EXHIBIT C
to Securities Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of October 20, 2005, between INTERACTIVE TELEVISION
NETWORKS, INC., a Nevada corporation, (the "Company") and PENTAGON BERNINI FUND,
LTD., an international business company organized under the laws of the British
Virgin Islands (the "Holder").
WHEREAS, the Holder has purchased a 17% Secured Convertible Debenture in
the aggregate principal amount of $4,000,000.00 (the "Debenture") pursuant to a
Securities Purchase Agreement, and Holder has the right to cause the Debenture
to be converted into shares of Common Stock, $0.001 par value (the "Common
Stock"), of the Company, pursuant to the conversion formula set forth in the
Debenture;
WHEREAS, the Debenture bears interest, and at the option of the Company,
subject to certain conditions, one-half of such interest may be paid by issuing
additional Debentures;
WHEREAS, at the option of the Company, subject to certain conditions, the
Company may pre-pay/redeem some of the principal of the Debentures;
WHEREAS, Holder has acquired Warrants (the "Warrants") from the Company,
pursuant to which the Holder has the right to purchase in the aggregate up to
One Million (1,000,000) shares of the Common Stock through the exercise of the
Warrants;
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the shares of Common Stock issuable upon
the conversion of the Debenture and the exercise of the Warrants.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registrable Securities. As used herein the terms "Registrable Security"
means each of the shares of Common Stock (i) issued upon the conversion of the
Debenture (the "Conversion Shares") or (ii) upon exercise of the Warrant (the
"Warrant Shares"), provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination that (a) it has been effectively
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and disposed of pursuant thereto, or (b) registration under the Securities Act
is no longer required for the immediate public distribution of such security.
The term "Registrable Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Section 1.
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2. Registration.
(a) The Company shall file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") within sixty (60) days after the date of this Agreement in order to
register the resale of the Registrable Securities under the Securities Act. Once
effective, the Company shall maintain the effectiveness of the Registration
Statement until the earlier of (i) the date that all of the Registrable
Securities have been sold, or (ii) the date that the Company receives an opinion
of counsel to the Company that all of the Registrable Securities may be freely
traded without registration under the Securities Act, under Rule 144 promulgated
under the Securities Act or otherwise.
(b) The Company will initially include in the Registration Statement
as Registrable Securities Three Million Six Hundred Sixty Seven Thousand
(3,667,000) shares of Common Stock registered for the benefit of Holder, Two
Million Five Hundred Thousand (2,500,000) shares of Common Stock registered for
the benefit of M.A.G. Capital, LLC and its affiliates and One Million Five
Hundred Thousand Five Hundred Thirty Three (1,500,533) shares of Common Stock
registered for the benefit of certain third parties.
3. Covenants of the Company with Respect to Registration.
The Company covenants and agrees as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement to become effective with the SEC as promptly as possible and in no
event more than 90 days after initial filing of the Registration Statement with
the SEC (or within 120 days after such filing date if the SEC provides comments
on the Registration Statement). Upon effectiveness and in no event more than 90
days after the initial filing of the Registration Statement with the SEC (or 120
days if the Registration Statement is subjected to a review by the SEC), the
Company shall file the final prospectus with the SEC pursuant to Rule 424(b) and
provide copies to Holder. If any stop order shall be issued by the SEC in
connection therewith, the Company shall use best efforts to obtain promptly the
removal of such order. Following the effective date of the Registration
Statement, the Company shall, upon the request of Holder, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities Act, and
any other documents necessary or incidental to the public offering of the
Registrable Securities, as shall be reasonably requested by the Holder to permit
the Holder to make a public distribution of the Holder's Registrable Securities.
The obligations of the Company hereunder with respect to the Holder's
Registrable Securities are subject to the Holder's furnishing to the Company
such appropriate information concerning the Holder, the Holder's Registrable
Securities and the terms of the Holder's offering of such Registrable Securities
as the Company may reasonably request in writing.
(a) The Company shall pay all costs, fees and expenses in connection
with the Registration Statement filed pursuant to Section 2 hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses; provided, however, that each Holder shall be
solely responsible for the fees of any counsel retained by the Holder in
connection with such registration and any transfer taxes or underwriting
discounts, commissions or fees applicable to the Registrable Securities sold by
the Holder pursuant thereto.
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(b) The Company will take all actions which may be required to
qualify or register the Registrable Securities included in the Registration
Statement for the offer and sale under the securities or blue sky laws of such
states as are reasonably requested by each Holder of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
4. Additional Terms.
(a) The Company shall indemnify and hold harmless the Holder and
each underwriter, within the meaning of the Securities Act, who may purchase
from or sell for any Holder, any Registrable Securities, from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
of a material fact contained in the Registration Statement, any other
registration statement filed by the Company under the Securities Act with
respect to the registration of the Registrable Securities, any post-effective
amendment to such registration statements, or any prospectus included therein or
caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission based upon information furnished or required to be
furnished in writing to the Company by the Holder or underwriter expressly for
use therein, which indemnification shall include each person, if any, who
controls any Holder or underwriter within the meaning of the Securities Act and
each officer, director, employee and agent of each Holder and underwriter;
provided, however, that the indemnification in this Section 4(a) with respect to
any prospectus shall not inure to the benefit of Holder or underwriter (or to
the benefit of any person controlling any Holder or underwriter) on account of
any such loss, claim, damage or liability arising from the sale of Registrable
Securities by the Holder or underwriter, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to such Holder or underwriter by the Company prior to the subject sale
and the subsequent prospectus was not delivered or sent by the Holder or
underwriter to the purchaser prior to such sale and provided further, that the
Company shall not be obligated to so indemnify any Holder or any such
underwriter or other person referred to above unless the Holder or underwriter
or other person, as the case may be, shall at the same time indemnify the
Company, its directors, each officer signing the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act, from and against any and all losses, claims, damages and liabilities caused
by any untrue statement of a material fact contained in the Registration
Statement, any registration statement or any prospectus required to be filed or
furnished by reason of this Agreement or caused by any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission based upon
information furnished in writing to the Company by the Holder or underwriter
expressly for use therein.
