REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.2
AGREEMENT
dated as
of December 21,
2005, among Mercator Momentum Fund, L.P. ("MMF"),
Mercator Momentum Fund III, L.P. ("MMF
III"),
Monarch Pointe Fund, Ltd. ("Monarch")
(collectively, the "Funds"),
M.A.G. Capital, LLC ("MAG")
(the Funds and any other holder being referred to as a "Holder"
and collectively as the "Holders"),
and Interactive Television Networks, Inc., a Nevada corporation (the
"Company").
WHEREAS,
pursuant to a Subscription Agreement dated even date herewith among MAG,
the
Funds and the Company (the "Subscription
Agreement"),
on the date hereof the Funds and MAG have agreed to purchase, in exchange
for
(a) tendering the IBD Securities (as defined in the Subscription Agreement)
owned by the Funds, (b) assigning the IBD Agreements (as defined in the
Subscription Agreement), and (c) paying an aggregate of $2,000,000 in cash,
an
aggregate of 3,333,333 shares of Series A Convertible Preferred Stock (the
"Series
A Stock")
from the Company, and have the right to cause the Series A Stock to be converted
into shares of Common Stock, $0.001 par value (the "Common
Stock"),
of the Company, pursuant to the conversion formula set forth in the Certificate
of Designation of Preferences and Rights of Series A Convertible Preferred
Stock
as filed with the Secretary of State of the State of Nevada (the "Certificate
of Designation");
WHEREAS,
the Funds and MAG have acquired warrants (the "Warrants")
from the Company, pursuant to which the Funds and MAG have the right to purchase
in the aggregate up to 265,000 shares of Common Stock;
WHEREAS,
the Company desires to grant to the Holders the registration rights set forth
herein with respect to the shares of Common Stock issuable upon the conversion
of the Series A Stock and the exercise of the Warrants.
NOW,
THEREFORE,
the parties hereto mutually agree as follows:
1. Registrable
Securities.
As used
herein the terms "Registrable
Security"
means
each of the shares of Common Stock issued (i) upon the conversion of the
Series
A Stock (the "Conversion
Shares")
and
(ii) upon exercise of the Warrants (the "Warrant
Shares"),
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security as of the date of
determination that (a) it has been effectively registered under the
Securities Act of 1933, as amended (the "Securities
Act"),
and
disposed of pursuant thereto, or (b) registration under the Securities
Act
is no longer required for the immediate public distribution of such security.
The term "Registrable
Securities"
means
any and/or all of the securities falling within the foregoing definition
of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution
or
enlargement of the rights granted pursuant to this Section 1.
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2. Registration.
(a) The
Company shall file a registration statement (the "Registration
Statement")
with the Securities and Exchange Commission (the "SEC")
no later than the date that is one hundred thirty (130) days after the Closing
Date (as defined in the Subscription Agreement) in order to register the
resale
of the Registrable Securities under the Securities Act. The Company shall
cause
the Registration Statement to become effective no later than two hundred
eighty
(280) days after the Closing Date. Once effective, the Company shall maintain
the effectiveness of the Registration Statement until the earliest of the
following dates (the "Expiration
Date")
(i) the date that all of the Registrable Securities have been sold,
or
(ii) the date that the Company receives an opinion of counsel to the
Company that all of the Registrable Securities may be freely traded without
registration under the Securities Act, under Rule 144 promulgated
under the
Securities Act or otherwise..
(b) The
Company will initially include in the Registration Statement as Registrable
Securities three million five hundred ninety-eight thousand three hundred
thirty-three (3,598,333) shares of Common Stock, which number represents
the
number of shares of Common Stock the Series A Stock may be converted into
on the
date hereof plus the number of Warrant Shares which may be obtained upon
exercise of the Warrant on the date hereof.
(c) If
the
Company fails to file the Registration Statement with the SEC by the date
that
is one hundred thirty (130) days after the Closing Date, the Company shall
pay
to Holders an amount equal to One Thousand Dollars ($1,000) per day until
the
Registration Statement is declared effective.
3. Covenants
of the Company with Respect to Registration.
The
Company covenants and agrees as follows:
(a) If
any stop order shall be issued by the SEC in connection therewith, the Company
shall use commercially reasonable efforts to obtain promptly the removal
of such
order. Following the effective date of the Registration Statement, the Company
shall, upon the request of any Holder, forthwith supply such reasonable number
of copies of the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Securities Act, and any other documents
necessary or incidental to the public offering of the Registrable Securities,
as
shall be reasonably requested by the Holder to permit the Holder to make
a
public distribution of the Holder's Registrable Securities. The obligations
of
the Company hereunder with respect to the Holder's Registrable Securities
are
subject to the Holder's furnishing to the Company such appropriate information
concerning the Holder, the Holder's Registrable Securities and the terms
of the
Holder's offering of such Registrable Securities as the Company may reasonably
request in writing.
