Interactive Television Networks, Inc. Shares of Series A Convertible Preferred Stock and Common Stock Warrants SUBSCRIPTION AGREEMENT
EXHIBIT
10.1
Shares
of Series A Convertible Preferred
Stock
and Common Stock Warrants
December
21, 2005
M.A.G.
Capital, LLC
Mercator
Momentum Fund, L.P.
Mercator
Momentum Fund III, L.P.
Monarch
Pointe Fund, Ltd.
c/o
M.A.G. Capital, LLC
000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Ladies
and Gentlemen:
Interactive
Television Networks, Inc., a Nevada corporation (the "Company"),
hereby confirms its agreement with M.A.G. Capital, LLC ("MAG"),
Mercator
Momentum Fund, L.P. ("MMF"),
Mercator Momentum Fund III, L.P. ("MMF
III"),
and Monarch Pointe Fund, Ltd. ("Monarch")
as set forth below. Each of MAG, MMF, MMF III and Monarch are sometimes referred
to herein as a "Purchaser"
and together as the "Purchasers".
1. The
Securities.
Subject to the terms and conditions herein contained, the Company agrees
to
issue and sell to the Purchasers (a) an aggregate of 3,333,333 shares of
its
Series A Convertible Preferred Stock (the "Series
A Stock"),
which shall be convertible into shares (the "Conversion
Shares")
of the Company's Common Stock, par value $0.001 per share (the "Common
Stock"),
in accordance with the formula set forth in the Series A Certificate of
Designation further described below and (b) warrants, substantially in the
form
attached hereto at Exhibit
A
(the "Warrants"),
to acquire up to a total of 265,000
shares of Common Stock (the "Warrant
Shares"),
in accordance with the terms and conditions set forth in Section 3 hereof.
The
rights, preferences and privileges of the Series A Stock are as set forth
in the
Certificate of Designation of Preferences and Rights of Series A Convertible
Preferred Stock as filed with the Secretary of State of the State of Nevada
(the
"Series
A Certificate of Designation")
in the form attached hereto as Exhibit
B.
The number of Conversion Shares and Warrant Shares that any Purchaser may
acquire at any time are subject to limitation in the Series A Certificate
of
Designation and in the Warrants, respectively, so that the aggregate number
of
shares of Common Stock of which such Purchaser and all persons affiliated
with
such Purchaser and/or MAG have beneficial ownership (calculated pursuant
to Rule
13d-3 of the Securities Exchange Act of 1934, as amended) does not at any
time
exceed 9.99% of the Company's then outstanding Common Stock.
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The
Series A Stock, the Conversion Shares, the Warrants and the Warrant Shares
are
sometimes herein collectively referred to as the "Securities."
This
Agreement, the Warrants, the filed Series A Certificate of Designation, and
the
Registration Rights Agreement by and among the Company and the Purchasers,
entered into concurrently herewith and attached hereto as Exhibit
C,
are
sometimes herein collectively referred to as the "Transaction
Documents."
The
Securities will be offered and sold to the Purchasers without such offers
and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission
(the
"SEC")
promulgated thereunder, the "Securities
Act"),
in reliance on exemptions therefrom.
In
connection with the sale of the Securities, the Company has made available
(including electronically via the SEC's XXXXX system) to Purchasers the
Company's periodic and current reports, forms, schedules, proxy statements
and
other documents (including exhibits and all other information incorporated
by
reference) filed with the SEC under the Securities Exchange Act of 1934,
as
amended (the "Exchange
Act").
The Registration Statement on Form SB-2 filed with the SEC on December 19,
2005
and the Company's Annual Report on Form 10-KSB for the fiscal year ended
April
30, 2005, and all subsequent reports, forms, schedules, statements, documents,
filings and amendments filed by the Company with the SEC under the Exchange
Act,
are collectively referred to as the "Disclosure
Documents."
All references in this Agreement to financial statements and schedules and
other
information which is "contained," "included" or "stated" in the Disclosure
Documents (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules, documents, exhibits
and
other information which is incorporated by reference in the Disclosure
Documents.
2. Representations
and Warranties of the Company.
Except as set forth in the schedule attached hereto, the Company represents
and
warrants to and agrees with Purchasers as follows:
(a) The
Disclosure Documents as of their respective dates did not, and will not (after
giving effect to any updated disclosures therein) as of the Closing Date,
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Disclosure Documents and
the
documents incorporated or deemed to be incorporated by reference therein,
at the
time they were filed or hereafter are filed with the SEC, complied and will
comply, at the time of filing, in all material respects with the requirements
of
the Securities Act and/or the Exchange Act, as the case may be, as
applicable.
(b) Schedule
A attached hereto sets forth a complete list of the subsidiaries of the
Company (the "Subsidiaries"). Each of the Company and
its Subsidiaries has been duly incorporated and each of the Company and the
Subsidiaries is validly existing and in good standing as a corporation under
the
laws of its jurisdiction of incorporation, with the requisite corporate power
and authority to own its properties and conduct its business as now conducted
as
described in the Disclosure Documents and is duly qualified to do business
as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, condition (financial or other), properties or results of operations
of
the Company and the Subsidiaries, taken as a whole (any such event, a
"Material Adverse Effect"); as of the Closing Date,
the Company will have the authorized, issued and outstanding capitalization
set
forth in on Schedule B attached hereto (the "Company
Capitalization"); except as set forth in the Disclosure Documents
or on Schedule A, the Company does not have any Subsidiaries or own
directly or indirectly any of the capital stock or other equity or long-term
debt securities of or have any equity interest in any other person; all of
the
outstanding shares of capital stock of the Company and the Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable
and
were not issued in violation of any preemptive or similar rights and are
owned
free and clear of all liens, encumbrances, equities, and restrictions on
transferability (other than those imposed by the Securities Act and the state
securities or "blue sky" laws) or voting; except as set forth in the Disclosure
Documents, all of the outstanding shares of capital stock of the Subsidiaries
are owned, directly or indirectly, by the Company; except as set forth in
the
Disclosure Documents, no options, warrants or other rights to purchase from
the
Company or any Subsidiary, agreements or other obligations of the Company
or any
Subsidiary to issue or other rights to convert any obligation into, or exchange
any securities for, shares of capital stock of or ownership interests in
the
Company or any Subsidiary are outstanding; and except as set forth in the
Disclosure Documents or on Schedule C, there is no agreement,
understanding or arrangement among the Company or any Subsidiary and each
of
their respective stockholders or any other person relating to the ownership
or
disposition of any capital stock of the Company or any Subsidiary or the
election of directors of the Company or any Subsidiary or the governance
of the
Company's or any Subsidiary's affairs, and, if any, such agreements,
understandings and arrangements will not be breached or violated as a result
of
the execution and delivery of, or the consummation of the transactions
contemplated by, the Transaction Documents.
