CONFIDENTIALITY AGREEMENT
The undersigned ("Purchaser") has requested that International Travel
CD's, Inc. (the "Company") provide Purchaser with a copy of the Securities
Purchase Agreement and other documents (the "Offering Documents") relating to
the Company's proposed offering of units comprised of shares of preferred stock
convertible into shares of its common stock and warrants to acquire shares of
its common stock (the "Offering").
Purchaser, as a condition to the receipt of the Offering Documents,
acknowledges and agrees as follows:
1. I acknowledge receipt of the Offering Documents.
2. I acknowledge that the Offering Documents have been furnished
to me on a confidential basis solely for the purpose of
enabling me to evaluate the Offering, and I agree not to
further distribute them, without the prior written consent of
the Company, except to my legal, financial or other personal
advisors, if any, who will use the Offering Documents on my
behalf solely for purposes of evaluating the Offering.
3. I acknowledge that any reproduction or distribution of the
Offering Documents, in whole or in part, or the direct or
indirect disclosure of the contents of the Offering Documents
for any other purpose, without the prior written consent of
the Company is prohibited.
4. By accepting the Offering Documents, I agree to be bound by
all terms and conditions specified herein.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇▇ acknowledges and agrees to abide by the
terms of this Confidentiality Agreement.
PURCHASER
Date: _______________________ By: __________________________________
Name: ________________________________
Title: _______________________________
Address: _____________________________
______________________________________
EXECUTION OF THIS DOCUMENT DOES NOT INDICATE ANY INTENT TO SUBSCRIBE FOR OR
PURCHASE THE SECURITIES OFFERED IN THE OFFERING DOCUMENTS. THIS DOCUMENT MUST BE
SIGNED AT THE TIME YOU RECEIVE THE ATTACHED OFFERING DOCUMENTS AND RETURNED TO
THE SECRETARY OF THE COMPANY.
INTERNATIONAL TRAVEL CD'S, INC.
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SECURITIES PURCHASE AGREEMENT
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SERIES A CONVERTIBLE PREFERRED STOCK AND
WARRANTS TO ACQUIRE COMMON STOCK
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__________________, 2004
CONFIDENTIAL
NOTICE TO OFFEREES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS SECURITIES
PURCHASE AGREEMENT AND THE OTHER OFFERING DOCUMENTS DO NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THE SECURITIES ARE BEING SOLD FOR INVESTMENT PURPOSES ONLY, WITHOUT A
VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED, RESOLD OR
OFFERED FOR RESALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND EFFECTIVE REGISTRATION OR QUALIFICATION UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR THE
AVAILABILITY OF AN EXEMPTION THEREFROM.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS SECURITIES PURCHASE AGREEMENT OR ANY OF THE OTHER OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONFIDENTIAL
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated
_____________, 2004, by and between INTERNATIONAL TRAVEL CD'S, INC., a Colorado
corporation (the "Company"), and the purchaser or purchasers identified on the
signature page hereof ("Purchaser").
R E C I T A L S:
WHEREAS, Purchaser desires to purchase and the Company desires to sell
units comprised of shares of preferred stock convertible into common stock and
warrants to acquire shares of common stock on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises hereof and the
agreements set forth herein below, the parties hereto hereby agree as follows:
1. The Offering.
(a) Private Offering. The securities offered by this
Agreement are being offered in a private offering (the "Offering") of up to
2,500,000 shares ("Shares") of Series A Convertible Preferred Stock, no par
value per share, and warrants ("Warrants") to acquire up to 2,500,000 shares of
common stock, no par value per share ("Common Stock"). The Shares and Warrants
will be sold in units ("Units") comprised of one (1) share of Series A
Convertible Preferred Stock and one (1) Warrant. The Units will be sold at a
purchase price of $.75 per Unit pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), and Rule 506 of Regulation D
thereunder. The Units are being offered solely to a limited number of
"accredited investors" as that term is defined in Rule 501(a) of the Securities
Act during an offering period commencing January [___], 2004, and terminating at
the sole discretion of the Company. A minimum of $300,000 of Units must be
subscribed for in the Offering before any subscriptions will be accepted by the
Company, and thereafter, subscriptions will be accepted by the Company when
received until the aggregate value of Units sold reaches $1,875,000. Each Share
is initially convertible into two (2) shares of Common Stock, subject to
adjustment, and each Warrant is initially exercisable into one (1) share of
Common Stock at an exercise price of $.60 per share, subject to adjustment. The
terms of the Shares are set forth in the Form of Certificate of Designation of
Series A Convertible Preferred Stock, attached hereto and made a part hereof as
Exhibit A (the "Certificate of Designation"), and the terms of the Warrants are
set forth in the Form of Warrant, attached hereto and made a part hereof as
Exhibit B (the "Warrant Purchase Agreement"). The Shares, Warrants and shares of
Common Stock issuable upon conversion or exercise, as applicable, of the Shares
or Warrants are hereinafter referred to collectively as the "Securities".
