Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
Interruption Television, Inc.
a Nevada corporation
and
Bongiovi Entertainment, Inc., a Florida corporation
effective as of September ___, 2002
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, is made and entered into this
___ day of September 2002, by and between Interruption Television, Inc., a
Nevada corporation ("ITV") and Bongiovi Entertainment, Inc., a Florida
corporation ("Bongiovi"), and certain shareholders of Bongiovi listed on the
attached Schedule I ("Bongiovi Shareholders"), and specifically incorporated
herein by reference (Bongiovi and Bongiovi Shareholders shall be hereinafter
jointly referred to as "Bongiovi Parties").
PREMISES
A. This Agreement provides for the reorganization of Bongiovi with and into
ITV, with Bongiovi becoming a wholly-owned subsidiary of ITV, and in connection
therewith, the exchange of the outstanding common stock of Bongiovi into shares
of common voting stock of ITV, all for the purpose of effecting a tax-free
reorganization pursuant to sections 351, 354 and 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended ("IRC"). On the terms and conditions set forth
herein, the parties hereby adopt the Plan of Reorganization embodied in this
Agreement.
B. The boards of directors of Bongiovi and ITV have determined, subject to
the terms and conditions set forth in this Agreement, that the exchange
contemplated hereby, as a result of which Bongiovi would become a wholly owned
subsidiary of ITV is desirable and in the best interests of their stockholders.
This Agreement is being entered into for the purpose of setting forth the terms
and conditions of the proposed exchange.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
BONGIOVI AND BONGIOVI SHAREHOLDERS
Bongiovi and each of Bongiovi Shareholders, individually and neither
jointly nor severally, represents and warrants to ITV, except as disclosed in
this Agreement or in the case of any representation qualified by its terms to a
particular Schedule, as hereinafter defined, of Bongiovi attached hereto, that
the statements made in this Article I will be correct and complete at the
Effective Date, as hereinafter defined, provided, however, if there is no
Effective Date, then no party shall be liable for any inaccuracy.
SECTION 1.1 SHAREHOLDERS. Each of the Bongiovi Shareholders is the owner of
all of the issued and outstanding shares of the capital stock of Bongiovi
attributed to such Shareholder on Schedule I; each Bongiovi Shareholder has full
legal title to all Bongiovi Shares described in Schedule I as being owned by
such Bongiovi Shareholder free from any and all claims, liens or other
encumbrances. Bongiovi Shareholders have the unqualified right to sell,
transfer, and dispose of their respective Bongiovi Shares subject to the
applicable securities laws and the laws of bankruptcy, insolvency and general
creditors' rights. Each Bongiovi Shareholder represents and warrants that, in
regards to such Bongiovi Shareholder's shares of Bongiovi, such Bongiovi
Shareholder has full right and authority to execute this Agreement and to
transfer his shares of Bongiovi to ITV.
SECTION 1.2 ORGANIZATION. Bongiovi is a corporation duly organized, validly
existing, and in good standing under the laws of Florida and has the corporate
power and is duly authorized, qualified, franchised and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in all material
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respects as it is now being conducted, including qualification to do business as
a foreign corporation in the jurisdiction in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the Bongiovi Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation, bylaws and
amendments thereto of Bongiovi as in effect on the date hereof. The execution
and delivery of this Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not
violate any provision of Bongiovi's articles of incorporation or bylaws.
Bongiovi has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement.
SECTION 1.3 CAPITALIZATION. The authorized capitalization of Bongiovi
consists of 25 million Class A voting common stock shares, $0.001 par value per
share (the "Bongiovi Common Shares"). As of the date of this Agreement, 7
million of the authorized Bongiovi Common Shares are issued and outstanding. All
issued and outstanding shares are legally issued, fully paid and nonassessable
and are not issued in violation of the preemptive or other rights of any person.
Except as may be disclosed in Bongiovi Schedules, Bongiovi has no other
securities, warrants or options authorized or issued.
SECTION 1.4 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as otherwise
set forth in the Bongiovi Schedules, Bongiovi does not have any other
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation. For purposes herein, all references to Bongiovi shall include
Bongiovi and all of its subsidiaries.
SECTION 1.5 FINANCIAL INFORMATION.
(a) Attached hereto as Schedule 1.5 are audited financial
statements from the inception of Bongiovi until December 31, 2001 and
unaudited financial statements for the seven months period ended July
31, 2002 (collectively, the "Bongiovi Financial Statements"), subject
to the provisions of Section 4.2. Bongiovi Financial Statements are
correct and complete in all respects and fairly present, in accordance
with generally accepted accounting principles ("GAAP"), consistently
applied, the consolidated financial position of Bongiovi as of such
dates and the results of operations and changes in financial position
for such periods all in accordance with GAAP. The Bongiovi Financial
Statements comply with the requirements of Regulation S-X of the
Securities and Exchange Commission and the provisions of the
Securities Act of 1933 (the "1933 Act") and will be suitable for
inclusion in any subsequent filing with any state or federal
regulatory agency under the Securities Exchange Act of 1934 (the "1934
Act").
(b) Bongiovi has no liabilities with respect to the payment of
any federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) Bongiovi has filed all state, federal and local income tax
returns, including extensions of such tax returns, if any, required to
be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of Bongiovi are
in all material respects complete and correct and have been maintained
in accordance with good business accounting practices; and
(e) except as and to the extent disclosed herein and the Bongiovi
Schedules, Bongiovi has no material contingent liabilities, direct or
indirect, matured or unmatured.
SECTION 1.6 INFORMATION. The information concerning Bongiovi set forth in
this Agreement and in the Bongiovi Schedules to the best of Bongiovi's
knowledge, is complete and accurate in all material respects and does not
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contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading.
SECTION 1.7 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 1.7, there are no existing options, warrants, calls or
commitments of any character to which Bongiovi is a party and by which it is
bound.
SECTION 1.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
this Agreement, the Bongiovi Schedules, or as otherwise disclosed to ITV, since
July 31, 2002:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Bongiovi; or
(ii) any damage, destruction or loss to Bongiovi (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets or condition of Bongiovi;
(b) Bongiovi has not: (i) amended its articles of incorporation
or bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Bongiovi; (iv) made any material change in
its method of management, operation or accounting other than in its
ordinary course of business; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees.
(c) Bongiovi has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contin gent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Bongiovi balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted
any amendment or termination of any contract, agreement or license to
which it is a party if such amendment or termination is material,
considering the business of Bongiovi; or (vi) issued, delivered or
agreed to issue or deliver any stock, bonds or other corporate
securities, including debentures (whether authorized and unissued or
held as treasury stock); and
(d) to the best knowledge of Bongiovi, it has not become subject
to any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of Bongiovi.
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SECTION 1.9 TITLE AND RELATED MATTERS. Except as provided herein or in the
Bongiovi Schedules, Bongiovi has good and marketable title to and is the sole
and exclusive owner of all of its properties, inventory, interests in properties
and assets, real and personal including technical information, copyrights,
trademarks, service marks and tradenames (collectively, the "Assets") which are
reflected in the Bongiovi Schedules or acquired after that date (except
properties, interests in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges or encumbrances except: (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not and
will not, materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the Bongiovi Schedules. Except as set forth in the Bongiovi Schedules, Bongiovi
owns free and clear of any liens, claims, encumbrances, royalty interests or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management or other information utilized in connection with Bongiovi's business.
Except as set forth in the Bongiovi Schedules, no third party has any right to,
and Bongiovi has not received any notice of infringement of or conflict with
asserted rights of others with respect to any product, technology, data, trade
secrets, know-how, proprietary techniques, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse affect
on the business, operations, financial conditions or income of Bongiovi or any
material portion of its properties, assets or rights.