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(c) The
Company
has the requisite corporate power and authority to execute, deliver and perform
its obligations under the Transaction Documents. Each of the Transaction
Documents has been duly and validly authorized by the Company and, when executed
and delivered by the Company, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its
terms except as the enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally or (B) general principles of equity and the discretion of
the
court before which any proceeding therefore may be brought (regardless of
whether such enforcement is considered in a proceeding at law or in equity)
(collectively, the "Enforceability
Exceptions").
(d) The
shares of
Series A Stock and the Warrants have been duly authorized and, when issued
upon
payment thereof in accordance with this Agreement, will have been validly
issued, fully paid and non-assessable. The Conversion Shares issuable have
been
duly authorized and validly reserved for issuance, and when issued upon
conversion of the Series A Stock in accordance with the terms of the Series
A
Certificate of Designation, will have been validly issued, fully paid and
non-assessable. The Warrant Shares have been duly authorized and validly
reserved for issuance, and when issued upon exercise of the Warrants in
accordance with the terms thereof, will have been validly issued, fully paid
and
non-assessable. The Common Stock of the Company conforms to the description
thereof contained in the Disclosure Documents. The stockholders of the Company
have no preemptive or similar rights with respect to the Common
Stock.
(e) No
consent, approval,
authorization, license, qualification, exemption or order of any court or
governmental agency or body or third party is required for the performance
of
the Transaction Documents by the Company or for the consummation by the Company
of any of the transactions contemplated thereby, or the application of the
proceeds of the issuance of the Securities as described in this Agreement,
except for such consents, approvals, authorizations, licenses, qualifications,
exemptions or orders (i) as have been obtained on or prior to the
Closing
Date, (ii) as are not required to be obtained on or prior to the Closing
Date that will be obtained when required, or (iii) the failure to
obtain
which would not, individually or in the aggregate, have a Material Adverse
Effect.
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(f) Except
as set
forth on Schedule D, none of the Company or the Subsidiaries is (i) in
material violation of its articles of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to it or any of its properties
or
assets, which breach or violation would, individually or in the aggregate,
have
a Material Adverse Effect, or (iii) except as described in the Disclosure
Documents, in default (nor has any event occurred which with notice or passage
of time, or both, would constitute a default) in the performance or observance
of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate or agreement or instrument to which
it
is a party or to which it is subject, which default would, individually or
in
the aggregate, have a Material Adverse Effect.
(g) The
execution, delivery and performance by the Company of the Transaction Documents
and the consummation by the Company of the transactions contemplated thereby
and
the fulfillment of the terms thereof will not (a) violate, conflict
with or
constitute or result in a breach of or a default under (or an event that,
with
notice or lapse of time, or both, would constitute a breach of or a default
under) any of (i) the terms or provisions of any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate or agreement or instrument to which any of
the
Company or the Subsidiaries is a party or to which any of their respective
properties or assets are subject, (ii) the Certificate of Incorporation
or
bylaws of any of the Company or the Subsidiaries (or similar organizational
document) or (iii) any statute, judgment, decree, order, rule or regulation
of any court or governmental agency or other body applicable to the Company
or
the Subsidiaries or any of their respective properties or assets or
(b) result in the imposition of any lien upon or with respect to any
of the
properties or assets now owned or hereafter acquired by the Company or any
of
the Subsidiaries; which violation, conflict, breach, default or lien would,
individually or in the aggregate, have a Material Adverse Effect.
(h) The
audited
consolidated financial statements included in the Disclosure Documents present
fairly the consolidated financial position, results of operations, cash flows
and changes in shareholders' equity of the entities, at the dates and for
the
periods to which they relate and have been prepared in all material respects
in
accordance with generally accepted accounting principles applied on a consistent
basis; the interim un-audited consolidated financial statements included
in the
Disclosure Documents present fairly the consolidated financial position,
results
of operations and cash flows of the entities, at the dates and for the periods
to which they relate subject to year-end audit adjustments and have been
prepared in all material respects in accordance with generally accepted
accounting principles applied on a consistent basis with the audited
consolidated financial statements included therein; the selected financial
and
statistical data included in the Disclosure Documents present fairly the
information shown therein and have been prepared and compiled in all material
respects on a basis consistent with the audited financial statements included
therein, except as otherwise stated therein; and each of the auditors previously
engaged by the Company or to be engaged in the future by the Company is an
independent certified public accountant as required by the Securities Act
for an
offering registered thereunder.
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(i) Except
as
described in the Disclosure Documents, there is not pending or, to the knowledge
of the Company, threatened any action, suit, proceeding, inquiry or
investigation, governmental or otherwise, to which any of the Company or
the
Subsidiaries is a party, or to which their respective properties or assets
are
subject, before or brought by any court, arbitrator or governmental agency
or
body, that, if determined adversely to the Company or any such Subsidiary,
would, individually or in the aggregate, have a Material Adverse Effect or
that
seeks to restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Securities to be sold hereunder or the application
of the proceeds therefrom or the other transactions described in the Disclosure
Documents.
(j) The
Company
and the Subsidiaries own or possess adequate licenses or other rights to
use all
patents, trademarks, service marks, trade names, copyrights and know-how
that
are necessary to conduct their businesses as described in the Disclosure
Documents. None of the Company or the Subsidiaries has received any written
notice of infringement of (or knows of any such infringement of) asserted
rights
of others with respect to any patents, trademarks, service marks, trade names,
copyrights or know-how that, if such assertion of infringement or conflict
were
sustained, would, individually or in the aggregate, have a Material Adverse
Effect.
(k) Each
of the
Company and the Subsidiaries possesses all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals presently required or necessary to own or lease, as the case may
be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Disclosure
Documents ("Permits"), except where the failure to
obtain such Permits would not, individually or in the aggregate, have a Material
Adverse Effect and none of the Company or the Subsidiaries has received any
notice of any proceeding relating to revocation or modification of any such
Permit, except as described in the Disclosure Documents and except where
such
revocation or modification would not, individually or in the aggregate, have
a
Material Adverse Effect.
(l) Subsequent
to
September 30, 2005 and except as described in the Company’s Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2005, the Company's Annual
Report on Form 10-KSB for the year ended April 30, 2005, as amended, or in
the
Registration Statement on Form SB-2 filed with the SEC on December 19, 2005
(i) the Company and the Subsidiaries have not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business or (ii) the Company
and
the Subsidiaries have not purchased any of their respective outstanding capital
stock, or declared, paid or otherwise made any dividend or distribution of
any
kind on any of their respective capital stock or otherwise (other than, with
respect to any of such Subsidiaries, the purchase of capital stock by the
Company), (iii) there has not been any material increase in the long-term
indebtedness of the Company or any of the Subsidiaries, (iv) there
has not
occurred any event or condition, individually or in the aggregate, that has
a
Material Adverse Effect, and (v) the Company and the Subsidiaries
have not
sustained any material loss or interference with respect to their respective
businesses or properties from fire, flood, hurricane, earthquake, accident
or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding.