(b) Use of Proceeds. Assuming all of the Units in the
Offering are sold, the net proceeds to the Company are estimated to be
approximately $1,654,000 (after deducting offering expenses payable by the
Company estimated at $20,000 and assuming payment of the maximum amount of
finder's or placement fees of up to $93,750). The Company intends to use the net
proceeds for general working capital and other general corporate purposes.
(c) Placement and Finder's Fees. The Company reserves the
right to pay placement or finder's fees in connection with the sale of the Units
in an amount of up to five percent (5%) of the Purchase Price of such Units.
2. Sale and Purchase of Units.
(a) Sale and Purchase of Units. Subject to the terms and
conditions hereof, the Company agrees to sell, and ▇▇▇▇▇▇▇▇▇ agrees to purchase,
the number of Units specified on the signature page of this Agreement at a
purchase price of $.75 per Unit. The aggregate purchase price for the Units
shall be as set forth on the signature page hereto (the "Purchase Price") and
shall be payable upon execution hereof by check or wire transfer of immediately
available funds.
(b) Subscription Procedure. In order to purchase Units,
Purchaser shall deliver to the Company, at its principal executive office
identified in Section 16 hereof: (i) one completed and duly executed copy of
this Agreement; and (ii) immediately available funds in an amount equal to the
Purchase Price. Execution and delivery of this Agreement shall constitute an
irrevocable subscription for that number of Units set forth on the signature
page hereto. Payment for the Units may be made by wire transfer to:
______________________________
______________________________
______________________________
______________________________
______________________________
or by check made payable to: International Travel CD's, Inc., ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The minimum purchase that may be
made by a Purchaser is [____________] Units for a purchase price of
$[____________], although the Company may, in its sole discretion, accept
Agreements for a lesser number of Units. This Agreement may be rejected by the
Company, in whole or in part, in its sole discretion, in which event the
Purchase Price will be returned (by mail) to Purchaser within ten (10) business
days thereafter. Unless the Offering is otherwise terminated by the Company, as
soon as possible after the receipt and acceptance by the Company of this
Agreement and collection of the funds paid therefor, the Company will issue
certificates for the Shares to Purchaser, together with a copy of Purchaser's
executed Agreement countersigned by the Company and the Warrant Purchase
Agreement executed by the Company.
(c) Closing.
(i) Closing Date. Subject to satisfaction or
waiver of all conditions precedent set forth in this Agreement, the closing of
the Offering (the "Closing") shall take place at the offices of the Company at
10:00 a.m., local time on the date hereof or at such other time, date and place
as the parties may agree.
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(ii) Closing Transactions. At the Closing, the
Company shall deliver to each Purchaser certificates and an agreement
representing the number of Shares and Warrants, respectively, represented by the
number of Units specified on the signature page of this Agreement, against
payment of the Purchase Price specified on the signature page of this Agreement
by wire transfer or check payable to the Company.
3. Representations and Warranties of Purchaser. Purchaser
represents and warrants to the Company as follows:
(a) Organization and Qualification.
(i) If Purchaser is an entity, Purchaser is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with the corporate or other entity power and
authority to own and operate its business as presently conducted, except where
the failure to be or have any of the foregoing would not have a material adverse
effect on Purchaser, and Purchaser is duly qualified as a foreign corporation or
other entity to do business and is in good standing in each jurisdiction where
the character of its properties owned or held under lease or the nature of their
activities makes such qualification necessary, except for such failures to be so
qualified or in good standing as would not have a material adverse effect on it.
(ii) If Purchaser is an entity, the address of
its principal place of business is as set forth on the signature page hereto,
and if Purchaser is an individual, the address of its principal residence is as
set forth on the signature page hereto.
(b) Authority; ▇▇▇▇▇▇▇▇ and Effect of Agreement.
(i) If Purchaser is an entity, Purchaser has the
requisite corporate or other entity power and authority to execute and deliver
this Agreement and perform its obligations under this Agreement. The execution
and delivery of this Agreement by ▇▇▇▇▇▇▇▇▇, the performance by Purchaser of its
obligations hereunder and all other necessary corporate or other entity action
on the part of Purchaser have been duly authorized by its Boards of Directors or
similar governing body, and no other corporate or other entity proceedings on
the part of Purchaser is necessary for Purchaser to execute and deliver this
Agreement and perform its obligations hereunder.
