Exhibit 10.18
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 30, 2005, by and among International Thoroughbred
Breeders, Inc., a Delaware corporation (the "Company"), and MBC Global, LLC, an
Illinois limited liability company ("MBC Global").
BACKGROUND
Pursuant to an Advisory Agreement dated as of June 30, 2005 among
the Company and MBC Global (the "Advisory Agreement"), the Company is issuing
warrants to purchase 400,000 shares of the Company's Common Stock (the
"Shares").
In connection with the Advisory Agreement, the Company has agreed
to grant certain registration rights to MBC Global as more fully set forth
herein, under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Shares.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Advisory Agreement shall have the meanings given
such terms in the Advisory Agreement. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 6(d).
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Closing Date" means the date hereof.
"Effectiveness Period" shall have the meaning set forth in Section
2.
"Filing Date" means, with respect to the Registration Statement
required to be filed hereunder, the 45th calendar day following Company's
filing of its Annual Report on Form 10-K with the Commission for its
fiscal year ending June 30, 2005.
"Holder" or "Holders" means the holder or holders, as the case may
be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
5(c).
"Indemnifying Party" shall have the meaning set forth in Section
5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means all of the Shares.
"Registration Statement" means the registration statements
required to be filed hereunder, including (in each case) the Prospectus,
amendments and supplements to the registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in the registration statement.
"Rule 114(k)" means Rule 114(k) promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
2. Registration. On or prior to the Filing Date, the Company shall
prepare and file with the Commission a Registration Statement, or include in an
amendment to a previously filed Registration Statement, covering the resale of
all of the Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement required hereunder shall
be on Form S-3 (except if the Company or the transaction is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case the
Registration shall be on another appropriate form in accordance herewith). The
Registration Statement required hereunder shall contain (except if otherwise
directed by the Holders) substantially the "Plan of Distribution" attached
hereto as Annex A. Subject to the terms of this Agreement, the Company shall use
its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as soon as reasonably possible after the filing
thereof, and shall use its best efforts
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to keep the Registration Statement continuously effective under the Securities
Act until the date when all Registrable Securities covered by the Registration
Statement have been sold or may be sold by persons who are not affiliates of the
Company without volume restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed to the Company's transfer agent and the affected Holders (the
"Effectiveness Period").
3. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Within a reasonable period of time prior to the filing of the
Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall, furnish to the Holders copies of
all such documents proposed to be filed (including documents incorporated
or deemed incorporated by reference to the extent requested by such
Person) which documents will be subject to the review of such Holders,
and the Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders
of a majority of the Registrable Securities shall reasonably object in
good faith, provided that the Company is notified of such objection in
writing no later than five business days after the Holders have been so
furnished copies of such documents. Each Holder agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement
as Annex B (a "Selling Holder Questionnaire") not less than two business
days prior to the Filing Date or by the end of the fourth business day
following the date on which such Holder receives draft materials in
accordance with the preceding sentence. A delay by any Holder in
providing such completed Questionnaire to the Company shall extend all
time periods in this Agreement for the Company to take action which
requires the information requested by such Questionnaire.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep
the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file
with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond
as promptly as reasonably possible to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and, as promptly as reasonably possible, upon request, provide
the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or
in such Prospectus as so supplemented.
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(c) Notify the Holders of Registrable Securities to be sold as
promptly as reasonably possible and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a "review" of the
Registration Statement and whenever the Commission comments in writing on
the Registration Statement (the Company shall upon request provide true
and complete copies thereof and all written responses thereto to each of
the Holders); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental
authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement
made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities
for sale in any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed
copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference to the extent requested by such
Person, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request in connection with resales by the Holder of
Registrable Securities. Subject to the terms of this Agreement, the
Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders in connection with
the offering and sale
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of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto, except after the giving on any notice
pursuant to Section 3(c).
(g) Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification) of
such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing, to keep the
Registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things
reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement;
provided, that the Company shall not be required to -------- qualify
generally to do business in any jurisdiction where it is not then so
qualified, subject the Company to any material tax in any such
jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.
(h) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free,
to the extent permitted by the Advisory Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may
request.
(i) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an 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, in light
of the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with clauses (ii) through (v)
of Section 3(c) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of a
Registration Statement and Prospectus for a period not to exceed 60 days
(which need not be consecutive days) in any 12 month period.
(j) Comply with all applicable rules and regulations of the
Commission.