-5-
(m) There
are no
material legal or governmental proceedings nor are there any material contracts
or other documents required by the Securities Act to be described in a
prospectus that are not described in the Disclosure Documents. Except as
described in the Disclosure Documents, none of the Company or the Subsidiaries
is in default under any of the contracts described in the Disclosure Documents,
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except for
such
defaults or breaches as would not, individually or in the aggregate, have
a
Material Adverse Effect.
(n) Each
of the
Company and the Subsidiaries has good and marketable title to all real property
described in the Disclosure Documents as being owned by it and good and
marketable title to the leasehold estate in the real property described therein
as being leased by it, free and clear of all liens, charges, encumbrances
or
restrictions, except, in each case, as described in the Disclosure Documents
or
such as would not, individually or in the aggregate, have a Material Adverse
Effect. All material leases, contracts and agreements to which the Company
or
any of the Subsidiaries is a party or by which any of them is bound are valid
and enforceable against the Company or any such Subsidiary, are, to the
knowledge of the Company, valid and enforceable against the other party or
parties thereto and are in full force and effect, in each case subject to
the
Enforceability Exceptions.
(o) Each
of the
Company and the Subsidiaries has filed all necessary federal, state and foreign
income and franchise tax returns, except where the failure to so file such
returns would not, individually or in the aggregate, have a Material Adverse
Effect, and has paid all taxes shown as due thereon; and other than tax
deficiencies which the Company or any Subsidiary is contesting in good faith
and
for which adequate reserves have been provided in accordance with generally
accepted accounting principles, there is no tax deficiency that has been
asserted against the Company or any Subsidiary that would, individually or
in
the aggregate, have a Material Adverse Effect.
(p) None
of the
Company or the Subsidiaries is, or immediately after the Closing Date will
be,
required to register as an "investment company" or a company "controlled
by" an
"investment company" within the meaning of the Investment Company Act of
1940,
as amended (the "Investment Company
Act").
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(q) Since
January
2002 none of the Company or the Subsidiaries or, to the knowledge of any
of such
entities' directors, officers, employees, agents or controlling persons,
has
taken, directly or indirectly, any action for the purpose of causing the
stabilization or manipulation of the price of the Common Stock.
(r) None
of the
Company, the Subsidiaries or any of their respective Affiliates (as defined
in
Rule 501(b) of Regulation D under the Securities Act) directly,
or
through any agent, engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) in connection with the offering of the Securities or engaged in any
other
conduct that would cause such offering to constitute a public offering within
the meaning of Section 4(2) of the Securities Act. Assuming the accuracy
of
the representations and warranties of the Purchaser in Section 6 hereof,
it
is not necessary in connection with the offer, sale and delivery of the
Securities to the Purchaser in the manner contemplated by this Agreement
to
register any of the Securities under the Securities Act.
(s) There
is no
strike, labor dispute, slowdown or work stoppage with the employees of the
Company or any of the Subsidiaries which is pending or, to the knowledge
of the
Company or any of the Subsidiaries, threatened.
(t) Each
of the
Company and the Subsidiaries carries general liability insurance coverage
comparable to other companies of its size and similar business.
(u) Each
of the
Company and the Subsidiaries maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to maintain
accountability for its assets, and (C) access to its material assets
is
permitted only in accordance with management's authorization and (D) the
values and amounts reported for its material assets are compared with its
existing assets at reasonable intervals.
(v) The
Company
does not know of any claims for services, either in the nature of a finder's
fee
or financial advisory fee, with respect to the offering of the Securities
and
the transactions contemplated by the Transaction Documents.
(w) The
Common
Stock is traded on the Over-the-Counter Bulletin Board (the "OTC
BB"). Except as described in the Disclosure Documents, the Company
currently is not in violation of, and the consummation of the transactions
contemplated by the Transaction Documents will not violate, any rule of the
National Association of Securities Dealers.
(x) The
Company
is eligible to use Form SB-2 for the resale of the Conversion Shares by
Purchaser or their transferees and the Warrant Shares by Purchasers or their
transferees. The Company has no reason to believe that it is not capable
of
satisfying the registration or qualification requirements (or an exemption
therefrom) necessary to permit the resale of the Conversion Shares and the
Warrant Shares under the securities or "blue sky" laws of any jurisdiction
within the United States.
-7-
(y) Except
as set
forth on Schedule E, to the Company's knowledge, none of the officers or
directors of the Company (i) has been convicted of any crime (other
than traffic violations or misdemeanors not
involving
fraud) or is currently under investigation or indictment
for any
such crime, (ii) has been found by a court or governmental agency
to have
violated any securities or commodities law or to have committed
fraud or is
currently a party to any legal proceeding in which either is alleged, (iii)
has been the subject of a proceeding under the bankruptcy
laws or any
similar state laws, or (iv) has been an officer, director, general
partner,
or managing member of an entity which has been the subject of such
a
proceeding.
(z)
Representations of the Company regarding IBD Securities. The Company
represents and warrants to the Purchasers that the IBD Securities to be acquired
by it hereunder are being acquired for its own account for investment and
with
no intention of distributing or reselling such IBD Securities or any part
thereof or interest therein in any transaction which would be in violation
of
the securities laws of the United States of America or any State. Nothing
in
this Agreement, however, shall prejudice or otherwise limit the Company's
right
to sell or otherwise dispose of all or any part of such shares of common
stock
of Interactive Brand Development, Inc. under an effective registration statement
under the Securities Act and in compliance with applicable state securities
laws
or under an exemption from such registration. By executing this Agreement,
the
Company further represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any person with respect to any of the IBD Securities. The
Company understands that the IBD Securities have not been registered under
the
Securities Act and may not be offered, resold, pledged or otherwise transferred
except (i) pursuant to an exemption from registration under the Securities
Act or pursuant to an effective registration statement under the Securities
Act
and (ii) in accordance with all applicable securities laws of the
states of
the United States and other jurisdictions. The Company represents and warrants
to the Purchasers that it is an "accredited investor" within the meaning
of Rule
501(a) of Regulation D under the Securities Act. The Company represents and
warrants to the Purchasers that the Company did not learn of the opportunity
to
acquire IBD Securities through any form of general advertising or public
solicitation. The Company acknowledges that, other than as expressly set
forth
herein, with respect to the acquisition by the Company of the IBD Securities
(defined below), the Purchasers make no representation to, and the Company
is
not relying on, any representations of the Purchasers (or any agent or
representative of the Purchasers). The Company further acknowledges that,
notwithstanding any requirement to the contrary contained in the IBD Agreements,
the Purchasers have not obtained the consent or approval of Interactive Brand
Development, Inc. to transfer the IBD Securities or assign the IBD Agreements
to
the Company and the Purchasers shall have no liability arising out the failure
to obtain such consent or approval.