(ii) This Agreement has been duly and validly
authorized, executed and delivered by Purchaser and, assuming it has been duly
and validly executed and delivered by the Company, constitutes a legal, valid
and binding obligation of Purchaser, in accordance with its terms.
(c) No Conflict; Required Filings and Consents. Neither
the execution and delivery of this Agreement by Purchaser nor the performance by
Purchaser of its obligations hereunder will: (i) if Purchaser is an entity,
conflict with Purchaser's Articles of Incorporation or Bylaws, or other similar
organizational documents; (ii) violate any statute, law, ordinance, rule or
regulation, applicable to Purchaser or any of the properties or assets of
Purchaser; or (iii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of Purchaser, or result in the creation or
imposition of any lien upon any properties, assets or business of Purchaser
under, any material contract or any order, judgment or decree to which Purchaser
is a party or by which it or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not have a material adverse effect on its obligation to perform
its covenants under this Agreement.
3
(d) Accredited Investor. Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act. If Purchaser is an entity, Purchaser was not formed for the
specific purpose of acquiring the Securities, and, if it was, all of Purchaser's
equity owners are "accredited investors" as defined above.
(e) No Government Review. Purchaser understands that
either the United States Securities and Exchange Commission ("SEC") nor any
securities commission or other governmental authority of any state, country or
other jurisdiction has approved the issuance of the Securities or passed upon or
endorsed the merits of the Securities or this Agreement, the Warrant Purchase
Agreement, the Certificate of Designation or any of the other documents relating
to the proposed Offering (collectively, the "Offering Documents"), or confirmed
the accuracy of, determined the adequacy of, or reviewed this Agreement or the
other Offering Documents.
(f) Investment Intent. The Securities are being acquired
for the Purchaser's own account for investment purposes only, not as a nominee
or agent and not with a view to the resale or distribution of any part thereof,
and Purchaser has no present intention of selling, granting any participation in
or otherwise distributing the same. By executing this Agreement, Purchaser
further represents that Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or third person with respect to any of the
Securities.
(g) Restrictions on Transfer. Purchaser understands that
the Securities are "restricted securities" as such term is defined in Rule 144
under the Securities Act and have not been registered under the Securities Act
or registered or qualified under any state securities law, and may not be,
directly or indirectly, sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act and registration or qualification under applicable state securities laws or
the availability of an exemption therefrom. In any case where such an exemption
is relied upon by Purchaser from the registration requirements of the Securities
Act and the registration or qualification requirements of such state securities
laws, Purchase shall furnish the Company with an opinion of counsel stating that
the proposed sale or other disposition of such securities may be effected
without registration under the Securities Act and will not result in any
violation of any applicable state securities laws relating to the registration
or qualification of securities for sale, such counsel and opinion to be
satisfactory to the Company. Purchaser acknowledges that it is able to bear the
economic risks of an investment in the Company Securities for an indefinite
period of time, and that its overall commitment to investments that are not
readily marketable is not disproportionate to its net worth.
4
(h) Investment Experience. Purchaser has such knowledge,
sophistication and experience in financial, tax and business matters in general,
and investments in securities in particular, that it is capable of evaluating
the merits and risks of this investment in the Securities, and Purchaser has
made such investigations in connection herewith as it deemed necessary or
desirable so as to make an informed investment decision without relying upon the
Company for legal or tax advice related to this investment. In making its
decision to acquire the Securities, Purchaser has not relied upon any
information other than information provided to Purchaser by the Company or its
representatives and contained herein and in the other Offering Documents.
(i) Access to Information. Purchaser acknowledges that it
has had access to and has reviewed all documents and records relating to the
Company, including, but not limited to, the Company's filings with the SEC, that
it has deemed necessary in order to make an informed investment decision with
respect to an investment in the Securities; that it has had the opportunity to
ask representatives of the Company certain questions and request certain
additional information regarding the terms and conditions of such investment and
the finances, operations, business and prospects of the Company and has had any
and all such questions and requests answered to its satisfaction; and that it
understands the risks and other considerations relating to such investment.
(j) Reliance on Representations. Purchaser understands
that the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of the federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities. Purchaser represents
and warrants to the Company that any information which Purchaser has heretofore
furnished or furnishes herewith to the Company is complete and accurate, and
further represents and warrants that it will notify and supply corrective
information to the Company immediately upon the occurrence of any change therein
occurring prior to the Company's issuance of the Securities. Within five (5)
days after receipt of a request from the Company, Purchaser will provide such
information and deliver such documents as may reasonably be necessary to comply
with any and all laws and regulations to which the Company is subject.