SECTION 1.10 LITIGATION AND PROCEEDINGS. To the best of Bongiovi's
knowledge and belief, there are no actions, suits, proceedings or investigations
pending or threatened by or against Bongiovi or affecting Bongiovi or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign or before any arbitrator of any kind
that would have a material adverse affect on the business, operations, financial
condition or income of Bongiovi. Bongiovi does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
SECTION 1.11 CONTRACTS.
(a) Except as included or described in the Bongiovi Schedules,
there are no material contracts, agreements, franchises, license
agreements or other commitments to which Bongiovi is a party or by
which it or any of its assets, products, technology or properties are
bound;
(b) Except as included or described in the Bongiovi Schedules or
reflected in the most recent Bongiovi balance sheet, Bongiovi is not a
party to any oral or written: (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days or
less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Bongiovi is a primary obligor, for collection
and other guaranties of obligations, which, in the aggregate do not
exceed more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar contracts
with an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of Bongiovi; or (viii) contract, agreement or other
commitment involving payments by it of more than $10,000 in the
aggregate; and
(c) To Bongiovi's knowledge, all contracts, agreements,
franchises, license agreements and other commitments to which Bongiovi
is a party or by which its properties are bound and which are material
to the operations of Bongiovi taken as a whole, are valid and
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enforceable by Bongiovi in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights
of creditors generally.
SECTION 1.12 MATERIAL CONTRACT DEFAULTS. Except as set forth in the
Bongiovi Schedules, to the best of Bongiovi's knowledge and belief, Bongiovi is
not in default in any material respect under the terms of any outstanding
contract, agreement, lease or other commitment which is material to the
business, operations, properties, assets or condition of Bongiovi, and there is
no event of default in any material respect under any such contract, agreement,
lease or other commitment in respect of which Bongiovi has not taken adequate
steps to prevent such a default from occurring.
SECTION 1.13 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Bongiovi is a
party or to which any of its properties or operations are subject.
SECTION 1.14 GOVERNMENTAL AUTHORIZATIONS. To the best of Bongiovi's
knowledge and except as provided herein or in the Bongiovi Schedules, Bongiovi
has all licenses, franchises, permits or other governmental authorizations
legally required to enable Bongiovi to conduct its business in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Bongiovi of this Agreement and the consummation by
Bongiovi of the transactions contemplated hereby.
SECTION 1.15 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of
Bongiovi's knowledge, except as disclosed in the Bongiovi Schedules, Bongiovi
has complied with all applicable statutes and regulations of any federal, state
or other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of Bongiovi or would not result in
Bongiovi's incurring any material liability.
SECTION 1.16 INSURANCE. Except as disclosed on Schedule 1.16, Bongiovi has
no insurable properties and no insurance policies will be in effect at the
Closing Date, as hereinafter defined.
SECTION 1.17 APPROVAL OF AGREEMENT. The board of directors of Bongiovi has
authorized the execution and delivery of this Agreement by Bongiovi and has
approved the transactions contemplated hereby. The majority of Bongiovi's
shareholders approved the transactions contemplated hereby by the written
consent action.
SECTION 1.18 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the Bongiovi Schedules, there exists no material contract,
agreement or arrangement between Bongiovi and any predecessor and any person who
was at the time of such contract, agreement or arrangement an officer, director
or person owning of record, or known by Bongiovi to own beneficially, ten
percent (10%) or more of the issued and outstanding Bongiovi Common Shares and
which is to be performed in whole or in part after the date hereof. In all of
such transactions, the amount paid or received, whether in cash, in services or
in kind, has been during the full term thereof, and is required to be during the
unexpired portion of the term thereof, no less favorable to Bongiovi than terms
available from otherwise unrelated parties in arms length transactions. There
are no commitments by Bongiovi, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
SECTION 1.19 LABOR RELATIONS. Bongiovi has never had a work stoppage
resulting from labor problems. To the best knowledge of Bongiovi, no union or
other collective bargaining organization is organizing or attempting to organize
any employee of Bongiovi.
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SECTION 1.20 PREVIOUS SALES AND ISSUANCE OF SECURITIES. Since inception,
Bongiovi has issued Bongiovi Common Shares in reliance upon applicable
exemptions from the registration requirements under the laws of the jurisdiction
of Florida and other applicable state and federal securities laws, to the
shareholders listed on Schedule I. The shares of Bongiovi Common Stock issued to
the Bongiovi Shareholders are legally issued, fully paid and nonassessable and
are not issued in violation of the preemptive or other rights of any person.
SECTION 1.21 REORGANIZATION RELATED REPRESENTATIONS.
(a) following the Effective Date, Bongiovi will continue its
historic business or use a significant portion of its historic
business assets in its business;
(b) Bongiovi is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of IRC;
(c) Bongiovi is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the
IRC.
SECTION 1.22 BONGIOVI SCHEDULES. Upon execution hereof, Bongiovi will
deliver to ITV the following schedules, which are collectively referred to as
the "Bongiovi Schedules" and which consist of separate schedules dated as of the
date of this Agreement and instruments and data as of such date, complete, true
and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of Bongiovi;
(b) the financial information of Bongiovi referenced hereinabove
in Section 1.4;
(c) a list indicating the name and address of the stockholders of
Bongiovi, together with the number of shares owned by them;
(d) the Bongiovi Business Plan which includes, among other
matters, information concerning all of Bongiovi's material licenses,
permits and other governmental authorizations, requests or
applications therefor, pursuant to which Bongiovi carries on or
proposes to carry on its business (except those which in the
aggregate, are immaterial to the present or proposed business of
Bongiovi), as well as a description of any material adverse change in
the business operations, property, inventory, assets or condition of
Bongiovi since the most recent Bongiovi balance sheet required to be
provided pursuant to Section 1.5; and
Bongiovi shall cause the Bongiovi Schedules and the instruments and data
delivered to ITV hereunder to be updated after the date hereof up to and
including the Closing Date, as hereinafter defined.
SECTION 1.23 TAXES. Bongiovi has complied with applicable tax filing
requirements, if any.
SECTION 1.24 ADDITIONAL INFORMATION AVAILABLE. Bongiovi will make available
to ITV the opportunity to ask questions and receive answers concerning
acquisition of Bongiovi shares in this transaction, and to obtain any additional
information related thereto which Bongiovi possesses or can acquire without
unreasonable effort or expense.
SECTION 1.25 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, Bongiovi shall not have any liability for
any misrepresentation or breach of any representation or warranty contained in
this Article I, if ITV had actual knowledge of such misrepresentation or breach
prior to the Closing.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF ITV
As an inducement to, and to obtain the reliance of Bongiovi, ITV represents
and warrants as follows:
SECTION 2.1 ORGANIZATION. ITV is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the ITV Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation,
amended articles of incorporation (collectively, hereinafter referred to as the
"articles of incorporation"), bylaws of ITV as in effect on the date hereof and
a certificate of Good Standing. The execution and delivery of this Agreement
does not and the consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any provision of ITV's
articles of incorporation or bylaws. ITV has taken all action required by law,
its articles of incorporation, its bylaws or otherwise to authorize the
execution and delivery of this Agreement. ITV has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the transactions herein
contemplated.
SECTION 2.2 CAPITALIZATION. The authorized capitalization of ITV consists
of 100 million shares of Common Stock, par value $0.001 per share, of which 4
million shares are issued and outstanding, and 10 million shares of Preferred
Stock, $0.001 par value, of which no shares are issued nor outstanding. All
issued and outstanding shares are legally issued, fully paid and nonassessable
and are not issued in violation of the preemptive or other rights of any person.
Except as may be disclosed in ITV Schedules, ITV has no other securities,
warrants or options authorized or issued.
SECTION 2.3 SUBSIDIARIES. At the Closing, other than as disclosed herein,
ITV shall own no securities or have any interest in any corporation,
partnership, or other form of business organization, including its current
subsidiaries.
