Exhibit 10.1
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."
(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:
(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:
(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 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."
(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.
(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 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 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 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
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.
WITNESS COMPANY:
SBS INTERACTIVE, CO.
By: /s/ Xxxx Xxxxxxx (SEAL)
--------------------------
Name: Xxxx Xxxxxxx
Title: President
STOCKHOLDER:
/s/ Xxxxxx Xxxx
--------------------------
Xxxxxx Xxxx
[Signature Page to First Amendment to Assignment and Agreement to Convert]
