permit the
Subsidiary to acquire, all or any substantial part of the properties
of any person or entity; nor sell, lease or otherwise dispose of, nor
permit the Subsidiary to sell, lease or otherwise dispose of, any of
its properties, except for sales of inventory in the ordinary course
of business.
(3) Make, or permit the Subsidiary to make, any loans or other
advances of money to any person or entity, other than (a) advances of
salary to employees, (b) extensions of trade credit, (c) deposits with
financial institutions, and (d) prepaid expenses, in each case, in the
ordinary course of business.
(4) Create, incur, assume, or suffer to exist, or permit the
Subsidiary to create, incur, assume, or suffer to exist, any
indebtedness, except for trade credit in the ordinary course of
business.
(5) Declare or make, or permit the Subsidiary to declare or make,
any dividends or other distributions with respect to capital stock, or
redeem or repurchase any capital stock.
(6) Enter into, or be a party to, or permit the Subsidiary to
enter into or be a party to, any transaction with any affiliate of the
Company or the Subsidiary or any holder of any capital stock of the
Company or the Subsidiary.
(7) Create or acquire, or permit the Subsidiary to create or
acquire, any subsidiary or joint venture arrangement.
(8) Agree to, or permit to occur, any amendment, supplement or
addition to the Company's or the Subsidiary's charter, articles or
certificate of incorporation, bylaws or other organizational
documents.
(c) PREEMPTIVE RIGHTS.
(1) As long as the Assignee holds ten percent (10%) or more of
the issued and outstanding shares of Common Stock of the Company,
prior to any sale or issuance by the Company of any shares of capital
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stock of the Company, or rights, options or warrants to purchase such
shares, or securities convertible into such shares (collectively, "New
Securities"), the Company shall first offer to sell the New Securities
to the Assignee by delivering a notice (the "New Issuance Notice") to
the Assignee stating the number and type of New Securities which the
Company desires to sell, and the price (the "Offer Price") and other
material terms and conditions upon which the Company desires to sell
the New Securities.
(2) The Assignee shall have the option, exercisable in writing
(the "Reply Notice") for a period of fifteen (15) days after the
effective date of the New Issuance Notice, to elect to purchase (at
the Offer Price and on the terms and conditions specified in the New
Issuance Notice) up to the Assignee's "Pro-Rata Share" (as defined
herein) of the New Securities. For purposes hereof, "Pro-Rata Share"
shall be the product of (A) the aggregate number of New Securities set
forth in the New Issuance Notice, multiplied by (B) the quotient of
(x) the number of issued and outstanding shares of Common Stock owned
by the Assignee as of the effective date of the New Issuance Notice,
divided by (y) the aggregate number of issued and outstanding shares
of Common Stock owned by all stockholders as of such date.
(3) If the Assignee elects not to purchase any of the New
Securities, the Company shall have sixty (60) days to sell any or all
of the New Securities on terms and conditions no more favorable to the
purchasers than those set forth in the New Issuance Notice. Upon
termination of such sixty (60) day period, the Company shall not
thereafter sell any New Securities without first offering such New
Securities to the Assignee in the manner set forth herein.
(d) Indemnification. The Company shall indemnify and hold harmless the
Assignee, his heirs, executors, personal representatives, affiliates,
successors and assigns, from and against any and all losses, liabilities,
damages, penalties, costs, fees and expenses (including legal fees and
disbursements) which may result, directly or indirectly, from the Company's
misrepresentations or misstatements contained in this Agreement or breaches
hereof."
(vii) By deleting the references in Section 8(d) thereof (as renumbered as
Section 9(d)) to "Xxxx Xxxxx, 00000 Xxxxxxxxxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000" and "Los Angeles
time," and substituting in lieu thereof, "Xxxxxxx Xxxxxx, 0000 Xxxxxxxxxx Xxxx &
Xxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, facsimile number (000) 000-0000, or
such other address or facsimile number as the Assignee may specify for such
purposes by notice to the Company delivered in accordance with this Section" and
"Baltimore Maryland time" respectively.
(viii) By deleting the last sentence of paragraph (e) of Section 8 and
substituting, in lieu thereof, "The Assignee may assign its respective rights
hereunder."
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(ix) By adding new paragraph (i) to Section 8 thereof (as renumbered as
Section 9) as follows:
(i) Time is of the Essence. Time is of the essence in this Agreement.
3. REPRESENTATIONS BY COMPANY. The Company hereby represents and warrants
to the Stockholder as follows, as of the Effective Date:
(i) Each of the representations and warranties set forth in Section 5
of the Conversion Agreement are true and correct as of the Effective Date as
though made on such date. For purposes hereof, the term "Agreement," as used in
such Section 5, shall mean and include each of the Conversion Agreement and this
Amendment.