(k) No General Solicitation. Purchaser is unaware of, and
in deciding to participate in the Offering is in no way relying upon, and did
not become aware of the Offering through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media, or broadcast over television or radio or the
internet, in connection with the Offering.
(l) Placement and Finder's Fees. No agent, broker,
investment banker, finder, financial advisor or other person acting on behalf of
Purchaser or under its authority is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or indirectly, in
connection with the Offering, and no person is entitled to any fee or commission
or like payment in respect thereof based in any way on agreements, arrangements
or understanding made by or on behalf of Purchaser.
5
(m) Legends. The certificates and agreements evidencing
the Securities shall have endorsed thereon the following legend (and appropriate
notations thereof will be made in the Company's stock transfer books), and stop
transfer instructions reflecting the these restrictions on transfer will be
placed with the transfer agent of the Securities:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION
THEREFROM. NO TRANSFER OF THE SECURITIES REPRESENTED HEREBY MAY BE MADE
IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION UNLESS THERE SHALL
HAVE BEEN DELIVERED TO THE ISSUER A WRITTEN OPINION OF UNITED STATES
COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
4. Representations and Warranties of the Company. The Company
represents and warrants to Purchaser as follows:
(a) Organization and Qualification. The Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with the corporate power and authority to own and
operate its business as presently conducted, except where the failure to be or
have any of the foregoing would not have a material adverse effect on the
Company. The Company is duly qualified as a foreign corporation or other entity
to do business and is in good standing in each jurisdiction where the character
of its properties owned or held under lease or the nature of their activities
makes such qualification necessary, except for such failures to be so qualified
or in good standing as would not have a material adverse effect on the Company.
(b) Authority; ▇▇▇▇▇▇▇▇ and Effect of Agreement.
(i) The Company has the requisite corporate
power and authority to execute and deliver this Agreement, perform its
obligations under this Agreement, and conduct the Offering. The execution and
delivery of this Agreement by the Company, the performance by the Company of its
obligations hereunder, the Offering and all other necessary corporate action on
the part of the Company have been duly authorized by its Board of Directors, and
no other corporate proceedings on the part of the Company is necessary to
authorize this Agreement or the Offering. This Agreement has been duly and
validly executed and delivered by the Company and, assuming that it has been
duly authorized, executed and delivered by Purchaser, constitutes a legal, valid
and binding obligation of the Company, in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
6
(ii) The Shares have been duly authorized and,
when issued and paid for in accordance with this Agreement, will be validly
issued, fully paid and non-assessable shares of Series A Convertible Preferred
Stock with no personal liability resulting solely from the ownership of such
shares and will be free and clear of all liens, charges, restrictions, claims
and encumbrances imposed by or through the Company. The shares of Common Stock
issuable upon exercise of the Warrants have been duly reserved for issuance upon
exercise of the Warrants and, when issued and paid for in accordance with the
Warrants, will be duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock with no personal liability resulting solely from the
ownership of such shares and will be free and clear of all liens, charges,
restrictions, claims and in encumbrances imposed by or through the Company.
(c) No Conflict; Required Filings and Consents. Neither
the execution and delivery of this Agreement by the Company nor the performance
by the Company of its obligations hereunder will: (i) conflict with the
Company's Articles of Incorporation or Bylaws; (ii) violate any statute, law,
ordinance, rule or regulation, applicable to the Company or any of the
properties or assets of the Company; or (iii) violate, breach, be in conflict
with or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or permit the termination of any
provision of, or result in the termination of, the acceleration of the maturity
of, or the acceleration of the performance of any obligation of the Company, or
result in the creation or imposition of any lien upon any properties, assets or
business of the Company under, any material contract or any order, judgment or
decree to which the Company is a party or by which it or any of its assets or
properties is bound or encumbered except, in the case of clauses (ii) and (iii),
for such violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect on
its obligation to perform its covenants under this Agreement; and
(d) Placement and Finder's Fees. Except as provided in
Section 1(c), neither the Company nor any of its respective officers, directors,
employees or managers, has employed any broker, finder, advisor or consultant,
or incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees, advisory fees or consulting fees in connection
with the Offering for which the Company has or could have any liability.