SECTION 2.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 2.4 are audited financial
statements for the years ended June 30, 2000 and June 30, 2001,
together with the related footnotes and report thereon of the auditors
rendering such reports and unaudited financial statements for the nine
months ended March 31, 2002 (collectively, the "ITV Financial
Statements"). The ITV Financial Statements are correct and complete in
all respects and fairly present, in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, the consolidated
financial position of ITV as of such dates and the results of
operations and changes in financial position for such periods all in
accordance with GAAP. The ITV Financial Statements comply with the
requirements of Regulation S-X of the Securities and Exchange
Commission and the provisions of the Securities Act of 1933 (the "1933
Act") and will be suitable for inclusion in any subsequent filing with
any state or federal regulatory agency under the Securities Exchange
Act of 1934 (the "1934 Act"). AN INVESTMENT IN ITV SHARES INVOLVES A
HIGH DEGREE OF RISK. BONGIOVI SHAREHOLDERS SHOULD REVIEW AND CAREFULLY
CONSIDER THE DISCLOSURE MATERIALS ATTACHED HERETO AS EXHIBIT "A",
PRIOR TO EXECUTING THIS AGREEMENT;
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(b) The books and records, financial and others, of ITV are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices;
(c) ITV has no liabilities with respect to the payment of any
federal, state, county, local or other taxes, current or accrued
(including any deficiencies, interest or penalties);
(d) ITV has filed all state, federal and local income tax
returns, including extensions of such tax returns, if any, required to
be filed by it from inception to the date hereof, if any;
(e) except as and to the extent disclosed herein and the ITV
Schedules, ITV has no material contingent liabilities, direct or
indirect, matured or unmatured.
SECTION 2.5 INFORMATION. The information concerning ITV as set forth in
this Agreement and in the ITV Schedules, to the best of ITV's knowledge, is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
SECTION 2.6 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 2.6, there are no existing options, warrants, calls or
commitments of any character to which ITV is a party and by which it is bound.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
herein or in the ITV Schedules, since March 31, 2002:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of ITV; or (ii)
any damage, destruction or loss to ITV (whether or not covered by
insurance) materially and adversely affecting the business,
operations, properties, assets or condition of ITV;
(b) ITV has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of ITV; (iv) made any material change in its
method of management, operation or accounting other than in its
ordinary course of business; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees.
(c) Except as disclosed to Bongiovi or as included in the ITV
Schedules, ITV has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent ITV balance sheet
and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted
any amendment or termination of any contract, agreement or license to
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which it is a party if such amendment or termination is material,
considering the business of ITV; or (vi) issued, delivered or agreed
to issue or deliver any stock, bonds or other corporate securities,
including debentures (whether authorized and unissued or held as
treasury stock); and
(d) to the best knowledge of ITV, it has not become subject to
any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of ITV.
SECTION 2.8 TITLE AND RELATED MATTERS. As of the Closing Date, ITV will own
no real, personal or intangible property, other than as disclosed herein.
SECTION 2.9 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the best of ITV's knowledge and belief, threatened by
or against or affecting ITV, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition, income or business prospects of ITV.
ITV does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
SECTION 2.10 CONTRACTS. On the Closing Date and other than as disclosed
herein in Schedule 2.10 or otherwise:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which ITV is a party or by
which it or any of its properties are bound;
(b) ITV is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as ITV
can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of ITV; and
(c) ITV is not a party to any material oral or written: (i)
contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as
amended; (iii) agreement, contract or indenture relating to the
borrowing of money; (iv) guaranty of any obligation for the borrowing
of money or otherwise, excluding endorsements made for collection and
other guaranties of obligations, which, in the aggregate exceeds
$1,000; (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payments in excess of
$10,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of ITV; or
(viii) contract, agreement, or other commitment involving payments by
it of more than $10,000 in the aggregate.
SECTION 2.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which ITV is a
party or to which any of its properties or operations are subject.
SECTION 2.12 MATERIAL CONTRACT DEFAULTS. To the best of ITV's knowledge and
belief, ITV is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of ITV, and there is
no event of default in any material respect under any such contract, agreement,
9
lease or other commitment in respect of which ITV has not taken adequate steps
to prevent such a default from occurring.
SECTION 2.13 GOVERNMENTAL AUTHORIZATIONS. To the best of ITV's knowledge,
ITV has all licenses, franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for compliance with
federal and state securities or corporation laws, no authorization, approval,
consent or order of, or registration, declaration or filing with, any court or
other governmental body is required in connection with the execution and
delivery by ITV of the transactions contemplated hereby.
SECTION 2.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of ITV's
knowledge and belief, ITV has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
ITV or would not result in ITV's incurring any material liability.
SECTION 2.15 INSURANCE. ITV has no insurable properties and no insurance
policies will be in effect at the Closing Date, as hereinafter defined.
SECTION 2.16 APPROVAL OF AGREEMENT. The board of directors and the majority
shareholder of ITV has authorized the execution and delivery of this Agreement
by ITV and has approved the transactions contemplated hereby.
SECTION 2.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as stated herein
or in the ITV Schedules, as of the Closing Date there will exist no material
contract, agreement or arrangement between ITV and any person who was at the
time of such contract, agreement or arrangement an officer, director or person
owning of record, or known by ITV to own beneficially, ten percent (10%) or more
of the issued and outstanding common stock of ITV and which is to be performed
in whole or in part after the date hereof. ITV has no commitment, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
SECTION 2.18 LABOR RELATIONS. ITV has never had a work stoppage resulting
from labor problems. ITV has no employees other than its officers and directors.
SECTION 2.19 TAXES. (a) Except as provided in Schedule 2.19, ITV has timely
filed (within the applicable extension periods) with the appropriate
governmental agencies all governmental tax returns, information returns, tax
reports and declarations which are monetary liabilities. All governmental tax
returns, information returns, tax reports and declarations filed by ITV for
years for which the statute of limitations has not run (the "Tax Returns") are
correct in all material respects. ITV has timely paid (or has collected and paid
over in the case of sales, use or similar taxes) all taxes, additions to tax,
penalties, interest, assessments, deposits, and other governmental charges
imposed by law upon it or any of its properties, tangible or intangible assets,
income, receipts, payrolls, transactions, capital, net worth and franchises, or
upon the sale, use or delivery of any item sold by the ITV, other than as may be
disclosed in the Schedule of Taxes. Except as set forth in the Schedule of
Taxes, no tax returns have been examined by the Internal Revenue Service or any
other governmental authority. Except as may be disclosed in the Schedule of
Taxes or in any document delivered to ITV therewith, ITV (i) is not currently
being audited with respect to any tax, assessment or other governmental charge;
(ii) has not received formal or informal notice from any governmental agency
that an audit or investigation with respect to any tax, assessment or other
governmental charge is to be initiated; (iii) is not formally or informally
discussing material pending ruling requests or other material tax or assessment
issues with the Internal Revenue Service or any other governmental taxing
authority in connection with any matter concerning ITV; or (iv) has not been
formally or informally notified of any potential tax or assessment issue which
the Internal Revenue Service or any other governmental taxing authority intends
to raise in connection with any matter concerning any member of ITV's group.
Except (i) as may be disclosed in the Schedule of Taxes, or (ii) in connection
10
with any pending audit or investigation, ITV has not granted or proposed any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment or collection of, or any offer in compromise of any
governmental tax. The accruals and reserves for taxes reflected in the financial
statements are adequate to cover substantially all taxes (including additions to
tax, interest, penalties, and other charges or assessments, if any) which become
due and payable or accruable by reason of the business conducted by ITV through
the Closing Date herein. ITV is not now or has it ever been a corporation which
meets the tests of Section 542(b)(2) of the Internal Revenue Code. ITV has not
participated in, or is required to participate in, for any period prior to the
date of this Agreement the filing of any consolidated tax return other than (i)
as set forth in the Schedule of Taxes, or (ii) as a member of an affiliated
group of which ITV is the common parent.