(ii) The authorized capital stock of the Company, immediately prior to
the Effective Date consists of 50,000,000 shares of Common Stock, par value
$0.001 per share, 20,279,557 shares of which are issued and outstanding. The
authorized capital stock of the Company on and immediately after the Effective
Date (taking into account the transactions contemplated in this Agreement) shall
consist of 50,000,000 shares of Common Stock, par value $0.001 per share,
27,592,890 shares of which will be issued and outstanding. Except for the
Subsidiary, the Company has no subsidiaries. The Subsidiary has no subsidiaries.
The Subsidiary is duly organized, validly existing and in good standing under
the laws of the State of Nevada. The Company owns all of the issued and
outstanding shares of capital stock of the Subsidiary and such shares are duly
authorized, validly issued fully paid and nonassessible and free of any liens or
encumbrances. Except as set forth on Schedule 1 hereof, neither the Company nor
the Subsidiary: (a) has any authorized or outstanding subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company or the
Subsidiary; (b) is committed to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness or assets of the
Company or the Subsidiary; and/or (c) has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as provided in this Amendment, no person
or entity is entitled to any preemptive or similar right with respect to the
issuance of any capital stock of the Company or the Subsidiary. Each of the
Company and the Subsidiary has provided copies of its respective Articles of
Incorporation and Bylaws, in each case as amended through, and in effect on, the
date of this Amendment.
(iii) The Company, the Board of Directors and the Subsidiary have taken
all necessary steps to render any "business combination," "moratorium," "control
share" or other state anti-takeover statute or regulation applicable to the
Company inapplicable to the Stockholder, the Debenture, the $45,000 Promissory
Note, the Prior Loan Documents, the Shares, the Warrants and the transactions
contemplated therein, including the issuance of shares of Common Stock on the
terms and conditions set forth therein.
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(iv) The execution, delivery and performance of the Agreement and this
Amendment do not and will not (with or without the passage of time or the giving
of notice): (a) violate or conflict with the articles of incorporation or bylaws
of the Company or the Subsidiary; (b) violate or conflict with any law,
regulation, judgment or order applicable to the Company or the Subsidiary; (c)
violate any rule of any self-regulatory organization applicable to the Company
or the Subsidiary; (d) violate or conflict with, result in a breach of,
constitute a default or otherwise cause any loss of benefit under any material
agreement or other material obligation to which the Company and/or the
Subsidiary is a party, or by which the Company, the Subsidiary and/or any of
their respective properties are otherwise bound; (e) result in the creation of
any encumbrance pursuant to, or give rise to any penalty, acceleration of
remedies, right of termination or otherwise cause any alteration of any rights
or obligations of any party under any contract to which the Company and/or the
Subsidiary is a party or by which the Company, the Subsidiary and/or any of
their respective properties are otherwise bound; or (f) require any consent,
notice, authorization, waiver by or filing with any governmental agency,
administrative body or other third party, other than the filing of a Form D with
the Securities and Exchange Commission (the "Commission") and any state
securities commission.
(v) The Company's periodic reports filed pursuant to the Exchange Act
(the "Past Periodic Reports"), comply in all material respects with the
provisions of the Exchange Act of 1934 and the rules promulgated thereunder and
do not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein (in light of the circumstances under which they were made) not
misleading. The Past Periodic Reports include all certifications and statements
required, if any, by (A) the Commission's Order dated June 27, 2002 pursuant to
Section 21(a)(1) of the Exchange Act (File No. 4-460), (B) Rule 13a-14 or 15d-14
under the Exchange Act, and (C) 18 U.S.C. ss. 1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002), and each of such certifications and statements
contain no qualifications or exceptions to the matters certified therein other
than a knowledge qualification, permitted under such provision, and have not
been modified or withdrawn, and neither the Company nor any of its officers has
received any notice from the Commission or any other governmental body
questioning or challenging the accuracy, completeness, form or manner of filing
or submission of such certifications or statements. The Company is in material
compliance with all of the provisions of the Xxxxxxxx-Xxxxx Act of 2002, and the
provisions of such Exchange Act and the Securities Act of 1933, as amended,
relating thereto, applicable to the Company. The financial statements (including
related notes, if any) contained in the Past Periodic Reports: (i) complied as
to form in all material respects with the published rules and regulations of the
Commission applicable thereto; (ii) were prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods covered; and (iii) fairly presented in all material
respects the consolidated financial position of the Company and the Subsidiary
as of the respective dates thereof and the consolidated results of operations
and cash flows of the Company and the Subsidiary for the periods covered
thereby.