3. Purchase,
Sale, Exchange and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set
forth, the Company agrees to issue and sell to the Purchasers, and Purchasers
agree to purchase from the Company, a total of 3,333,333 shares of Series
A
Stock. The purchase price for the foregoing shares of Series A Stock shall
consist of (i) the following securities issued by Interactive Brand Development,
Inc. ("IBD"):
(1) 34,988 shares of Series D Convertible Preferred Stock (the “Series
D Preferred Stock”)
held by Monarch, (2) 11,657 shares of Series D Preferred Stock held by MMF
III,
(3) 11,269 shares of Series D Preferred Stock held by MMF, (4) 34,000 shares
of
Series E Convertible Preferred Stock held by Monarch, (v) 200,000
shares of
restricted common stock held by Monarch (collectively, the "IBD
Securities"),
(ii) the assignment to the Company of all of Purchasers' rights under
the
IBD Agreements, and (iii) an aggregate of $2,000,000 in cash. In
connection with the purchase and sale of Series A Stock, for no additional
consideration, the Purchasers will receive Warrants to purchase a total of
265,000 shares of Common Stock, as set forth below. The respective number
of
shares of Series A Stock to be purchased by each Purchaser and the respective
number of Warrant Shares which may be acquired by each Purchaser are set
forth
on the signature page hereto. The
term “IBD
Agreements”
shall mean and include all of the agreements, certificates and instruments
entered into by the Purchasers, or any of them, and IBD in connection with
the
issuance to the Purchasers of the IBD Securities and which are set forth
on
Exhibit
D
hereto.
-8-
(b) Subject
to the fulfillment of each of the conditions to closing set forth herein,
the
closing of the transactions described herein (the
"Closing") shall take place on December 27, 2005 or
such later date as may be specified by the parties (the "Closing
Date"). On the Closing Date, Purchasers shall acquire 3,333,333
shares of Series A Stock and the Warrants. On the Closing Date, the Company
shall deliver to Purchasers (i) a certificate in definitive form
for
3,333,333 shares of Series A Stock issued to the respective Purchasers,
(ii) warrants for the purchase of the total amount of 265,000 shares
to the respective Purchasers, (iii) the Transaction Documents, each
duly
executed on behalf of the Company, and (iv) that certain Registration Rights
Agreement dated as of December 21, 2005 among MAG, MMF, MMF III, Monarch
and the
Company with respect to 500,000 shares of Common Stock and Warrants for
the
purchase of an additional 2,000,000 shares of Common Stock, duly executed
on
behalf of the Company. On the Closing Date, Purchasers shall deliver (i)
the IBD
Securities, (or a stock power duly endorsed in blank for such shares),
(ii)
certificates representing the IBD Securities, (iii) $2,000,000 by wire
transfer
of immediately available funds to an account as directed by the Company,
and
(iv) the Subscription Agreement and Registration Rights Agreement, each
duly
executed on behalf of Purchasers. The Closing will occur when all documents
and
instruments necessary or appropriate to effect the transactions contemplated
herein are exchanged by the parties and all actions taken at the Closing
will be
deemed to be taken simultaneously.
4. Certain
Covenants of the Company.
The Company covenants and agrees with Purchasers as follows:
(a) None
of the
Company or any of its Affiliates will sell, offer for sale or solicit offers
to
buy or otherwise negotiate in respect of any "security" (as defined in the
Securities Act) which would be integrated with the sale of the Securities
in a
manner which would require the registration under the Securities Act of the
Securities.
(b) The
Company
will not become, at any time prior to the expiration of three years after
the
Closing Date, an open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is required
to
be registered under the Investment Company Act.
(c) None
of the
proceeds of the Series A Stock will be used to reduce or retire any insider
note
or convertible debt held by an officer or director of the Company.
-9-
(d) The
Conversion Shares and the Warrant Shares will be eligible for trading on
the OTC
BB or such market on which the Company's shares are subsequently listed or
traded, immediately following the effectiveness of the Registration Statement.
(e) The
Company
will do and perform all things required to be done and performed by it under
this Agreement and the other Transaction Documents and to satisfy all conditions
precedent on its part to the obligations of the Purchasers to purchase and
accept delivery of the Securities.
5. Conditions
to
Closing.
(a)
The
obligation of Purchasers to consummate the Closing is subject to the following
conditions unless waived in writing by the Purchasers:
(i) The
representations and warranties of the Company contained in this Agreement
shall
be true and correct in all material respects (other than representations
and
warranties with a Material Adverse Effect qualifier, which shall be true
and
correct as written) on and as of the Closing Date and the Company shall have
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to the
Closing Date.
(ii) No
Event
of Default or breach of any covenant under this Agreement or the Transaction
Documents shall have occurred.
(iii) The
Company shall be current in all of its public filings.
(iv) None
of the
issuance and sale of the Securities pursuant to this Agreement or any of
the
transactions contemplated by any of the other Transaction Documents shall
be
enjoined (temporarily or permanently) and no restraining order or other
injunctive order shall have been issued in respect thereof; and there shall
not
have been any legal action, order, decree or other administrative proceeding
instituted or, to the Company's knowledge, threatened against the Company
or
against Purchaser relating to the issuance of the Securities or Purchasers'
activities in connection therewith or any other transactions contemplated
by
this Agreement, the other Transaction Documents or the Disclosure
Documents.
(b) The
obligation of the Company to consummate the Closing is subject to the condition
(unless waived in writing by the Company) that the representations and
warranties of the Purchasers contained in this Agreement shall be true and
correct in all material respects (other than representations and warranties
with
a Material Adverse Effect qualifier, which shall be true and correct as written)
on and as of the Closing Date and the Purchasers shall have complied in all
material respects with all agreements and satisfied all conditions on their
part
to be performed or satisfied hereunder at or prior to the Closing
Date.
-10-
6. Representations
and Warranties of the Purchaser.
(a) Each
Purchaser represents and warrants to the Company that the Securities to be
acquired by it hereunder (including the Conversion Shares and the Warrant
Shares
that it may acquire upon conversion or exercise of the Series A Stock or
the
Warrants, respectively) are being acquired for their own account for investment
and with no intention of distributing or reselling such Securities (including
the Conversion Shares and the Warrant Shares that it may acquire upon conversion
or exercise thereof, as the case may be) or any part thereof or interest
therein
in any transaction which would be in violation of the securities laws of
the
United States of America or any State. Nothing in this Agreement, however,
shall
prejudice or otherwise limit the Purchasers' right to sell or otherwise dispose
of all or any part of such Conversion Shares or Warrant Shares under an
effective registration statement under the Securities Act and in compliance
with
applicable state securities laws or under an exemption from such registration.