SECTION 2.20 REPORTING ACT DOCUMENTS. Except as set forth in ITV's
Schedules, ITV has, in all reporting act documents, complied in all material
respects with the reporting requirements of the Exchange Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
The information contained in each reporting act document of ITV, to the best of
ITV's knowledge, is true and correct in all material respects as of the date
thereof, and no reporting act document contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the date thereof.
To the best knowledge of current management of ITV, there is no negative
matters, such as pending investigation or formal inquiry, which are outstanding
concerning Exchange Act reports filed by ITV prior to the Closing.
SECTION 2.21 ITV SCHEDULES. Upon execution hereof, ITV shall deliver to
Bongiovi the following schedules, which are collectively referred to as the "ITV
Schedules" which are dated the date of this Agreement, all complete, true and
accurate in all material respects:
(a) complete and correct copies of the articles of incorporation,
bylaws and Certificate of Good Standing of ITV as in effect as of the
date of this Agreement;
(b) copies of all financial statements of ITV identified in
Section 2.4(a);
(c) the description of any material adverse change in the
business, operations, property, assets, or condition of ITV since June
30, 2002 required to be provided pursuant to Section 2.6; and
(d) any other information, together with any required copies of
documents, required to be disclosed in the ITV Schedules under this
Agreement.
ITV shall cause the ITV Schedules and the instruments to be delivered to
Bongiovi hereunder to be updated after the date hereof up to and including the
Closing Date.
SECTION 2.22 LISTING OF ITV'S COMMON STOCK. ITV's Common Stock is listed
and trading on the over-the- counter market of National Association of
Securities' Dealers ("NASD") ("Bulletin Board").
SECTION 2.23 ADDITIONAL INFORMATION AVAILABLE. ITV will make available to
each Bongiovi Shareholder the opportunity to ask questions and receive answers
concerning the acquisition of ITV Common Stock in the transaction, and to obtain
any additional information which ITV possesses or can acquire without
unreasonable effort or expense.
SECTION 2.24 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, ITV shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article II, if Bongiovi or any of the Bongiovi Shareholders had actual knowledge
of such misrepresentation or breach prior to the Closing.
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ARTICLE III
EXCHANGE PROCEDURE
SECTION 3.1 DELIVERY OF BONGIOVI SECURITIES. On the Closing Date, the
holders of the Bongiovi Common Shares shall deliver to ITV (i) certificates or
other documents evidencing all of the issued and outstanding Bongiovi Common
Shares, duly endorsed in blank or with executed stock power attached thereto in
transferrable form; and (ii) Investment Letters, the form of which is attached
hereto as Exhibit "B".
SECTION 3.2 ISSUANCE OF ITV COMMON SHARES. (a) In exchange for all of the
Bongiovi Common Shares tendered pursuant to Section 3.1, ITV shall instruct its
Transfer Agent to issue an aggregate of 16 million "restricted" ITV Common
Shares to the Bongiovi Shareholders on a pro rata basis and shall cause such
shares to be delivered to Bongiovi. Each share of Bongiovi Common Stock shall be
exchanged for 2.2857 shares of ITV (based on the total issuance of 16 million
ITV Common Shares).
(b) No fractional ITV Common Shares shall be issued pursuant to this
Section 3.2. In lieu of such fractional shares, all shares to be issued shall be
rounded up or down to the nearest whole share.
(c) The total of 16 million shares to be issued to the Bongiovi
Shareholders by ITV (the "Bongiovi Shares") are not being registered under the
Securities Act of 1933, as amended (the "Act") and are issued in reliance on the
exemptions from the registration requirements provided by Regulation D, and are
to be issued as "restricted securities", as that term is defined in Rule 144
promulgated under the Act, and that the certificates representing the Bongiovi
Shares will bear a legend to that effect, substantially in the form set forth
below:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF CERTAIN STATES,
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER
THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS AVAILABLE.
SECTION 3.3 UNDERTAKINGS.
(a) Upon execution hereof or as soon thereafter as practical,
management of ITV and Bongiovi shall execute, acknowledge and deliver
(or shall cause to be executed, acknowledged and delivered) any and
all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this
Agreement to be so delivered, together with such other items as may be
reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
(b) Bongiovi hereby undertakes and provides assurances to ITV
that it will file a current report on Form 8-K within 15 days of the
Closing in compliance with the Exchange Act, with the audited
12
financial statements of Bongiovi and the pro forma statements required
by the Exchange Act and by Regulation S-B by amendment of the Form 8-K
within the time parameters established by the Exchange Act, and will
otherwise comply with the reporting requirements of the Exchange Act.
SECTION 3.4 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date in which all of the
shareholders of Bongiovi have approved the terms of this Agreement, all
conditions to Closing referenced in this Agreement have been satisfied or waived
by Bongiovi and all documentation referenced herein is delivered to the
respective party herein, which shall be the date of September 30, 2002, unless a
different date is mutually agreed to in writing by the parties hereto ("Closing
Date").
SECTION 3.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors of
either ITV or Bongiovi at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court
or any governmental body which shall seek to restrain, prohibit
or invalidate the transactions contemplated by this Agreement and
which, in the judgment of such board of directors, made in good
faith and based on the advice of its legal counsel, makes it
inadvisable to proceed with the exchange contemplated by this
Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Article VI below have not
been satisfied in full; or
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of ITV if Bongiovi
shall fail to comply in any material respect with any of its covenants
or agreements contained in this Agreement or if any of the
representations or warranties of Bongiovi contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days' written notice thereof is given to
Bongiovi. If this Agreement is terminated pursuant to this paragraph
(b) of this Section 3.5, this Agreement shall be of no further force
or effect and no obligation, right or liability shall arise hereunder;
and
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Bongiovi if ITV
shall fail to comply in any material respect with any of its covenants
or agreements contained in this Agreement or if any of the
representations or warranties of ITV contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days written notice thereof is given to ITV. If
this Agreement is terminated pursuant to this paragraph (c) of Section
3.5, this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder.
13
(d) This Agreement shall be terminated if the Closing of the
transactions contemplated in this Agreement have not occurred by the
Closing Date as that term is defined in Section 3.4.
SECTION 3.6 DIRECTORS OF ITV. Upon the Closing, the present members of
ITV's Board of Directors shall tender their resignations SERIATIM so that the
following persons are appointed directors of ITV in accordance with procedures
set forth in the ITV bylaws: Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxx and Xxxxxx Xxxxxx. Each director shall hold office until his
successor shall have been duly elected and shall have qualified or until his or
her earlier death, resignation or removal.
SECTION 3.7 OFFICERS OF ITV. Upon the Closing, the present officers of ITV
shall tender their resignations and provide ITV with applicable releases
concerning their respective employment agreements. Simultaneous therewith, the
following persons shall be elected as officers of ITV in accordance with
procedures set forth in the ITV bylaws:
NAME OFFICE
---- ------
Xxxxxx Xxxxxxx Chairman and Chief Executive Officer
Xxxxxxx Xxxxxxxx President
Xxxxxx Xxxxxx Vice President, Treasurer and Assistant
and Secretary
Xxxxxxx Xxxxxxxx Vice President
Xxxxx Xxxxxxx Secretary
SECTION 3.8 EFFECTIVE DATE. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 5:00 P.M. Pacific
Daylight Time on September ___, 2002, unless the parties agree otherwise, in
writing.
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ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 ACCESS TO PROPERTIES AND RECORDS. ITV and Bongiovi will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of ITV and Bongiovi, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of ITV and Bongiovi, as the case may be, as the
other shall from time to time prior to Closing reasonably request. In addition,
ITV shall provide to Bongiovi subsequent to Closing all information necessary to
allow Bongiovi to properly prepare and file all reports required to be filed
pursuant to the Exchange Act, including all information concerning ITV's
subsidiaries which existed prior to Closing.