(b) If for any reason the indemnification provided for in the
preceding section is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, claim, damage, liability or
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expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations.
(c) Neither the filing of a Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by the
Holder shall impose upon any Holder any obligation to sell the Holder's
Registrable Securities.
(d) Holder, upon receipt of notice from the Company that an event
has occurred which requires a Post-Effective Amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of Registrable Securities until the Holder receives a copy
of a supplemented or amended prospectus from the Company, which the Company
shall provide as soon as practicable after such notice.
(e) If the Company fails to keep the Registration Statement referred
to above continuously effective during the requisite period, then the Company
shall, promptly upon the request of Holder, use best efforts to update the
Registration Statement or file a new registration statement covering the
Registrable Securities remaining unsold, subject to the terms and provisions
hereof.
(f) Holder agrees to provide the Company with any information or
undertakings reasonably requested by the Company in order for the Company to
include any appropriate information concerning the Holder in the Registration
Statement or in order to promote compliance by the Company or the Holder with
the Securities Act.
(g) The Company agrees that it shall cause each of its directors,
officers and shareholders owning ten percent (10%) or more of the Company's
outstanding Common Stock to refrain from selling any shares of the Company's
Common Stock until the Registration Statement has been declared effective.
(h) Commencing on the date hereof and continuing until such time as
the Debenture and Warrants are no longer outstanding Holder, on behalf of itself
and its affiliates, hereby covenants and agrees not to offer to "short sell", or
contract to "short sell" the securities of the Company against the unconverted
Debenture Shares or the un-exercised Warrants.
(i) Other than the Registrable Securities and an additional
4,000,533 shares, registered for the benefit of M.A.G. Capital, LLC and its
affiliates, and certain third parties set forth in Section 2(b) above, the
Company shall not include any other securities for registration in the
Registration Statement or file any other registration statement unless the
Registration Statement is effective.
5. Governing Law. The Registrable Securities will be, if and when issued,
delivered in New York. This Agreement shall be deemed to have been made and
delivered in the State of New York, County of New York and shall be governed as
to validity, interpretation, construction, effect and in all other respects by
the internal substantive laws of the State of New York, without giving effect to
the choice of law rules thereof.
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6. Amendment. This Agreement may only be amended by a written instrument
executed by the Company and the Holder.
7. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
8. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9. Notices. All communications hereunder shall be in writing and shall be
hand delivered, mailed by first-class mail, couriered by next-day air courier or
by facsimile at the addresses set forth below.
If to the Holder Pentagon Bernini Fund, Ltd.
c/o Pentagon Capital Management Plc
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Telephone No.: ▇▇▇ (▇)▇▇ ▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇ (▇)▇▇ ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
With a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company, Interactive Television Networks, Inc.
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Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CFO
All such notices and communications shall be deemed to have been duly given: (i)
three (3) days after it is received if sent by facsimile at the address and
number set forth above; provided that notices given by facsimile shall not be
effective, unless either (a) a duplicate copy of such facsimile notice is
promptly given by depositing the same in the mail, postage prepaid and addressed
to the party as set forth below or (b) the receiving party delivers a written
confirmation of receipt for such notice by any other method permitted under this
paragraph; and further provided that any notice given by facsimile received
after 5:00 p.m. (recipient's time) or on a non-business day shall be deemed
received on the next business day; (ii) five (5) business days after deposit in
the United States mail, certified, return receipt requested, postage prepaid,
and addressed to the party as set forth below; or (iii) the next business day
after deposit with an international overnight delivery service, postage prepaid,
addressed to the party as set forth below with next business day delivery
guaranteed; provided that the sending party receives confirmation of delivery
from the delivery service provider.
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10. Binding Effect; Benefits. Any Holder may assign its rights hereunder
if such assignment complies with all applicable securities and other laws, and
the assignee executes a counterpart of this Agreement agreeing to be bound by
all of its terms. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, legal representatives,
successors and assigns. Nothing herein contained, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective heirs, legal representatives and successors, any rights or remedies
under or by reason of this Agreement.
11. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
12. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
13. Jurisdiction. Each of the parties irrevocably agrees that any and all
suits or proceedings based on or arising under this Agreement may be brought
only in and shall be resolved in the federal or state courts located in the
State of New York, County of New York, and consents to the jurisdiction of such
courts for such purpose. Each of the parties irrevocably waives the defense of
an inconvenient forum to the maintenance of such suit or proceeding in any such
court. Each of the parties further agrees that service of process upon such
party mailed by first class mail to the address set forth in Section 9 shall be
deemed in every respect effective service of process upon such party in any such
suit or proceeding. Nothing herein shall affect the right of either party to
serve process in any other manner permitted by law. Each of the parties agrees
that a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.
14. Attorneys' Fees and Disbursements. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party or parties shall be entitled to receive from the other party or parties
reasonable attorneys' fees and disbursements in addition to any other relief to
which the prevailing party or parties may be entitled.
[The balance of this page is intentionally left blank.]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
INTERACTIVE TELEVISION NETWORKS, INC.
By:
Name: _________________________________
Its: President
HOLDER:
PENTAGON BERNINI FUND, LTD.
By: ___________________
Its: ____________________
By:
Name: _____________________
Its: _____________________
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