By executing this Agreement, each Purchaser further represents that such
Purchaser does not have any contract, undertaking, agreement or arrangement
with
any person to sell, transfer or grant participation to any person with respect
to any of the Securities.
(b) Each
Purchaser understands that the Securities (including the Conversion Shares
and
the Warrant Shares that it may acquire upon conversion or exercise thereof,
as
the case may be) have not been registered under the Securities Act and may
not
be offered, resold, pledged or otherwise transferred except (a) pursuant
to
an exemption from registration under the Securities Act (and, if requested
by
the Company, based upon an opinion of counsel acceptable to the Company)
or
pursuant to an effective registration statement under the Securities Act
and
(b) in accordance with all applicable securities laws of the states
of the
United States and other jurisdictions.
Each
Purchaser agrees to the imprinting, so long as appropriate, of the following
legend on the Securities (including the Conversion Shares and the Warrant
Shares
that it may acquire upon conversion or exercise thereof, as the case may
be):
The
shares of stock evidenced by this certificate have not been registered under
the
U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged
or otherwise transferred ("transferred") in the absence of such registration
or
an applicable exemption therefrom. In the absence of such registration, such
shares may not be transferred unless, if the Company requests, the Company
has
received a written opinion from counsel in form and substance satisfactory
to
the Company stating that such transfer is being made in compliance with all
applicable federal and state securities laws.
The
legend set forth above may be removed if and when the Conversion Shares or
the
Warrant Shares, as the case may be, are disposed of pursuant to an effective
registration statement under the Securities Act or in the opinion of counsel
to
the Company experienced in the area of United States Federal securities laws
such legends are no longer required under applicable requirements of the
Securities Act. The Series A Stock, the Warrants, the Conversion Shares and
the
Warrant Shares shall also bear any other legends required by applicable Federal
or state securities laws, which legends may be removed when in the opinion
of
counsel to the Company experienced in the applicable securities laws, the
same
are no longer required under the applicable requirements of such securities
laws. The Company agrees that it will provide Purchasers, upon request, with
a
substitute certificate, not bearing such legend at such time as such legend
is
no longer applicable. Each Purchaser agrees that, in connection with any
transfer of the Conversion Shares or the Warrant Shares by it pursuant to
an
effective registration statement under the Securities Act, such Purchaser
will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability
of
any exemption from registration under the Securities Act with respect to
any
resale of the Series A Stock, the Warrants, the Conversion Shares or the
Warrant
Shares.
-11-
(c) Each
Purchaser
represents and warrants to the Company that it is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act.
Each
Purchaser represents and warrants to the Company that such Purchaser did
not
learn of the opportunity to acquire Securities or any other security issuable
by
the Company through any form of general advertising or public
solicitation.
(d) Each
Purchaser
represents and warrants to the Company that it has such knowledge,
sophistication and experience in business and financial matters so as to
be
capable of evaluating the merits and risks of the prospective investment
in the
Securities, having been represented by counsel, and has so evaluated the
merits
and risks of such investment and is able to bear the economic risk of such
investment and, at the present time, is able to afford a complete loss of
such
investment.
(e) Each
Purchaser represents and warrants to the Company that its overall commitment
to
investments which are not readily marketable is not disproportionate to its
net
worth, and its purchase of the Securities will not cause such overall commitment
to become excessive.
(f)
Each
Purchaser recognizes that the purchase of the Securities involves a high
degree
of risk.
(g) Each
Purchaser represents and warrants to the Company that all information it
has
provided to the Company including, but not limited to, its financial position
and its knowledge of financial and business matters is true, correct and
complete as of the date of execution of this Agreement. Each Purchaser
undertakes to provide promptly to the Company written notice of any material
changes in its financial position or otherwise, and such information shall
be
true, correct and complete as of the date given. Each Purchaser understands
that
the Company will rely to a material degree upon the representations contained
therein.
(h) Each
Purchaser represents and warrants to the Company that (i) the purchase of
the
Securities to be purchased by it has been duly and properly authorized and
this
Agreement has been duly executed and delivered by it or on its behalf and
constitutes the valid and legally binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, subject to the Enforceability
Exceptions, (ii) the purchase of the Securities to be purchased by
it does
not conflict with or violate its charter, by-laws or any law, regulation
or
court order applicable to it; and (iii) the purchase of the Securities
to
be purchased by it does not impose any penalty or other onerous condition
on
Purchaser under or pursuant to any applicable law or governmental regulation.
-12-
(i) Each
Purchaser represents and warrants to the Company that neither it nor any
of its
directors, officers, employees, agents, partners, members, controlling persons
or shareholders holding 5% or more of the Common Stock outstanding on the
Closing Date, has taken or will take, directly or indirectly, any actions
designed, or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock.
(j) Each
Purchaser
acknowledges it or its representatives have reviewed and understand the
Transaction Documents and Disclosure Documents and further acknowledges that
it
or its representatives have been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management
and
prospects sufficient to enable it to evaluate its investment in the Securities;
and (iii) the opportunity to obtain such additional information which the
Company possesses or can acquire without unreasonable effort or expense that
is
necessary to verify the accuracy and completeness of the information contained
in the Disclosure Documents.
(k) Each
Purchaser
represents and warrants to the Company that it has based its investment decision
solely upon the information contained in the Disclosure Documents and such
other
information as may have been provided to it or its representatives by the
Company in response to their inquiries, and has not based its investment
decision on any research or other report regarding the Company prepared by
any
third party ("Third Party Reports"). Each Purchaser
understands and acknowledges that (i) the Company does not endorse any Third
Party Reports and (ii) its actual results may differ materially from those
projected in any Third Party Report.
(l) Each
Purchaser represents and warrants to the Company that no oral or written
representations have been made and no oral or written information has been
furnished to them or their advisors in connection with this offering that
were
in any way inconsistent with the information set forth in the Disclosure
Documents.
(m) Each
Purchaser understands and acknowledges that (i) any forward-looking information
included in the Disclosure Documents supplied to Purchaser by the Company
or its
management is subject to risks and uncertainties, including those risks and
uncertainties set forth in the Disclosure Documents; and (ii) the Company's
actual results may differ materially from those projected by the Company
or its
management in such forward-looking information.