5. Indemnification. Purchaser agrees to indemnify, defend and
hold harmless the Company and its respective affiliates and agents from and
against any and all demands, claims, actions or causes of action, judgments,
assessments, losses, liabilities, damages or penalties and reasonable attorneys'
fees and related disbursements incurred by the Company which arise out of or
result from a breach of any representations or warranties made by Purchaser
herein, and Purchaser agrees that in the event of any breach of any
representations or warranties made by Purchaser herein, the Company may, at its
option, forthwith rescind the sale of the Units to Purchaser.
7
6. Registration Rights. The Company covenants and agrees as
follows:
6.1 For the purpose of this Section 6, the following
definitions shall apply:
(a) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
(b) "Person" shall mean an individual,
partnership (general or limited), corporation, limited liability company, joint
venture, business trust, cooperative, association or other form of business
organization, whether or not regarded as a legal entity under applicable law, a
trust (inter vivos or testamentary), an estate of a deceased, insane or
incompetent person, a quasi-governmental entity, a government or any agency,
authority, political subdivision or other instrumentality thereof, or any other
entity.
(c) "Register," "registered," and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or order of
effectiveness of such registration statement or document.
(d) "Registration Statement" shall mean any
registration statement of the Company filed with the SEC pursuant to the
provisions of Section 6.2 of this Agreement, which covers the resale of the
Restricted Stock on an appropriate form then permitted by the SEC to be used for
such registration and the sales contemplated to be made thereby under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including any pre-
and post- effective amendments thereto, in each case including the prospectus
contained therein, all exhibits thereto and all materials incorporated by
reference therein.
(e) "Restricted Stock" shall mean (i) the shares
of Common Stock issuable upon conversion of the Shares; (ii) the shares of
Common Stock issuable upon exercise of the Warrants; and (iii) any additional
shares of Common Stock of the Company issued or issuable after the date hereof
in respect of any of the foregoing securities, by way of a stock dividend or
stock split; provided that as to any particular shares of Restricted Stock, such
securities shall cease to constitute Restricted Stock when (x) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of thereunder, (y) such securities are permitted to be transferred pursuant to
Rule 144 (or any successor provision to such rule) under the Securities Act or
(z) such securities are otherwise freely transferable to the public without
further registration under the Securities Act.
8
(f) "Selling Stockholders" shall mean Purchaser
and any other purchaser of Units in the Offering, and their respective
successors and assigns.
6.2. Registration of the Shares.
(a) The Company shall notify all Selling
Stockholders in writing at least twenty (20) days prior to the filing of any
registration statement under the Securities Act for purposes of registering
securities of the Company, excluding registration statements on SEC Forms S-4,
S-8 or any similar or successor forms, and will afford each such Selling
Stockholder an opportunity to include in such registration statement all or part
of such Restricted Stock held by such Selling Stockholder. Each Selling
Stockholder desiring to include in any such registration statement all or any
part of the Restricted Stock held by it shall, within ten (10) days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Restricted Stock by
such Selling Stockholder. If a Selling Stockholder decides not to include all of
its Restricted Stock in any registration statement thereafter filed by the
Company, such Selling Stockholder shall nevertheless continue to have the right
to include any Restricted Stock in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein. The
Company may, without the consent of the Selling Stockholders, withdraw such
registration statement prior to its becoming effective if the proposal to
register the securities proposed to be registered thereby is abandoned.
(b) In the event that any registration pursuant
to Section 6.2(a) shall be, in whole or in part, an underwritten public offering
of Common Stock on behalf of the Company, all Purchasers proposing to distribute
their Restricted Stock through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If the managing underwriter
thereof advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in such registration (i)
first, the securities the Company proposes to sell, and (ii) second, the
Restricted Stock and any other registrable securities eligible and requested to
be included in such registration to the extent that the number of shares to be
registered under this clause (ii) will not, in the opinion of the managing
underwriter, adversely affect the offering of the securities pursuant to clause
(i). In such a case, shares shall be registered pro rata among the holders of
such Restricted Stock and registrable securities on the basis of the number of
shares eligible for registration that are owned by all such holders and
requested to be included in such registration.
(c) Notwithstanding anything to the contrary
contained herein, the Company's obligation in Sections 6.2(a) and 6.2(b) above
shall extend only to the inclusion of the Restricted Stock in a Registration
Statement. The Company shall have no obligation to assure the terms and
conditions of distribution, to obtain a commitment from an underwriter relative
to the sale of the Restricted Stock or to otherwise assume any responsibility
for the manner, price or terms of the distribution of the Restricted Stock.