(b) The
Company shall pay all costs, fees and expenses in connection with the
Registration Statement filed pursuant to Section 2 hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses; provided, however, that each Holder shall
be
solely responsible for the fees of any counsel retained by the Holder in
connection with such registration and any transfer taxes or underwriting
discounts, commissions or fees applicable to the Registrable Securities sold
by
the Holder pursuant thereto.
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(c) The
Company will take all actions which may be required to qualify or register
the
Registrable Securities included in the Registration Statement for the offer
and
sale under the securities or blue sky laws of such states as are reasonably
requested by each Holder of such securities, provided that the Company shall
not
be obligated to execute or file any general consent to service of process
or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
4. Additional
Terms.
(a) The
Company shall indemnify and hold harmless the Holders and each underwriter,
within the meaning of the Securities Act, who may purchase from or sell for
any
Holder, any Registrable Securities, from and against any and all losses,
claims,
damages and liabilities caused by any untrue statement of a material fact
contained in the Registration Statement, any other registration statement
filed
by the Company under the Securities Act with respect to the registration
of the
Registrable Securities, any post-effective amendment to such registration
statements, or any prospectus included therein or caused by any omission
to
state therein a material fact required to be stated therein or necessary
to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission
based
upon information furnished or required to be furnished in writing to the
Company
by the Holders or underwriter expressly for use therein, which indemnification
shall include each person, if any, who controls any Holder or underwriter
within
the meaning of the Securities Act and each officer, director, employee and
agent
of each Holder and underwriter; provided, however, that the indemnification
in
this Section 4(a) with respect to any prospectus shall not inure to
the
benefit of any Holder or underwriter (or to the benefit of any person
controlling any Holder or underwriter) on account of any such loss, claim,
damage or liability arising from the sale of Registrable Securities by the
Holder or underwriter, if a copy of a subsequent prospectus correcting the
untrue statement or omission in such earlier prospectus was provided to such
Holder or underwriter by the Company prior to the subject sale and the
subsequent prospectus was not delivered or sent by the Holder or underwriter
to
the purchaser prior to such sale and provided further, that the Company shall
not be obligated to so indemnify any Holder or any such underwriter or other
person referred to above unless the Holder or underwriter or other person,
as
the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the Registration Statement and each person, if any,
who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the Registration Statement, any
registration statement or any prospectus required to be filed or furnished
by
reason of this Agreement or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission based upon information furnished
in
writing to the Company by the Holder or underwriter expressly for use therein.
(b) The
Holders shall indemnify and hold harmless the Company, from and against any
and
all losses, claims, damages and liabilities caused by any untrue statement
of a
material fact contained in the Registration Statement, any registration
statement or any prospectus required to be filed or furnished by reason of
this
Agreement or caused by any omission to state therein a material fact required
to
be stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages or liabilities are caused by any
material untrue statement or material omission based upon information furnished
in writing to the Company by any Holder expressly for use therein.
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(c) If
for any reason the indemnification provided for in the preceding section
is held
by a court of competent jurisdiction to be unavailable to an indemnified
party
with respect to any loss, claim, damage, liability or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by
the indemnified party as a result of such loss, claim, damage or liability
in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
(d) Promptly
after receipt by an indemnified party under this Section 4 of notice
of the
commencement of any action (including
any
governmental action), such indemnified party will, if a claim in respect
thereof
is to be made against any indemnifying party under this Section 4,
deliver
to the indemnifying party a written notice of the commencement thereof, and
the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided,
however,
that an
indemnified party shall have the right to retain its own counsel, with the
fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party
would be inappropriate due to actual or potential conflict of interests between
such indemnified party and any other party represented by such counsel in
such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall relieve
such indemnifying party of liability to the indemnified party under this
Section 4 only to the extent the indemnifying party is prejudiced
as a
result thereof.
(e) Neither
the filing of a Registration Statement by the Company pursuant to this Agreement
nor the making of any request for prospectuses by the Holder shall impose
upon
any Holder any obligation to sell the Holder's Registrable Securities.
(f) Each
Holder, upon receipt of notice from the Company that an event has occurred
which
requires a Post-Effective Amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly discontinue
the
sale of Registrable Securities until the Holder receives a copy of a
supplemented or amended prospectus from the Company, which the Company shall
provide as soon as practicable after such notice.
(g) If
the Company fails to keep the Registration Statement referred to above
continuously effective during the requisite period, then the Company shall,
promptly upon the request of any Holder, use commercially reasonable efforts
to
update the Registration Statement or file a new registration statement covering
the Registrable Securities remaining unsold, subject to the terms and provisions
hereof, so that the registration of such unsold Registered Securities is
maintained for a number of days beyond the Expiration Date equal to the number
of days that the Holder is unable to sell pursuant to Section 4(f)
above.
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(h) Each
Holder agrees to provide the Company with any information or undertakings
reasonably requested by the Company in order for the Company to include any
appropriate information concerning the Holder in the Registration Statement
or
in order to promote compliance by the Company or the Holder with the Securities
Act.