SECTION 4.2 INFORMATION FOR ITV PUBLIC REPORTS. Bongiovi will furnish ITV
with all information concerning Bongiovi and the Bongiovi Stockholders,
including all financial statements, required for inclusion in any public report
to be filed by ITV pursuant to the Securities Act, the Exchange Act, or any
other applicable federal or state law. Bongiovi covenants that all information
so furnished to ITV, including the financial statements described in Section
1.5, shall be true and correct in all material respects without omission of any
material fact required to make the information stated not misleading. ITV agrees
that Bongiovi shall have 10 business days following the Closing Date to furnish
the financial statements set forth in Section 1.5 to ITV. Similarly, ITV will
provide all information concerning its history and operations reasonably
requested by Bongiovi.
SECTION 4.3 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE ITV COMMON
SHARES TO BE ISSUED IN THE EXCHANGE. The consummation of this Agreement,
including the issuance of the ITV Common Shares to the Bongiovi Shareholders as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, INTER ALIA, upon the
circumstances under which the Bongiovi Shareholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, Bongiovi shall
cause to be delivered, and the Bongiovi Shareholders shall deliver to ITV, the
Investment Letters referenced in Section 3.1. The Bongiovi Shareholders shall
receive disclosure materials attached hereto as Exhibit "A".
SECTION 4.4 THIRD PARTY CONSENTS. ITV and Bongiovi agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
SECTION 4.5 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the ITV or Bongiovi Schedules or as
permitted or contemplated by this Agreement, Bongiovi and ITV, to the
extent applicable, will each use its best efforts to:
(i) carry on its business in substantially the same manner
as it has heretofore;
15
(ii) maintain and keep its properties in states of good
repair and condition as at present, except for depreciation due
to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable
in amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization intact,
to retain its key employees and to maintain its relationship with
its material suppliers and customers; and
(vi) fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state
laws and all rules, regulations and orders imposed by federal or
state governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither ITV nor Bongiovi will, without the prior consent of the
other party:
(i) except as otherwise specifically set forth herein, make
any change in their respective certificates or articles of
incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding shares
of capital stock, except as may otherwise be required by law, or
effect any stock split or otherwise change its capitalization,
except as provided herein;
(iii) enter into or amend any employment, severance or
similar agreements or arrangements with any directors or
officers;
(iv) grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date hereof
to acquire any shares of its capital stock; or
(v) purchase or redeem any shares of its capital stock,
except as disclosed herein.
SECTION 4.6 INDEMNIFICATION.
(a) Bongiovi and its officers and directors hereby agree to
indemnify ITV and each of the officers, agents and directors of ITV as
of the date of execution of this Agreement against any loss,
liability, claim, damage or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened
or any claim whatsoever), to which it or they may become subject
incurred as a result of Bongiovi's breach of any representation,
warranty or covenant made by Bongiovi in this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months; and
16
(b) ITV and its officers and directors hereby agrees to indemnify
Bongiovi and each of the officers, agents and directors of Bongiovi as
of the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject incurred as a result of ITV's
breach of any representation, warranty or covenant made by ITV in this
Agreement and particularly the representation regarding no liabilities
referred to in Section 2.4(b). The indemnification provided for in
this Section shall survive the Closing and consumma tion of the
transactions contemplated hereby and termination of this Agreement for
a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ITV
The obligations of ITV under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
SECTION 5.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by Bongiovi in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such representations and
warranties were made at the Closing Date (except for changes therein permitted
by this Agreement), and Bongiovi shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Bongiovi prior to or at the Closing. ITV shall be furnished with a
certificate, signed by a duly authorized officer of Bongiovi and dated the
Closing Date, to the foregoing effect.
SECTION 5.2 BONGIOVI'S APPROVAL OF AGREEMENT. The Board of Directors and
stockholders of Bongiovi, if such stockholders' approval is so required under
Florida law, shall have approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
SECTION 5.3 OFFICER'S CERTIFICATE. ITV shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Bongiovi to the effect that no litigation, proceeding, investigation or inquiry
is pending or, to the best knowledge of Bongiovi, threatened, which might result
in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the Bongiovi
Schedules, by or against Bongiovi which might result in any material adverse
change in any of the assets, properties, business or operations of Bongiovi.
SECTION 5.4 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Bongiovi.
SECTION 5.5 OTHER ITEMS. ITV shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby as
ITV may reasonably request.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BONGIOVI
The obligations of Bongiovi under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by ITV in this Agreement were true when made and shall be true as of the
Closing Date (except for changes therein permitted by this Agreement) with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date, and ITV shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by ITV prior to or at the Closing. Bongiovi shall have been furnished with
a certificate, signed by a duly authorized executive officer of ITV and dated
the Closing Date, to the foregoing effect.
SECTION 6.2 OFFICER'S CERTIFICATE. Bongiovi shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
ITV to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of ITV, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the ITV Schedules, by or
against ITV which might result in any material adverse change in any of the
assets, properties, business or operations of ITV.
SECTION 6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of ITV.
SECTION 6.4 COMPLIANCE WITH REPORTING REQUIREMENTS. As of the Closing Date,
ITV shall be current in, and in compliance with all requirements of, all filings
required to be tendered to the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended.
SECTION 6.5 ISSUANCE OF NOTE. Simultaneous with the Closing of this
Agreement, Bongiovi shall issue to Sarmatan Development Ltd. a note (the
"Samartan Note") in the amount of $600,000 for services rendered in connection
with facilitating the share exchange transaction between the Parties hereto (see
Exhibit C attached hereto). The Samartan Note shall be repaid, subject to its
terms, prior to the repayment of any other debt of Bongiovi, other than normal
costs associated with the day to day operation of business, provided, however,
that such costs shall not include any debt repayment to Bongiovi's officers
and/or directors and their affiliates.
SECTION 6.6 ADDITIONAL INFUSION OF FUNDS INTO BONGIOVI. At the Closing,
Bongiovi shall have received at least $200,000 in gross proceeds from the bridge
loan financing under the terms and conditions acceptable to Bongiovi. The
proceeds of such financing shall be deposited in the designated escrow account
and released to Bongiovi upon the Closing of the transaction contemplated
hereby. Bongiovi may, at its sole discretion, waive this condition at the
Closing.
SECTION 6.7 ITV'S TRADING STATUS. As of the Closing Date, as defined
herein, ITV's Common Stock shall continue to be trading on NASD's Bulletin Board
and ITV shall comply in all respects with the ITV's reporting, filing and other
obligations under the by-laws or rules of the NASD.
SECTION 6.8 NO LIABILITIES. As of the Closing Date, as defined herein the
ITV balance sheet and the notes thereto, shall reflect that ITV has: (i) no
receivables; (ii) no accounts payable; (iii) except as stated herein or in the
18
ITV Schedules, no liabilities, whether absolute, accrued, known or unknown,
contingent or otherwise, whether due or to become due, including, without
limitation, liabilities as guarantor under any guaranty or other governmental
charges. In the event ITV is bound by or otherwise liable for any contract,
lease or other agreement or any other liability at the date of Closing, ITV's
existing "inside" officers and directors shall execute and deliver a binding
Indemnification and Hold Harmless Agreement at Closing relevant to such
obligations.
SECTION 6.9 OTHER ITEMS. Bongiovi shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Bongiovi may reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 BROKERS AND FINDERS. Except as set forth in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
SECTION 7.2 LAW. FORUM AND JURISDICTION. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Florida.
SECTION 7.3 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
IF TO ITV: Interruption Television, Inc.
---------- 000 Xxxxxxx Xxxxxx Xx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
IF TO BONGIOVI: Bongiovi Entertainment, Inc.
--------------- 000 XX Xxxxxxxx Xx.
Xxxx Xxxxx Xxxxx, XX 00000
WITH COPIES TO: Xxxxx Xxxxx, Esq.
--------------- Law Offices of Xxxxx X. Xxxxx
000 Xxxxxxx Xxxxxx Xx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
WITH COPIES TO: Xxxxx Xxxxxxx, PA.