9
(d) The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 6.2
prior to the effectiveness of such registration without thereby incurring
liability to the holders of the Restricted Stock, regardless of whether any
holder has elected to include securities in such registration. The Registration
Expenses (as defined in Section 6.5) of such withdrawn registration shall be
borne by the Company in accordance with Section 6.4 hereof.
6.3. Registration Procedures. Whenever it is obligated to
register any Restricted Stock pursuant to this Agreement, the Company shall:
(a) prepare and file with the SEC a Registration
Statement with respect to the Restricted Stock in the manner set forth in
Section 6.2 hereof and use its reasonable best efforts to cause such
Registration Statement to become effective as promptly as possible and to remain
effective until the earlier of (i) the sale of all shares of Restricted Stock
covered thereby, (ii) the availability under Rule 144 for the Selling
Stockholder to immediately, freely resell without restriction all Restricted
Stock covered thereby, or (iii) one (1) year from the effective date of the
first Registration Statement filed by the Company with the SEC pursuant to this
Agreement or with respect to any subsequent Registration Statement, 180 days
from the effective date of such Registration Statement;
(b) prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the period specified
in Section 6.3(a) above and to comply with the provisions of the Act with
respect to the disposition of all Restricted Stock covered by such Registration
Statement in accordance with the intended method of disposition set forth in
such Registration Statement for such period;
(c) furnish to the Selling Stockholders such
number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus) as such person may reasonably
request in order to facilitate the public sale or other disposition of the
Restricted Stock covered by such Registration Statement;
(d) use its reasonable best efforts to register
or qualify the Restricted Stock covered by such Registration Statement under the
state securities laws of such jurisdictions as any Selling Stockholder shall
reasonably request; provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) in the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter(s) of such
offering. Each Purchaser participating in such underwriting shall also enter
into and perform its obligations under such an agreement, as described in
Section 6.2(b);
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(f) immediately notify each Selling Stockholder
at any time when a prospectus relating thereto is required to be delivered under
the Act, of the happening of any event as a result of which the prospectus
contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required or
necessary to be stated therein in order to make the statements contained therein
not misleading in light of the circumstances under which they were made. The
Company will use reasonable efforts to amend or supplement such prospectus in
order to cause such prospectus not to include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
under which they were made;
(g) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection with such Registration Statements as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement;
(h) make available for inspection by any Selling
Stockholder and any attorney, accountant or other agent retained by any Selling
Stockholder, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Selling
Stockholder, attorney, accountant or agent in connection with such Registration
Statement; provided, however, that such Selling Stockholder, underwriter,
attorney or accountant shall agree to hold in confidence and trust all
information so provided;
(i) use its reasonable best efforts to list the
Restricted Stock covered by such Registration Statement on each exchange or
automated quotation system on which similar securities issued by the Company are
then listed (with the listing application being made at the time of the filing
of such Registration Statement or as soon thereafter as is reasonably
practicable);
(j) notify each Selling Stockholder of any
threat by the SEC or state securities commission to undertake a stop order with
respect to sales under the Registration Statement; and
(k) cooperate in the timely removal of any
restrictive legends from the shares of Restricted Stock in connection with the
resale of such shares covered by an effective Registration Statement.
6.4. Delay of Registration. No Selling Stockholder shall
have any right to obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 6.
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6.5 Expenses.
(a) For the purposes of this Section 6.5, the
term "Registration Expenses" shall mean: all expenses incurred by the Company in
complying with Section 6.2 of this Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, reasonable fees and
disbursements of a single special counsel for the Selling Stockholders, fees
under state securities laws, fees of the National Association of Securities
Dealers, Inc. ("NASD"), fees and expenses of listing shares of Restricted Stock
on any securities exchange or automated quotation system on which the Company's
shares are listed and fees of transfer agents and registrars. The term "Selling
Expenses" shall mean: all underwriting discounts and selling commissions
applicable to the sale of Restricted Stock and all accountable or
non-accountable expenses paid to any underwriter in respect of such sale.
(b) Except as otherwise provided herein, the
Company will pay all Registration Expenses in connection with the Registration
Statements filed pursuant to Section 6.2 of this Agreement. All Selling Expenses
in connection with any Registration Statements filed pursuant to Section 6.1 of
this Agreement shall be borne by the Selling Stockholders pro rata on the basis
of the number of shares registered by each Selling Stockholder whose shares of
Restricted Stock are covered by such Registration Statement, or by such persons
other than the Company (except to the extent the Company may be a seller) as
they may agree.