(n) Each
Purchaser understands and acknowledges that (i) the Securities are
offered
and sold without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act and
(ii) the availability of such exemption depends in part on, and that
the
Company and its counsel will rely upon, the accuracy and truthfulness of
the
foregoing representations and each of the Purchasers hereby consents to such
reliance.
-13-
(o)
Each
Purchaser
understands that no U.S. federal or state agency, or any agency or governmental
or regulatory authority in any other country, including without limitation,
the
U.S. Securities and Exchange Commission, has passed upon the Securities or
made
any finding or determination as to the fairness of this investment.
(p) Each
Purchaser represents and warrants to the Company that it is not a prohibited
investor under the anti-money laundering or anti-terrorism laws of any
jurisdiction, including without limitation, any country, territory, nation
or
national association.
(q) Each
Purchaser understands that the Company and its assets may be subject to the
laws
and regulations of many jurisdictions, including but not limited to
anti-terrorism laws and anti-money laundering laws. Each Purchaser, nor
any
person or entity who controls Purchaser, nor, to the best of Purchasers'
knowledge, any person or entity who owns any direct equity interest in it,
is
identified on the list of "Specially Designated Nationals and Blocked Persons"
("SDNs")
maintained by the U.S. Department of Treasury's Office of Foreign Assets
Control
("OFAC"),
and
Purchaser is not owned or controlled by any SDN. Each Purchaser is not involved
in business arrangements or otherwise engaged in transactions with or involving
countries subject to economic or trade sanctions imposed by the United States
Government, or with or involving SDNs in violation of the regulations maintained
by the OFAC. Each Purchaser is in full compliance with the Bank Secrecy Act
(31
U.S.C. § 5311 et. seq.) and 18 U.S.C. §§ 1956 and 1957 and the regulations under
such statutes; and any other applicable anti-terrorist or anti-money laundering
Laws and regulations.
(r) Each
Purchaser represents and warrants to the Company that none of the Purchasers,
nor any of their affiliates has, directly or indirectly, offered to "short
sell", contracted to "short sell," otherwise engaged in any "short selling"
or
encouraged others to "short sell" the securities of the Company, including,
without limitation, shares of Common Stock that will be received as a result
of
the conversion of the Series A Stock or the exercise of the Warrants; provided,
however, that nothing contained herein shall prohibit the Purchasers from
selling any shares of the Company's Common Stock "against the
box.."
(s) Each
Purchaser has the requisite power and authority to execute, deliver and perform
its obligations under this Agreement and the Registration Rights Agreement,
and
all other documents executed and delivered by such Purchaser in connection
with
the purchase of the Securities and the sale to the Company of the IBD Securities
(collectively, the “Purchaser
Documents”).
Each of the Purchaser Documents has been duly and validly authorized by the
Purchaser and, when executed and delivered by such Purchaser, will constitute
a
valid and legally binding agreement of the Purchaser, enforceable against
the
Purchaser in accordance with its terms except as the enforcement thereof
may be
limited by Enforceability
Exceptions.
(t) The
Purchasers have taken no actions which would create any pledges, security
interests, deposit arrangements, encumbrances, or liens (statutory or other)
with respect to the IBD Securities, other than restrictions imposed by federal
or state securities laws. To the knowledge of Purchasers, the IBD Securities
are
owned by the Purchasers free and clear of any and all pledges, security
interests, deposit arrangements, encumbrances, or liens (statutory or other),
other than restrictions imposed by federal or state securities laws. Upon
the
consummation of the transactions contemplated by this Agreement, the Company
will acquire all right, title and interest of the Purchasers in and to the
IBD
Securities.
-14-
(u) The
IBD
Agreements represent all of the agreements, documents and instruments executed
by either the Purchasers or Interactive Brand Development, Inc. in connection
with the purchase, by the Purchasers, of any of the IBD Securities, and there
have been no oral or written amendments thereto or any waivers of any of
the
provisions thereof. Neither the Purchasers nor, to the knowledge of Purchasers,
Interactive Brand Development, Inc. are in breach of any term or provision
of
any IBD Agreement, other than as set forth in Schedule F.
(v) Neither
the execution and delivery of the Purchaser Documents nor the consummation
or
performance of any of the transactions contemplated thereby will, directly
or
indirectly (with or without notice or lapse of time) (i) contravene, conflict
with, or result in a violation of any provision of the charter documents
of the
Purchasers, or (ii) contravene, conflict with, or result in a violation of,
or
give any governmental body or other person the right to challenge any of
the
contemplated transactions.
(w) To
the
knowledge of the Purchasers, the IBD Securities were issued by Interactive
Brand
Development, Inc. to the Purchasers in compliance with all federal and state
securities laws.
(x) There
are
no disputes between any of the Purchasers and Interactive Brand Development,
Inc., and there are no claims, actions or proceedings pending or, to the
knowledge of Purchasers, threatened against any of the Purchasers by Interactive
Brand Development, Inc., regarding the IBD Securities or the IBD Agreements
that
would be reasonably likely to result in a Material Adverse Affect on the
Company’s rights under the IBD Securities or the Company’s rights, as an
assignee, under any of the IBD Agreements.
(y) Exhibit
D
is a complete list of all the agreements related to the IBD Securities. Except
as set forth on Exhibit D, all of the agreements related to the IBD Securities
have been duly signed by all parties to the agreements.
7. Covenants
of Purchaser.
(a) Not
to
Short Sell Stock.
Purchaser, on behalf of itself, its affiliates, its successors and assigns
and
any other direct or indirect transferee holding any of the Warrants, the
Series
A Stock or the Registrable Securities, hereby covenants and agrees not to,
directly or indirectly, offer to "short sell", contract to "short sell" or
otherwise "short sell" or encourage others to "short sell" the securities
of the
Company, including, without limitation, shares of Common Stock that will
be
received as a result of the conversion of the Series A Stock or the exercise
of
the Warrants; provided, however, that nothing contained herein shall prohibit
the Purchasers from selling any shares of the Company's Common Stock "against
the box."
-15-
(b) Within
60
days after the Closing Date, Purchasers shall use commercially reasonable
efforts to obtain Interactive Brand Development, Inc.’s consent to the
assignment and transfer of the Series D Preferred Stock to the Company
hereunder; provided, however, that Purchasers shall not be required to incur
out-of-pocket expenses or costs to obtain or to attempt to obtain such consent;
and, provided, further, that Purchasers shall have no liability to the Company
arising out of the failure to obtain such consent.
8. Termination.
(a) This
Agreement may be terminated in the sole discretion of the Company by notice
to
Purchasers if at the Closing Date:
(i) the
representations and warranties made by Purchasers in Section 6 are not true
and
correct in all material respects; or
(ii) as
to the
Company, the sale of the Securities hereunder (i) is prohibited or enjoined
by
any applicable law or governmental regulation or (ii) subjects the Company
to
any penalty, or in its reasonable judgment, other onerous condition under
or
pursuant to any applicable law or government regulation that would materially
reduce the benefits to the Company of the sale of the Securities to Purchasers,
so long as such regulation, law or onerous condition was not in effect in
such
form at the date of this Agreement.