--------------- 0000 Xxxxx xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
19
SECTION 7.4 ATTORNEYS' FEES. The prevailing party in any proceeding brought
to enforce or interpret any provision of this Agreement shall be entitled to
recover its reasonable attorney's fees, costs and disbursements incurred in
connection with such proceeding, including but not limited to the costs of
experts, accountants and consultants and all other costs and services reasonably
related to the proceeding, including those incurred in any bankruptcy or appeal,
from the non-prevailing party or parties.
SECTION 7.5 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
SECTION 7.6 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
SECTION 7.7 THIRD PARTY BENEFICIARIES. This contract is solely between ITV
and Bongiovi and, except for the Bongiovi Shareholders or as otherwise
specifically provided herein, no director, officer, stockholder, employee,
agent, independent contractor or any other person or entity shall be deemed to
be a third party beneficiary of this Agreement.
SECTION 7.8 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
SECTION 7.9 SURVIVAL; TERMINATION. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for three years.
SECTION 7.10 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original and
all of which taken together shall be but a single instrument. This Agreement may
be executed by providing facsimile signatures by the parties hereto, however,
the original signatures shall be delivered within five (5) business days from
the date of execution of this Agreement.
SECTION 7.11 AMENDMENT OR WAIVER. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
SECTION 7.12 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
20
SECTION 7.13 EXPENSES. Each party herein shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions provided for herein and the
preparation therefor.
SECTION 7.14 HEADINGS; CONTEXT. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
SECTION 7.15 BENEFIT. This Agreement shall be binding upon and shall inure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
SECTION 7.16 PUBLIC ANNOUNCEMENTS. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
SECTION 7.17 SEVERABILITY. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
SECTION 7.18 FAILURE OF CONDITIONS; TERMINATION. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
SECTION 7.19 NO STRICT CONSTRUCTION. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
SECTION 7.20 EXECUTION KNOWING AND VOLUNTARY. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (C)) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
SECTION 7.21 JOINT PREPARATION. This Agreement is to be deemed to have been
prepared jointly by the parties hereto and any uncertainty or ambiguity existing
herein, if any, shall not be interpreted against any party, but shall be
interpreted according to the application of the rules of interpretation for
arm's length agreements.
SECTION 7.22 ARBITRATION AND VENUE. Any controversy arising out of or
relating to this Agreement or any modification or extension thereof, including
any claim for damages and/or rescission, shall be settled by arbitration in
Florida in accordance with the Commercial Arbitration Rules of the American
Arbitration Association before one arbitrator. The arbitrator sitting in any
such controversy shall have no power to alter or modify any express provisions
of this Agreement or to render any award which by its terms effects any such
alteration, or modification. The parties consent to the jurisdiction of the
state courts of the state of Florida for the county of Broward, and of the
United States District Court for the Southern District of Florida for all
21
purposes in connection with such arbitration including the entry of judgment on
any award. The parties consent that any process or notice of motion or other
application to either of said courts, and any paper in connection with
arbitration, may be served by certified mail or the equivalent, return receipt
requested, or by personal service or in such manner as may be permissible under
the rules of the applicable court or arbitration tribunal, provided a reasonable
time for appearance is allowed. Each of the parties shall, subject to the award
of the arbitrators, pay an equal share of the arbitrators' fees except the
arbitrators shall have the power to award recovery of all costs (including the
attorneys' fees, administrative fees, arbitrators' fees and court fees) to the
prevailing party, as determined by the arbitrators. This section shall survive
the termination of this Agreement.
22
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers, hereunto duly
authorized, and entered into as of the date first above written.
INTERRUPTION TELEVISION, INC.
ATTEST:
------------------------- By:
Secretary or -----------------------------------
Assistant Secretary President
ATTEST: BONGIOVI ENTERTAINMENT, INC.
------------------------- By:
Secretary or -----------------------------------
Assistant Secretary President
23
BONGIOVI SHAREHOLDERS:
/S/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx
/S/ Xxxxxxx Xxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxx
/S/ Xxxxxxx Xxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxx
/S/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx
24
SCHEDULE I
---------------
LIST OF BONGIOVI SHAREHOLDERS
---------------
ON FILE WITH BONGIOVI'S CORPORATE RECORDS
-----------------------------------------
25
EXHIBIT "A"
DISCLOSURE MATERIALS
Form 10-KSB for the fiscal year ended June 2001, Forms 10-QSB for the
quarters ended September 30, 2001, December 31, 2001 and March 31, 2002.
26
EXHIBIT "B"
FORM OF INVESTMENT LETTER
27
INVESTMENT LETTER
September ___, 2002
Interruption Television, Inc.
Newport Beach, California
Ladies & Gentlemen:
The undersigned herewith deposits certificate(s) for shares of Class A
common stock of Bongiovi Entertainment, Inc. ("Bongiovi"), as described below
(endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement"), between Bongiovi and Interruption Television,
Inc. ("ITV" or the "Company"), dated September ___, 2002, receipt of which is
hereby acknowledged, in exchange for shares of Common Stock of ITV (the
"Exchange Shares"). If any condition precedent to the Agreement is not satisfied
within the relevant time parameters established in the Agreement (or any
extension thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with
you that, in connection with the undersigned's acceptance of the terms of the
Agreement and Exchange Shares and as of the date of this letter:
1. The undersigned has received and has read the Agreement, and hereby
agrees to and accepts the terms and conditions of the Agreement.
2. The undersigned is aware that his, her or its acceptance of the
Exchange Shares is irrevocable, absent an extension of the Expiration
Date of any material change to any of the terms and conditions of the
Agreement.
3. The undersigned warrants full authority to deposit all shares referred
to above and that ITV will acquire a good and unencumbered title
thereto.
4. The undersigned has full power and authority to enter into this
agreement and that this agreement constitutes a valid and legally
binding obligation of the undersigned.
5. The undersigned represents that the undersigned is_____/ is not_____an
"Accredited Investor" as that term is defined in Section 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended
(the "Act"), because the undersigned meets one or more of the following
requirements: PLEASE CHECK AS MANY BOXES THAT APPLY ONLY IF YOU ARE
ACCREDITED INVESTOR:
|_| He or she is a natural person whose individual net worth, or joint net
worth with such investor's spouse, exceeds $1,000,000 and either he or
she is able to bear the economic risk of investment in the proposed
investments or the proposed investments will not exceed 10% of his or
her net worth or joint net worth with such investor's spouse;
28
|_| He or she is a natural person who had individual income in excess of
$200,000 in each of the two most recent years, or (except in
California) joint income with such investor's spouse in excess of
$300,000 in each of those years and reasonably expects to reach the
same income level in the current year, and either such investor is able
to bear the economic risk of investment in the proposed investments or
the proposed investments will not exceed 10% of his or her net worth or
joint net worth with such investor's spouse;
|_| It is an organization described inss. 501(C))(3) of the Internal
Revenue Code of 1986 as amended, (i.e., tax exempt entities),
corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the proposed
investments, with total assets in excess of $5,000,000;
|_| It is a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the proposed investments, whose
purchases are directed by a sophisticated person as described under the
first alternative above;
|_| It is a bank as defined in ss. 3(a)(2) of the Securities Act of 1933,
or a savings and loan association or other institution as defined in
ss. 3(a)(5)(A) of the Securities Act of 1933 whether acting in its
individual or fiduciary capacity;
|_| It is a broker registered pursuant toss. 15 of the Securities Exchange
Act of 1934;
|_| It is an insurance company as defined inss. 2(13) of the Securities Act
of 1933;
|_| It is an investment company registered under the Investment Company Act
of 1940 or a business development company as defined inss. 2(a)(48) of
that Act;
|_| It is a Small Business Investment Company licensed by the U.S. Small
Business Administration underss. 301(C)) or (d) of the Small Business
Investment Act of 1958;
|_| It is a private business development company as defined inss.