6.6. Obligations of the Selling Stockholders.
(a) In connection with each registration
hereunder, each Selling Stockholder will furnish to the Company in writing such
information with respect to it and the securities held by it and the proposed
distribution by it, as shall be reasonably requested by the Company in order to
assure compliance with applicable federal and state securities laws as a
condition precedent to including the Selling Stockholder's Restricted Stock in
the Registration Statement. Each Selling Stockholder shall also promptly notify
the Company of any changes in such information included in the Registration
Statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact required or necessary to
be stated therein in order to make the statements contained therein not
misleading in light of the circumstances under which they were made.
(b) In connection with the filing of the
Registration Statement, each Selling Stockholder shall furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with such Registration Statement or prospectus.
(c) In connection with each registration
pursuant to this Agreement, each Selling Stockholder agrees that it will not
effect sales of any Restricted Stock until notified by the Company of the
effectiveness of the Registration Statement, and thereafter will suspend such
sales after receipt of telegraphic or written notice from the Company to suspend
sales to permit the Company to correct or update a Registration Statement or
prospectus. At the end of any period during which the Company is obligated to
keep a Registration Statement current, each Selling Stockholder shall
discontinue sales of Restricted Stock pursuant to such Registration Statement
upon receipt of notice from the Company of its intention to remove from
registration the Restricted Stock covered by such Registration Statement which
remains unsold, and each Selling Stockholder shall notify the Company of the
number of shares registered which remain unsold immediately upon receipt of such
notice from the Company.
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6.7. Information Blackout and Holdbacks.
(a) At any time when a Registration Statement
effected pursuant to Section 6.2 is effective, upon written notice from the
Company to Purchaser that the Company has determined in good faith that the sale
of Restricted Stock pursuant to the Registration Statement would require
disclosure of non-public material information, Purchaser shall suspend sales of
Restricted Stock pursuant to such Registration Statement until such time as the
Company notifies Purchaser that such material information has been disclosed to
the public or has ceased to be material, or that sales pursuant to such
Registration Statement may otherwise be resumed.
(b) Notwithstanding any other provision of this
Agreement, Purchaser shall not effect any public sale or distribution (including
sales pursuant to Rule 144 under the Securities Act), if and when available, of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the thirty (30) days
prior to the commencement of any primary offering to be undertaken by the
Company of shares of its unissued Common Stock ("Primary Offering"), which may
also include other securities, and ending one hundred twenty (120) days after
completion of any such Primary Offering, unless the Company, in the case of a
non-underwritten Primary Offering, or the managing underwriter, in the case of
an underwritten Primary Offering, otherwise agree.
6.8. Indemnification.
(a) The Company agrees to indemnify, to the
extent permitted by law, each Selling Stockholder, such Selling Stockholder's
respective partners, officers, directors, underwriters and each Person who
controls any Selling Stockholder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by (i) any
untrue statement of or alleged untrue statement of material fact contained in
the Registration Statement, prospectus or preliminary prospectus or any
amendment or supplement thereto, (ii) any omission of or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law in connection with the offering covered by such
registration statement ("Violations"); provided, however, that the indemnity
agreement contained in this Section 6.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in for any loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such Selling Stockholder, partner, officer, director,
underwriter or controlling person of such Selling Stockholder.
13
(b) To the extent permitted by law, each Selling
Stockholder shall indemnify and hold harmless the Company, each of its
directors, its officers and each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter and any other Selling
Stockholder selling securities under such registration statement or any of such
other Selling Stockholder's partners, directors or officers or any person who
controls such Selling Stockholder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Selling Stockholder, or
partner, director, officer or controlling person of such other Selling
Stockholder, may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation (i) occurs in reliance upon and in conformity with written information
furnished by such Selling Stockholder under an instrument duly executed by such
Selling Stockholder for use in connection with such registration; (ii) occurs as
a result of any failure to deliver a copy of the prospectus relating to such
Registration Statement, or (iii) occurs as a result of any disposition of the
Restricted Stock in a manner that fails to comply with the permitted methods of
distribution identified within the Registration Statement.
(c) Any Person entitled to indemnification
hereunder shall (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification (provided that the failure
to give prompt notice shall not impair any Person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying party),
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) If the indemnification provided for in this
Section 6.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such 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 indemnifying party on the one hand and of the
indemnified party on the other in connection with the violation(s) described in
Section 6.8(a) that resulted in such loss, claim, damage or liability, as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, that in no event
shall any contribution by a Selling Stockholder hereunder exceed the net
proceeds from the offering received by such Selling Stockholder.
14
(e) The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the transfer of
securities. The Company also agrees to make such provisions as are reasonably
requested by any indemnified party for contribution to such party in the event
the Company's indemnification is unavailable for any reason.