(b) This
Agreement may be terminated by the Purchasers by notice to the Company given
in
the event that the Company shall have failed, refused or been unable to satisfy
all material conditions on its part to be performed or satisfied hereunder
on or
prior to the Closing Date, or if after the execution and delivery of this
Agreement and immediately prior to the Closing Date, trading in securities
of
the Company on the OTC BB shall have been suspended.
(c) This
Agreement may be terminated by mutual written consent of all
parties.
9. Registration.
The Company shall prepare and file with the SEC a Registration Statement
on Form
SB-2 covering the resale of the maximum number of Conversion Shares issuable
upon conversion of the Series A Stock which may be acquired by the Purchasers
and the Warrant Shares issuable upon exercise of the Warrants (collectively,
the
"Registrable
Securities"),
on or before the date that is 130 days after the Closing Date, as set forth
in
the Registration Rights Agreement.
10. Indemnification.
In
consideration of the Company acquiring the IBD Securities, the Purchasers
jointly and severally shall defend, protect, indemnify and hold harmless
the
Company from and against any and all causes of action, suits, claims, losses,
costs, liabilities and damages incurred by any the Company as a result of,
or
arising out of, the gross negligence or willful misconduct of any Purchaser
with
respect to the Purchaser's ownership of the IBD Securities free and clear
of
encumbrances.
11. Event
of Default.
If an
Event of Default (as defined below) occurs and remains uncured for a period
of
15 days, each Purchaser shall have the right to exercise any or all of the
rights given to each Purchaser relating to the Securities, as further described
in the Series A Certificate of Designation. In addition, the Company shall
pay
the Purchasers an aggregate of $1,000 per day during which an Event of Default
is occurring and remains uncured.
-16-
Each
Purchaser need not provide and the Company hereby waives any presentment,
demand, protest or other notice of any kind, and each Purchaser may immediately
and without expiration of any grace period enforce any and all of its rights
and
remedies hereunder and all other remedies available to it under applicable
law.
Such declaration may be rescinded and annulled by Purchaser at any time prior
to
payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.
An
"Event
of Default"
shall include the commencement by the Company of a voluntary case or proceeding
under the bankruptcy laws or the Company's failure to: (i) discharge
or
stay a bankruptcy proceeding within 60 days of such action being taken against
the Company, (ii) file the Registration Statement with the SEC on or before
the
date that is 130 days after the Closing Date, (iii) maintain trading
of the
Company’s Common Stock on the OTC BB except for any periods when the stock is
listed on the NASDAQ Small Stock Market, the NASDAQ National Stock Market,
the
AMEX or the NYSE, (iv) pay the Purchasers' legal expenses referred to in
Section
14 below within five (5) days after the Closing Date; or (vi) deliver to
Purchasers, or Purchasers' broker, as directed, Common Stock that any Purchaser
has converted within three (3) business days of such conversion.
12. Notices.
All
communications hereunder shall be in writing and shall be hand delivered,
mailed
by first-class mail, couriered by next-day air courier or by facsimile and
confirmed in writing (i) if to the Company, at the addresses set forth below,
or
(ii) if to a Purchaser, to the address set forth on the signature page
hereto.
If
to the Company:
00000
Xxxxx Xxxx, Xxxxx 000
Xxxxxx
Xxxxxx, XX 00000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000)
000-0000
Attention:
Xxxxxx Xxxxxxxx, CFO
All
such notices and communications shall be deemed to have been duly given:
(i)
when delivered by hand, if personally delivered; (ii) five business days
after
being deposited in the mail, postage prepaid, if mailed certified mail, return
receipt requested; (iii) one business day after being timely delivered to
a
next-day air courier guaranteeing overnight delivery; (iv) the date of
transmission if sent via facsimile to the facsimile number as set forth in
this
Section or the signature page hereof prior to 6:00 p.m. on a business day,
or
(v) the business day following the date of transmission if sent via facsimile
at
a facsimile number set forth in this Section or on the signature page hereof
after 6:00 p.m. or on a date that is not a business day. Change of a party's
address or facsimile number may be designated hereunder by giving notice
to all
of the other parties hereto in accordance with this Section.
-17-
13. Survival
Clause.
The respective representations, warranties, agreements and covenants of the
Company and the Purchasers set forth in this Agreement shall survive until
December 31, 2006, except that the rights and remedies of Purchasers upon
the
existence of an Event of Default shall continue to survive.
14. Fees
and Expenses.
Within five (5) days of the Closing Date, the Company agrees to pay Purchasers'
legal expenses incurred in connection with the preparation and negotiation
of
the Transaction Documents up to an amount of $12,500.
15. Attorneys'
Fees.
If any action at law or in equity is necessary to enforce or interpret the
terms
of this Agreement, the Warrants or the Series A Certificate of Designation,
the
prevailing party or parties shall be entitled to receive from the other party
or
parties reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other relief to which the prevailing party or parties may
be
entitled.
16. Successors.
This Agreement shall inure to the benefit of and be binding upon the Purchasers
and the Company and their respective successors and legal representatives,
and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim
under or in respect of this Agreement, or any provisions herein contained;
this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit
of
no other person. Neither the Company nor any Purchaser may assign this Agreement
or any rights or obligation hereunder without the prior written consent of
the
other party.
17. No
Waiver; Modifications in Writing.
No
failure or delay on the part of the Company or the Purchasers in exercising
any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude
any
other or further exercise thereof or the exercise of any other right, power
or
remedy. The remedies provided for herein are cumulative and are not exclusive
of
any remedies that may be available to the Company or the Purchasers at law
or in
equity or otherwise. No waiver of or consent to any departure by the Company
or
the Purchasers from any provision of this Agreement shall be effective unless
signed in writing by the party entitled to the benefit thereof, provided
that
notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless
signed
in writing by or on behalf of each of the Company and the Purchaser. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Company or the Purchasers from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required
by
this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
18. Entire
Agreement.
This Agreement, together with Transaction Documents, constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto
with
respect to the subject matter hereof and thereof.
-18-
19. Severability.
If any provision of this Agreement is held to be invalid or unenforceable
in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired
thereby.
20. APPLICABLE
LAW.
THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS
SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PROVISIONS RELATING
TO
CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL COURTS
LOCATED IN THE CITY OF LOS ANGELES, CALIFORNIA AND HEREBY SUBMIT TO
THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
21. Counterparts.
This Agreement may be executed in two or more counterparts and may be delivered
by facsimile transmission, each of which shall be deemed an original, but
all of
which together shall constitute one and the same instrument.