202(a)(22) of the Investment Advisers Act of 1940;
|_| It is an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in ss. 3(21) of such
Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self- directed
plan, with investment decisions made solely by persons that are
Accredited Investors as described above;
|_| He or she is a director or executive officer of the Company;
|_| It is an entity in which all the equity owners are Accredited Investors
since they are all described above.
6. By execution hereof, the undersigned hereby confirms that the ITV
common stock to be received in exchange for Bongiovi Class A common
stock (the "Securities"), will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that the
undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. By execution
hereof, the undersigned further represents the undersigned does not
have any contract, undertaking, agreement or arrangement with any third
party, with respect to any of the Securities.
29
7. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), or under
any state securities laws. The undersigned understands that no
registration statement has been filed with the United States Securities
and Exchange Commission nor with any other regulatory authority and
that, as a result, any benefit which might normally accrue to a holder
such as me by an impartial review of such a registration statement by
the Securities and Exchange Commission or other regulatory authority
will not be forthcoming. The undersigned understands that he/she/it
cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available. In this connection the undersigned
understands that the Company has advised the Transfer Agent for the
Common Shares that the Securities are "restricted securities" under the
1933 Act and that they may not be transferred by the undersigned to any
person without the prior consent of the Company, which consent of the
Company will require an opinion of my counsel to the effect that, in
the event the Securities are not registered under the 1933 Act, any
transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the1933 Act. To this end,
the undersigned acknowledges that a restrictive legend will be placed
upon the certificate representing the Securities and that the Transfer
Agent has been advised of such facts.
8. The undersigned represents that it is experienced in evaluation and
investing in securities of companies and acknowledges that he/she/it is
able to fend for itself, can bear the economic risk of this investment
and has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment
in the Securities.
9. The undersigned represents that all information provided by the
undersigned herein is true and correct as of the date thereof.
IN WITNESS WHEREOF, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: __________,2002
Very truly yours,
----------------------------
(signature)
----------------------------
(print name in full)
----------------------------
(address)
30
EXHIBIT C
FORM OF THE NOTE (Section 6.6)
31
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW
IS AVAILABLE.
8 % PROMISSORY NOTE
------------------------
$600,000 September ___, 2002
FOR VALUE RECEIVED, the undersigned, Interruption Television, Inc./
Bongiovi Entertainment, Inc. (the "Maker" or "Company"), hereby promises to pay
to the order of Samartan Development, Ltd., the holder, or its assigns
(the"Noteholder"), in lawful money of the United States of America, and in
immediately payable funds, the principal sum of six hundred thousand ($600,000)
(the "Note").
Bongiovi Entertainment, Inc., a Florida corporation ("Bongiovi") and
Interruption Television, Inc., a Nevada corporation ("ITV") have entered into an
Agreement and Plan of Reorganization dated as of September __, 2002 pursuant to
which all of the class "A" common stock of Bongiovi will be acquired by ITV in
exchange for common stock of ITV (the "Acquisition"). The closing of Acquisition
is expected to take place on or about September ___, 2002 (the "Closing Date").
All references to the Company or Maker in this Note refer to the
combined entity of Bongiovi and ITV as if the Acquisition had taken place.
The principal hereof together with any unpaid accrued interest thereon,
shall be due and payable eight months from the Closing Date, on April 30, 2003
(the "Maturity Date"). The first payment under this Note shall be due sixty (60)
days after the Closing Date. Subsequent payments shall be due and payable every
calendar month, on the same date as the first payment. Each payment shall be
equal to the greater of one hundred thousand dollars ($100,000) or twenty
percent (20%) of the net equity proceeds received by the Company in the period
since the last payment due date. Payment of all amounts due hereunder shall be
made at the address of the Noteholder provided for in this Note. The Maker
further promises to pay interest at the rate of eight per cent (8%) per annum on
the outstanding principal balance hereof. The accrued interest shall be payable
in cash quarterly on December 31, 2002 and April 30, 2003, however, such accrued
interest shall be waived by the Noteholder with respect to each Note payment
made timely on the respective due date.
This Note has not and will not be registered under the Securities Act
of 1933, as amended (the "Act") or applicable state securities laws, in reliance
on the exemption from registration afforded by Regulation D promulgated under
the Act. This Note may not be offered, sold, transferred or otherwise disposed
of, unless such securities are registered under the Act, or an exemption from
the registration requirements of the Act is available.
1. SUBORDINATION For purposes of this Note and specifically this
Section 1 hereof, the term "Superior Bank Indebtedness" shall be defined as
follows:
32
The principal of, and accrued and unpaid interest on (a) indebtedness
of the Company incurred in the ordinary course of business for money borrowed or
in respect of letters of credit issued for its own account, to (i) any bank or
trust company organized under the laws of the United States or any state or (ii)
any savings and loan association; (b) obligations of the Company incurred
pursuant to agreements to factor the accounts receivable of the Company (C))
purchase money obligations entered into in the ordinary course of business,
evidenced by notes, lease-purchase agreements, purchase contracts or agreements,
or similar instruments for the payment of which the Company is responsible or
liable, by guarantees or otherwise; (d) obligations of the Company incurred in
the ordinary course of business under any agreement to lease, or lease of, any
real or personal property which are required to be capitalized in accordance
with generally accepted accounting principles, or any other agreement to lease,
or lease of, any real or personal property for the benefit of the Company which,
by the terms thereof, are expressly designated as Superior Bank Indebtedness;
and (e) any modification, renewal, extension or refunding of any such
indebtedness, guarantee or obligation; in every case, whether such indebtedness,
guarantee or obligation, or such modification, renewal, extension or refunding
thereof, was outstanding on the date of execution of this Note or thereafter
created, incurred or assumed; unless, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that such
indebtedness, guarantee or obligation, or such modification, renewal, extension
or refunding thereof, is not superior in right of payment to the Notes.
The Maker agrees, and the Noteholder of the Note issued hereunder by
its acceptance thereof likewise agrees, that the Note shall be issued subject to
the provisions of this Section 1, each person holding any Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions. This Note issued hereunder shall, to the extent and in
the manner hereinafter set forth, be subordinated and subject in right of
payment or satisfaction to the prior payment of Superior Bank Indebtedness.
Subject to the payment of Superior Bank Indebtedness as provided above
and subject to ap plicable law, the rights of the Noteholder shall be
appropriately subrogated to the rights of the holders of Superior Bank
Indebtedness to receive payments or distributions of cash, property or
securities of the Company to the extent applicable to the Superior Bank
Indebtedness until the principal of, and premium, if any, and interest on the
Notes shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Superior Bank Indebtedness of
any cash, property or securities to which the Holder of the Note would be
entitled except for the provisions of this Section 1. It is understood that the
provisions of this Section 1 are and are intended solely for the purpose of
defining the relative rights of the Noteholder, on the one hand, and the holders
of the Superior Bank Indebtedness, on the other hand.
Nothing contained in this Section 1 or in the Note is intended to or
shall impair, as between the Company, its creditors other than the holders of
Superior Bank Indebtedness, and the Noteholder, the obligation of the Company,
which is absolute and unconditional, to pay to the Noteholder the principal of,
and premium, if any, and interest on the Note as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Noteholder and creditors of the Company other
than the holders of Superior Bank Indebtedness, nor shall anything herein
prevent the Noteholder from exercising all remedies otherwise permitted by
applicable law upon default under this Note, subject to the rights, if any,
under this Section 1 of the holders of Superior Bank Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
2. PREPAYMENT. The Maker may, at its option, at any time and from time
to time, prepay all or any part of the principal balance of this Note, without
penalty or premium.
33
3. REPAYMENT. The Maker shall have a ten (10) day grace period for each
repayment. If the payment is not received by the Noteholder within such time,
then there shall be assessed a five percent (5%) penalty on that payment, plus
an additional ten percent (10%) penalty on such amount due every thirty (30)
days thereafter, until paid, on pro-rata basis.