7. Confidentiality. Purchaser acknowledges and agreements that:
(a) All of the information contained herein and in the
other Offering Documents is of a confidential nature and may be regarded as
material non-public information under Regulation FD of the Securities Act.
(b) This Agreement and the other Offering Documents have
been furnished to Purchaser by the Company for the sole purpose of enabling
Purchaser to consider and evaluate an investment in the Company, and will be
kept confidential by Purchaser and not used for any other purpose.
(c) The information contained herein shall not, without
the prior written consent of the Company, be disclosed by Purchaser to any
person or entity, other than Purchaser's personal financial and legal advisors
for the sole purpose of evaluating an investment in the Company, and will not,
directly or indirectly, disclose or permit Purchaser's personal financial and
legal advisors to disclose, any of such information without the prior written
consent of the Company.
(d) Purchaser shall make its representatives aware of the
terms of this section and to be responsible for any breach of this Agreement by
such representatives.
(e) Purchaser shall not, without the prior written
consent of the Company, directly or indirectly, make any statements, public
announcements or release to trade publications or the press with respect to the
subject matter of this Agreement and the other Offering Documents.
(f) If ▇▇▇▇▇▇▇▇▇ decides to not pursue further
investigation of the Company or to not participate in the Offering, Purchaser
will promptly return this Agreement, the other Offering Documents and any
accompanying documentation to the Company.
8. Non-Public Information. Purchaser acknowledges that
information concerning the matters that are the subject matter of this Agreement
may constitute material non-public information under United States federal
securities laws, and that United States federal securities laws prohibit any
person who has received material non-public information relating to the Company
from purchasing or selling securities of the Company, or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell securities of the
Company. Accordingly, until such time as any such non-public information has
been adequately disseminated to the public, Purchaser shall not purchase or sell
any securities of the Company, or communicate such information to any other
person.
15
9. Entire Agreement. This Agreement contains the entire agreement
between the parties and supercedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereto,
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, guarantees or covenants except as specifically set
forth in this Agreement. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
10. Amendment and Modification. This Agreement may not be amended,
modified or supplemented except by an instrument or instruments in writing
signed by the party against whom enforcement of any such amendment, modification
or supplement is sought.
11. Extensions and Waivers. At any time prior to the Closing, the
parties hereto entitled to the benefits of a term or provision may (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance with any obligation, covenant, agreement or
condition contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument or
instruments in writing signed by the party against whom enforcement of any such
extension or waiver is sought. No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement.
12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that no party hereto may assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of the other party hereto. Except as provided in Section 5, nothing in
this Agreement is intended to confer upon any person not a party hereto (and
their successors and assigns) any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
13. Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein shall survive the Closing and
shall thereupon terminate eighteen (18) months from the Closing, except that the
representations contained in Sections 3.1, 3.2, 4.1, and 4.2 shall survive
indefinitely. All covenants and agreements contained herein which by their terms
contemplate actions following the Closing shall survive the Closing and remain
in full force and effect in accordance with their terms. All other covenants and
agreements contained herein shall not survive the Closing and shall thereupon
terminate.
16
14. Headings; Definitions. The Section headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections
contained herein mean Sections of this Agreement unless otherwise stated. All
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms
15. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable to any extent, the remainder of this Agreement shall remain in
full force and effect and shall be reformed to render the Agreement valid and
enforceable while reflecting to the greatest extent permissible the intent of
the parties.
16. Notices. All notices hereunder shall be sufficiently given for
all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below:
If to the Company:
International Travel CD's, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
Seven Penn Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
If to Purchaser:
To that address indicated on the signature page hereof.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without regard to
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent that the Colorado Business Corporation Act
shall apply to the internal corporate governance of the Company.
18. Arbitration. If a dispute arises as to the interpretation of
this Agreement, it shall be decided in an arbitration proceeding conforming to
the Rules of the American Arbitration Association applicable to commercial
arbitration then in effect at the time of the dispute. The arbitration shall
take place in the State of Florida. The decision of the Arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. The parties
shall share equally the costs of the arbitration.
17
19. Counterparts. This Agreement may be executed and delivered by
facsimile in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
18
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto
have caused this Agreement to be executed as of the dated set forth below.
PURCHASER
Date: ________________________________ ______________________________________
By:___________________________________
Name:
Title:
Address:_________________________
_________________________________
_________________________________
Number of Units Purchased: ___________
Purchase Price
@ $.75 per Unit: $____________________
INTERNATIONAL TRAVEL CD'S, INC.
Date:________________________________ By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
19