() Each
Holder, by its acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of a Registration Statement hereunder.
(j) Each
Holder, on behalf of itself, its affiliates, its successors and assigns and
any
other direct or indirect transferee holding any of the Warrants, the Series
A
Stock or the Registrable Securities, hereby covenants and agrees not to,
directly or indirectly, offer to "short sell", contract to "short sell" or
otherwise "short sell" or encourage others to "short sell" any securities
of the
Company, including, without limitation, shares of Common Stock that will
be
received as a result of the conversion of the Series A Stock or the exercise
of
the Warrants; provided, however, that nothing contained herein shall prohibit
the Funds or MAG from selling any Registrable Securities "against the box."
5. Governing
Law.
The
Registrable Securities will be, if and when issued, delivered in California.
This
Agreement shall be deemed to have been made and delivered in the State of
California
and
shall be governed as to validity, interpretation, construction, effect and
in
all other respects by the internal substantive laws of the State of California,
without
giving effect to the choice of law rules thereof.
6. Amendment.
This
Agreement may only be amended by a written instrument executed by the Company
and the Holders.
7. Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties hereto with respect
to
the subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
8. Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
document.
9. Notices.
All
communications hereunder shall be in writing and shall be hand delivered,
mailed
by first-class mail, couriered by next-day air courier or by facsimile at
the
addresses set forth below.
| If to the Funds |
c/o
M.A.G. Capital, LLC
000 Xxxxx
Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx,
XX 00000
Attention:
Xxxxx Xxxxxxxxx
|
|
| With a copy to |
Xxxxxxxx
Xxxxxx Xxxxxxx & Hampton LLP
000
Xxxxx Xxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000-0000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Attention: Xxxxx
X. Xxxxx
|
|
| If to the Company, |
00000
Xxxxx Xxxx, Xxxxx 000
Xxxxxx
Xxxxxx, XX 00000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000)
000-0000
Attention:
Xxxxxx Xxxxxxxx, CFO
|
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All
such
notices and communications shall be deemed to have been duly given: (i) when
delivered by hand, if personally delivered; (ii) five business days after
being
deposited in the mail, postage prepaid, if mailed certified mail, return
receipt
requested; (iii) one business day after being timely delivered to a next-day
air
courier guaranteeing overnight delivery; (iv) the date of transmission if
sent
via facsimile to the facsimile number as set forth in this Section or the
signature page hereof prior to 4:00 p.m. on a business day, or (v) the business
day following the date of transmission if sent via facsimile at a facsimile
number set forth in this Section or on the signature page hereof after 4:00
p.m.
or on a date that is not a business day. Change of a party's address or
facsimile number may be designated hereunder by giving notice to all of the
other parties hereto in accordance with this Section.
10. Binding
Effect; Benefits.
Any
Holder may assign its rights hereunder. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
heirs,
legal representatives, successors and permitted assigns. Nothing herein
contained, express or implied, is intended to confer upon any person other
than
the parties hereto and their respective heirs, legal representatives and
successors, any rights or remedies under or by reason of this Agreement.
11. Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of
any of
the terms or provisions of this Agreement.
12. Severability.
Any
provision of this Agreement which is held by a court of competent jurisdiction
to be prohibited or unenforceable in any jurisdiction(s) shall be, as to
such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
13. Jurisdiction.
Each of
the parties irrevocably agrees that any and all suits or proceedings based
on or
arising under this Agreement may be brought only in and shall be resolved
in the
federal or state courts located in the City of Los Angeles, California
and
consents to the jurisdiction of such courts for such purpose. Each of the
parties irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in any such court. Each of the parties
further agrees that service of process upon such party mailed by first class
mail to the address set forth in Section 9 shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
Nothing herein shall affect the right of either party
to serve
process in any other manner permitted by law. Each of the parties agrees
that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in
any
other lawful manner.
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14. Attorneys'
Fees and Disbursements.
If any
action at law or in equity is necessary to enforce or interpret the terms
of
this Agreement, the prevailing party or parties shall be entitled to receive
from the other party or parties reasonable attorneys’ fees and disbursements in
addition to any other relief to which the prevailing party or parties may
be
entitled.
[The
balance of this page is intentionally left blank.]
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IN
WITNESS WHEREOF,
this Agreement has been executed and delivered by the parties hereto as of
the
date first above written.
| INTERACTIVE TELEVISION NETWORKS, INC. | ||
| |
|
|
| By: | ||
|
Name:
|
Xxxxxxx Xxxxxxxx |
|
| Its: | President | |
| FUNDS: | ||
| Mecator Momentum Fund, L.P. | ||
|
|
By:
|
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
|
||
|
|
Mecator Momentum Fund III, L.P. | |
|
By:
|
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
| Monarch Pointe Fund Ltd. | ||
|
By:
|
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
| MAG: | ||
| M.A.G. Capital, LLC | ||
|
By:
|
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
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