4. CONVERSION. Anytime after the Maturity Date, if any amount of the
principal amount of the Note, the interest and /or the penalties thereon are
still outstanding and payable, the Noteholder shall be entitled to convert the
Note into shares of common stock of Maker, in whole or in part. The Note, or
portion hereof (including any accrued interest and/or penalties), shall be
convertible into such number of the Shares as will be determined by dividing the
principal amount of the Note, and accrued interest and/or penalties, if any, by
the Conversion Price (the "Conversion Shares"). The Conversion Price shall be
equal to seventy percent (70%) of the average closing bid price for the ten (10)
lowest of the thirty (30) trading days immediately preceding the conversion
date. For the purposes of this section, the closing bid price of the Company's
common stock shall be the closing bid price as reported by the National
Association of Securities Dealers, Inc. NASDAQ SmallCap or National Markets, or
the closing bid price in the over-the-counter market or, in the event the common
stock is listed on a stock exchange, the closing bid price on such exchange as
reported in THE WALL STREET JOURNAL. Such Shares shall have immediate demand and
piggy back registration rights.
5. DEFAULT. The occurrence of any one of the following events shall
constitute an Event of Default:
(a) The non-payment of any principal and/or interest pursuant
to this Note at maturity; and such failure continues for a period of ten (10)
days;
(b) The material breach of any representation or warranty,
covenant or undertaking in this Note; and such default continues for ten (10)
days after written notice of such default is received by Maker;
(C) The commencement by the Maker of any voluntary proceeding
under any bankruptcy, reorganization, insolvency, receivership, dissolution, or
liquidation law or statute or any jurisdiction, whether now or hereafter in
effect; or the adjudication of the Maker as insolvent or bankrupt by a decree of
a court of competent jurisdiction; or the petition or application by the Maker
for, acquiescence in, or consent by the Maker to, the appointment of any
receiver or trustee for the Maker or for all or a substantial part of the
property of the Maker; or the assignment by the Maker for the benefit of
creditors; or the written admission of the Maker of its inability to pay its
debts as they mature; or
(d) The commencement against the Maker of any proceeding
relating to the Maker under any bankruptcy, reorganization, insolvency,
receivership, dissolution or liquidation law or statute or any jurisdiction,
whether now or hereafter in effect, provided, however, that the commencement of
such a proceeding shall not constitute an Event of Default unless the Maker
consents to the same or admits in writing the material allegations of same, or
said proceeding shall remain undismissed for 60 days; or the issuance of any
order, judgment or decree for the appointment of a receiver or trustee for the
Maker or for all or a substantial part of the property of the Maker, which
order, judgment or decree remains undismissed for 60 days; or a warrant of
attachment, execution, or similar process shall be issued against any
substantial part of the property of the Maker.
Upon the occurrence of any Event of Default, the Noteholder may, by
written notice to the Maker, declare all or any portion of the unpaid principal
amount due to Noteholder, together with all accrued interest and/or penalties
thereon, immediately due and payable. The Noteholder may also proceed against
any guarantor of this obligation without waiving any rights under the terms of
this Note.
34
6. NOTICES. Notices to be given hereunder shall be in writing and shall
be deemed to have been sufficiently given if delivered personally or sent by
overnight courier or messenger or sent by registered or certified mail (air mail
if overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication. Notice shall be deemed to have been
received on the date of personal delivery, telex, facsimile transmission,
telegram or similar means of communication, or if sent by overnight courier or
messenger, shall be deemed to have been received on the next delivery day after
deposit with the courier or messenger, or if sent by certified or registered
mail, return receipt requested, shall be deemed to have been received on the
third business day after the date of mailing. The address of the Maker is: 000
XX Xxxxxxxx Xx., Xxxx Xxxxx Xxxxx, XX 00000; and the Maker shall give written
notice of any change of address to the Noteholder. The address of the Noteholder
is as set forth on the signature page to this Note, and the Noteholder shall
give written notice of any change of address to the Maker.
7. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Maker consents
to the jurisdiction of any court of the State of Florida and of any federal
court located in the State of Florida. The Maker waives personal service of any
summons, complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, as the Noteholder may
elect, by certified mail directed to the Maker at the location provided for in
Section 6 hereof, or, in the alternative, in any other form or manner permitted
by law.
8. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACT MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE
RULES AND CONFLICTS OF LAW.
9. CONFORMITY WITH LAW. All agreements between the Noteholder and Maker
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of deferment or acceleration of the maturity of this Note or
otherwise, shall the rate of interest hereunder exceed the maximum rate
permissible under applicable law. If, from any circumstances whatsoever, the
rate of interest resulting from the payment and/or accrual of any amount of
interest hereunder, at any time that payment of interest is due and/or at any
time that interest is accrued, shall exceed the limits prescribed by such
applicable law, then payment and/or accrual of such interest shall be reduced to
that resulting from the maximum rate of interest permissible under such
applicable law. This provision shall never be superseded or waived.
10. ATTORNEYS FEES. In the event of any action by the Noteholder of
this Note to enforce the terms hereof, the Maker shall be obligated to pay all
of the Noteholder's reasonable attorneys' fees and costs in connection
therewith.
11. SEVERABILITY. Every provision hereof is intended to be several. If
any provision of this Note is determined by a court of competent jurisdiction to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not effect the other provisions hereof, which shall
remain binding and enforceable.
12. WAIVER. The makers, endorsers, and/or guarantors of this Note do
hereby severally waive presentment, demand, protest and notices of protest,
demand, dishonor and nonpayment.
13. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified only upon the written consent of the parties hereto.
35
14. SUCCESSORS AND ASSIGNS. All the terms and provisions of this note
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
15. ASSIGNABILITY. Maker's obligations hereunder are nontransferable
and nonassignable without the prior written consent of Noteholder.
16. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other courses of dealing, understandings,
agreements, representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by a written
agreement signed by all parties hereto.
17. COUNTERPARTS This Note may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
18. LEGAL REPRESENTATION. Maker and Noteholder, respectively, agree and
represent that each party has been represented by such party's legal counsel
with regard to all aspects of this Note, or if such party is acting without
legal counsel, that such party has had adequate opportunity and has been
encouraged to seek the advice of such party's legal counsel prior to the
execution of this Note.
IN WITNESS WHEREOF, the Maker has signed and sealed this Note and
delivered it in the state of Florida as of September ___, 2002.
No._____ INTERRUPTION TELEVISION, INC.
By:
----------------------------
Its:
---------------------------
BONGIOVI ENTERTAINMENT, INC.
By:
----------------------------
Its:
---------------------------
NOTEHOLDER:
SAMARTAN DEVELOPMENT, LTD.
Address:
------------------------
36
SCHEDULE 2.2 and 2.6
ITV WARRANTS
Warrant Agreement
Holder: Samartan Development, Ltd.
Date: July 20, 2000
Expiration Date: July 21, 2003
Amount: 500,000 shares
Exercise Price: $0.5625
The warrants are subject to 11.5 reverse stock split, prior to the execution of
this Agreement, which effects the number of warrant shares and the exercise
price.
37
SCHEDULE 2.7(b)
Reverse stock split of 1-for-11.5 has been undertaken by ITV as of September 30,
2002.
Issuance of 73,411 post-split shares of common stock to ITV's officers and
directors, or their nominees for services rendered.
Issuance of 1,500,000 pre-split (130,435 post-split) shares of common stock of
ITV to Samartan Development pursuant to the Stock Purchase Agreement by and
between Samartan Development and ITV. The terms of the Stock Purchase Agreement:
Purchase Price per Share: $0.015
Total Purchase Price: $22,500 paid by cancellation of ITV's debt (Samartan's
loan to ITV to pay for corporate and administrative expenses)
38
Schedule 6.6
See attached terms sheet of the bridge financing. (On file with the Company)
39