(vi) As of the date of this Amendment, and as a condition of the
execution and delivery of this Amendment by the Stockholder, the officers of the
Company have delivered an officers' certificate (the "Officers' Certificate") to
the Stockholder certifying certain documents and actions of the Board of
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Directors and the officer of the Subsidiary has delivered an officer's
certificate (the "Subsidiary Officers' Certificate") to the Stockholder
certifying certain documents and actions of the board of directors of the
Subsidiary.
(vii) The Company has all requisite power and authority (corporate or
otherwise) to execute, deliver and perform this Amendment and the transactions
contemplated hereby, and the execution, delivery and performance by the Company
of this Amendment has been duly authorized by all requisite action by the
Company, including approval by each Disinterested Director and this Amendment,
when executed and delivered by the Company, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance or other similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
(viii) The Stockholder may be deemed an "interested shareholder" of the
Corporation as such term is defined in Section 607.0901 of the Florida Business
Corporation Act; Xxxx Xxxxxxx has been a member of the Board of Directors since
October 29, 2002 and Xxx Ash has been a member of the Board of Directors since
September 30, 2003 and was elected to fill a vacancy on the Board of Directors
by Xxxx Xxxxxxx, who, at the time of the election of Xxx Ash to the Board of
Directors, was the sole member of the Board; and each of Xxxx Xxxxxxx and Xxx
Ash is a "disinterested director," as such term is defined in Section 607.0901
of the Florida Business Corporation Act (each, a "Disinterested Director"), with
respect to the Stockholder.
(ix) At the time each of the Conversion Agreement, the Debenture, the
$45,000 Promissory Note, each of the Prior Loan Documents, each of the Loan
Documents and the transactions included therein, including the issuance of
shares of Common Stock on the terms and conditions set forth therein, was
authorized, executed and delivered by the Company (and the Subsidiary, where
applicable), the Company (and the Subsidiary, where applicable) had all
requisite power and authority (corporate or otherwise) to execute, deliver and
perform each of the Debenture, the $45,000 Promissory Note, each of the Prior
Loan Documents, each of the Loan Documents and the transactions included
therein, including the issuance of Common Stock on the terms and conditions set
forth therein, respectively, the execution, delivery and performance by the
Company (and the Subsidiary, where applicable) of each of the Conversion
Agreement, the Debenture, the $45,000 Promissory Note, each of the Prior Loan
Documents, each of the Loan Documents and each of the transactions included
therein, including the issuance of shares of Common Stock on the terms and
conditions set forth therein, have been duly authorized by all requisite action
by the Company (and the Subsidiary, where applicable), including, in each case,
approval by each Disinterested Director prior to the date of each of the
Conversion Agreement, the Debenture, the $45,000 Promissory Note, each of the
Prior Loan Documents, each of the Loan Documents and each of the transactions
included therein, including the issuance of shares of Common Stock on the terms
and conditions set forth therein, respectively, and each of the Conversion
Agreement, the Debenture, the $45,000 Promissory Note, each of the Prior Loan
Documents and each of the Loan Documents have been executed and delivered by the
Company (and the Subsidiary, where applicable), and constitute a valid and
binding obligation of the Company (and the Subsidiary, where applicable),
enforceable against the Company (and the Subsidiary, where applicable) in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, or other similar laws affecting
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creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) except to the extent that the Debenture, the
45,000 Promissory Note and/or any of the Prior Loan Documents has been
superceded by the Debenture, any of the Prior Loan Documents, any of the Loan
Documents, the Conversion Agreement and/or this Amendment.
(x) At the time the Additional Loan and the transactions included
therein, including the issuance of Common Stock on the terms and conditions set
forth therein, was authorized and entered into by the Company and the
Subsidiary, the Company and the Subsidiary had all requisite power and authority
(corporate or otherwise) to enter into and perform the Additional Loan and the
transactions included therein, including the issuance of Common Stock on the
terms and conditions set forth therein, the entry into and performance by the
Company and the Subsidiary of Additional Loan and the transactions included
therein, including the issuance of Common Stock on the terms and conditions set
forth therein, have been duly authorized by all requisite action by the Company
and the Subsidiary, including approval by each Disinterested Director prior to
the date of the Additional Loan and each of the transactions included therein,
including the issuance of Common Stock on the terms and conditions set forth
therein, the Additional Loan was validly entered into by the Company and the
Subsidiary, and constitutes a valid and binding obligation of the Company and
the Subsidiary enforceable against the Company and the Subsidiary in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance or other similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity) except to the extent that the Additional Loan has been superceded by the
Loan Documents and the Loan Documents fairly and accurately reflect the
agreement of the Company, the Subsidiary and the Stockholder at the time the
Additional Loan was made.