22. If
the
foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon
this
Agreement shall constitute a binding agreement among the Company and the
Purchasers.
Very
truly yours,
By: ___________________________
Name:
Xxxxxxx Xxxxxxxx
Title:
President
-19-
ACCEPTED
AND AGREED:
|
Shares
of Series A Stock: 589,116
Warrant
Shares: 37,468
|
Mecator
Momentum Fund, L.P.
By: __________________________
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
Shares
of Series A Stock: 700,680
Warrant
Shares: 44,563
|
Mecator
Momentum Fund III, L.P.
By: __________________________
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
Shares
of Series A Stock: 2,043,537
Warrant
Shares: 129,969
|
Monarch
Pointe Fund Ltd.
By: __________________________
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
Shares
of Series A Stock: -0-
Warrant
Shares: 53,000
|
M.A.G.
Capital, LLC
By: __________________________
Xxxxx
Xxxxxxxxx
Managing
Partner
|
|
Addresses
for Notice to any Purchaser:
c/o
M.A.G. Capital, LLC
000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxxxxxxx
Facsimile:
(000) 000-0000
with
copy to:
Xxxxx
X. Xxxxx, Esq.
Sheppard,
Mullin, Xxxxxxx & Xxxxxxx LLP
000
Xxxxx Xxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
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Schedules
Schedule
A - Subsidiaries
ITVN,
Inc., a Nevada corporation
Schedule
F - IBD Breaches
IBD
is currently in default on the Series E Preferred Stock, in connection with
the
following: (i) IBD’s failure to pay monthly dividends since the issuance of the
Series E Preferred Stock at an annual rate of 6%; (ii) IBD’s failure to file the
Information Statement relating to Stockholder Approval with the SEC within
five
trading days after the Closing Date; and (iii) IBD’s failure to obtain SEC
approval of the Information Statement relating to the Stockholder Approval
on or
before November 30, 2004. IBD has failed to pay dividends on the Series E
Preferred Stock since November 1, 2004.
IBD
was required, in connection with the issuance of the Series E Preferred Stock,
to ensure that the shares issuable upon conversion of the Series E Preferred
Stock would be listed on the AMEX.
Pursuant
to the Registration Rights Agreement relating to the Series E Preferred Stock,
IBD was required to use its best efforts to cause the Registration Statement
relating to the Series E Preferred Stock to become effective within 100 days
following September 29, 2004.
Pursuant
to the Registration Rights Agreement relating to the Series D Preferred Stock,
IBD is required to use its best efforts to maintain the effectiveness of
the
Registration Statement relating to the Series D Preferred Stock
Exhibit
A
Warrant
Exhibit
B
Certificate
of Designation of
Series
A Convertible Preferred Stock
Exhibit
C
Registration
Rights Agreement
Exhibit
D
IBD
Agreements
Subscription
Agreement dated September 20, 2004 among Care Concepts I, Inc., Monarch Pointe
Fund, Ltd. and Mercator Advisory Group, LLC and the Supplement dated October
15,
2004. The Supplement dated October 15, 2004 is not signed by the parties
thereto.
Certificate
of Designation of Preferences and Rights of Series D Convertible Preferred
Stock
Certificate
of Designation of Preferences and Rights of Series E Convertible Preferred
Stock
Settlement
and Assignment Agreement dated February 28, 2005 by and among Mercator Momentum
Fund, LP, Mercator Momentum Fund III, LP and Monarch Pointe Fund, Ltd. and
PHSL
Worldwide, Inc. This agreement is signed by all parties except Interactive
Brand
Development, Inc.
Series
G
Preferred Stock Escrow Agreement dated September 27, 2004 by and among Care
Concepts I, Inc., GMI Investment Partners, The Xxxxxx Vector Investment
Trust,
Faries
Capital LLC, Granite Management, LLC, Granite Financial Partners LLC, Summit
Trading Limited, Xxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxx & Xxxxxx LLP, XxXxxxxxxx & Xxxxx LLP, Xxxxxx Partners
LLP, and Xxxxxxxxx Xxxxxxxxx. This agreement is not signed by the parties
thereto.
Letter
Agreement dated September 20, 2004 by Xxxxxxx Xxxxxx Xxxxxxxxx Xxxx & Xxxxxx
LLP
Registration
Rights Agreement dated February 28, 2005 between Mercator Momentum Fund LP,
Mercator Momentum Fund III, LP, Monarch Pointe Fund, Ltd. and Interactive
Brand
Development, Inc.
Registration
Rights Agreement dated September 29, 2004 between Monarch Pointe Fund, Ltd.,
Mercator Advisory Group, LLC and Care Concepts I, Inc.
Interactive
Brand Development, Inc. Series D Preferred Stock Certificate Number PD-35
dated
September 11, 2005 for 9,520 shares issued in the name of Mercator Momentum
Fund
III, LP (together with stock power)
Interactive
Brand Development, Inc. Series D Preferred Stock Certificate Number PD-33
dated
September 11, 2005 for 9,908 shares issued in the name of Mercator Momentum
Fund, LP (together with stock power)
Interactive
Brand Development, Inc. Series D Preferred Stock Certificate Number PD-20
dated
March 25, 2005 for 34,988 shares issued in the name of Monarch Pointe Fund,
Ltd.
(together with stock power)
Interactive
Brand Development, Inc. Series D Preferred Stock Certificate Number PD-19
dated
March 25, 2005 for 1,749 shares issued in the name of Mercator Momentum Fund
III, LP (together with stock power)
Interactive
Brand Development, Inc. Series D Preferred Stock Certificate Number PD-18
dated
March 25, 2005 for 1,749 shares issued in the name of Mercator Momentum Fund,
LP
(together with stock power)
Care
Concepts I, Inc. Series G Preferred Stock Certificate Number P-G5 dated October
21, 2004 for 4,373,784 shares issued in the name of GMI Investment Partners,
together with stock power assigning and transferring such shares to Monarch
Pointe Fund, Ltd. (together with stock power)
Interactive
Brand Development, Inc. Series E Preferred Stock Certificate Number PE-3
dated
April 20, 2005 for 1,000 shares issued in the name of Monarch Pointe Fund,
Ltd.
(together with stock power)
Interactive
Brand Development, Inc. Series E Preferred Stock Certificate Number PE-2
dated
April 20, 2005 for 33,000 shares issued in the name of Monarch Pointe Fund,
Ltd.
(together with stock power)
Common
Stock Certificate Number 2718 dated April 26, 2005 for 200,000 shares of
Interactive Brand Development, Inc. Common Stock issued to Monarch Pointe
Fund,
Ltd. (together with stock power)