(xi) No representation or warranty by the Company contained in the
Agreement and/or this Amendment or any information in any schedule, instrument,
or document furnished or to be furnished by the Company, the Subsidiary, or any
of their respective officers, directors, employees, agents or representatives
pursuant hereto (including, but not limited to, the Officers' Certificate and
the Subsidiary Officer's Certificate), contains any untrue statement of a
material fact or omits or fails to state any material fact necessary in order to
make the statements contained therein, in light of the circumstances in which
made, not misleading.
4. RELEASE. The Stockholder, for himself and his past, present and future
heirs, executors, personal representatives, affiliates, successors and assigns
(separately and collectively, the "Stockholder Affiliates"), does hereby
irrevocably and unconditionally release, acquit, remise, exonerate and forever
discharge the Company, the Subsidiary and their respective past, present and
future officers, directors, successors and assignors (separately and collective,
the "Company Affiliates"), of and from any and all actions, causes of action,
suits, debts, dues, sums of money, accounts, claims, demands, grievances,
allegations, covenants, contracts, controversies, promises, agreements, damages,
costs and expenses, attorneys fees, obligations, liabilities and judgments, of
whatever kind or nature, known or unknown, now existing or which may develop in
the future, in law or in equity or otherwise (collective, "Claims"), which the
Stockholder or Stockholder Affiliates (or any of them) ever had, now has, or
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can, shall or may have in the future, against the Company or the Company
Affiliates (or any of them), from the beginning of time through the Effective
Date with respect to the Financing Agreement and the Additional Issuances,
except for any and all Claims by the Stockholder or Stockholder Affiliates (or
any of them) relating to this Amendment.
5. REIMBURSEMENT OF STOCKHOLDER'S FEES AND EXPENSES. The Company shall be
responsible for, and shall pay or reimburse the Stockholder for, all the fees
and expenses of the Stockholder's legal counsel relating to the preparation and
negotiation of the Conversion Agreement and this Amendment, the consummation of
the transactions contemplated thereby and hereby, all filings related thereto
and hereto with the Commission or any other governmental agency, and any and all
disputes arising out of the Conversion Agreement, this Amendment and/or such
transactions. The provisions of this Section 5 are in addition to and not in
limitation of any provisions of the Conversion Agreement governing the same
subject matter.
6. RATIFICATION. The parties hereto expressly ratify, affirm and adopt the
Agreement as amended herein, and agree that the Agreement as amended shall
continue in full force and effect in accordance with its terms. In the event
there are any conflicts between the terms of the Agreement and this Amendment,
this Amendment shall control.
7. REMEDIES. The Company acknowledges and agrees that irreparable damage to
the Stockholder would result in the event the Conversion Agreement and this
Amendment are not specifically enforced. Therefore, the rights and obligations
of the parties herein shall be enforceable in a court by a decree of specific
performance, and appropriate injunctive relief may be applied for and granted in
connection therewith. Such remedies, and all other remedies provided for in the
Agreement and/or in this Amendment, shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which the Stockholder
may have under the Agreement, this Amendment or otherwise.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties. The
Company may not assign its rights or obligations hereunder without the prior
written consent of the Stockholder. The Stockholder may assign its respective
rights hereunder.
9. ENTIRE AGREEMENT. The Agreement and this Amendment constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supercede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the parties whether oral or written.
10. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Amendment and/or the Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Amendment and/or the Agreement shall be
commenced in the United States District Court for the Northern District of
-11-
Maryland or any state court located in Baltimore, Maryland (the "Applicable
Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Applicable Courts for the adjudication of any dispute this
under this Amendment and/or the Agreement or in connection with this Amendment
and/or the Agreement or with any transaction contemplated by this Amendment
and/or the Agreement or discussed in this Amendment and/or the Agreement, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, or such Applicable Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Amendment and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Amendment and/or
the Agreement.
11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each party hereto has executed this Amendment, or
caused this Amendment to be executed by its duly authorized officer, as of the
Effective Date.
COMPANY:
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WITNESS SBS INTERACTIVE, CO.
By: /s/ Xxxx Xxxxxxx
--------------------------------- ---------------------------------
Name: Xxxx Xxxxxxx
Title: President
WITNESS STOCKHOLDER:
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/s/ Xxxxxx Xxxx
--------------------------------- ------------------------------------
Xxxxxx Xxxx
[Signature Page to First Amendment to Assignment and Agreement to Convert]