(k) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and the person thereof that has voting
and dispositive control over the Securities. During any periods that the
Company is unable to meet its obligations
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hereunder with respect to the registration of the Registrable Securities
solely because any Holder fails to furnish such information within three
business days of the Company's request, all obligations of the Company
hereunder, the performance of which depends upon its receipt of such
information shall be suspended, and all related time periods shall be
tolled until such information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any trading market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or any legal fees or other
costs of the Holders.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents and employees of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, or to the extent that such
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information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto (it being understood that the Holder has reviewed
and approved Annex A hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the
Advice contemplated in Section 6(c). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent arising out
of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company
specifically for inclusion in the Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statement or
omission is based solely upon information regarding such Holder furnished
in writing to the Company by such Holder expressly for use therein, or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood
that the Holder has reviewed and approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(c). In no
event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall promptly
notify the Person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel
reasonably
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satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
and to employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and a material conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and
the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party
shall not have the right to assume the defense thereof and the reasonable
fees and expenses of one separate counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are
the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable fees and
expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section),
other than legal fees incurred by the Indemnified Party after the
Indemnifying Party has assumed defense of such Proceeding, shall be paid
to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party; provided, that the Indemnified
Party shall promptly reimburse the Indemnifying Party for that portion of
such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder,
determined based upon the relative faults of the parties.
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged
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untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in this
Agreement, any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by
such Holder.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(c) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in
Section 3(c), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such
Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the
"Advice") by the Company
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that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as
promptly as it practicable.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and each Holder of the then outstanding
Registrable Securities.
(e) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made
in accordance with the provisions of the Advisory Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. Each
Holder may assign their respective rights hereunder in the manner and to
such Persons as it shall be permitted to transfer the Warrants under the
Advisory Agreement.
(g) Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall
constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(h) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
determined with the provisions of the Advisory Agreement.
(i) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(j) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
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(k) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(l) Independent Nature of Holders' Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be
responsible in any way for the performance of the obligations of any
other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by
any Holder pursuant hereto or thereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect
and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder
to be joined as an additional party in any proceeding for such purpose.
*************************
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IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
By:
______________________________________
Name:
Title:
MBC GLOBAL, LLC
By:
______________________________________
Name:
Title:
ANNEX A
Plan of Distribution
The common shares which may be sold by the selling shareholders and any of
their pledgees, donees, transferees or other successors-in-interest, may be
disposed of from time to time in one or more transactions, which may involve:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o sales on the NASDAQ Small Cap Market or any other principal
market on which the common shares trade at the time of sale,
including directly with a market maker acting as principal;
o privately-negotiated transactions, which include direct sales to
purchasers and sales effected through agents;
o a block trade in which the broker or dealer will attempt to sell
the common shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by that
broker or dealer for its own account;
o an exchange distribution in accordance with the rules of that
exchange or transactions in the over-the-counter market;
o short sales;
o the pledge of the security for any loan or obligation, including
pledges to brokers or dealers who may, from time to time,
themselves sell or transfer the common shares or their interest
in such securities;
o the transfer of the common shares by the selling shareholders to
their partners, members or shareholders;
o a combination of any of the above; or
o any other method permitted by applicable law.
The sale price of the common shares pursuant to the prospectus may be:
o a fixed price;
o the market price prevailing at the time of sale;
o a price related to such prevailing market price;
13
o a negotiated price; or
o at any other prices as the selling shareholders may determine,
including sales below the market price.
The selling shareholders may engage broker-dealers to participate in the
sales. Such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling shareholders and/or the
purchasers of the shares for whom broker-dealers may act as agent or to whom
they may sell as principals or both (which compensation as to a particular
broker-dealer may be less than or in excess of customary commissions).
In addition, the selling shareholders may enter into hedging transactions
with broker-dealers who may engage in short sales of our common shares in the
course of hedging the positions they assume with the selling shareholders. The
selling shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to such broker-dealers of our common
shares, which shares may be resold thereafter pursuant to the prospectus.
The common shares covered by the prospectus may also be sold in private
transactions pursuant to Rule 144 under the Securities Act of 1933, rather than
pursuant to the prospectus. The selling shareholders have the sole and absolute
discretion not to accept any purchase offer or make any sale of the common
shares if they deem the purchase price to be unsatisfactory at any particular
time.
In order to comply with the securities laws of certain states, if
applicable, the common shares may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common shares may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Selling shareholders that are broker dealers are statutory underwriters
under the Securities Act of 1933. Selling shareholders that are affiliates of
broker dealers purchased the shares in the ordinary course of business and at
the time of purchase the seller had no agreements or understandings, directly or
indirectly, with any person to distribute the shares. Under certain
circumstances, the selling shareholders and any broker-dealers that act in
connection with the sales of the shares may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, and any
commissions received by them and any profit on the sale of the shares as
principals may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. Selling shareholders who are "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933 will be subject to the
prospectus delivery requirements of the Securities Act of 1933.
14
ANNEX B
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
(the "Company")
QUESTIONNAIRE TO THE SELLING SHAREHOLDERS
This Questionnaire is to be completed, signed and faxed to David
Petkun, Esquire at (215) 701-2034 by no later than __________ __, 2005, by the
person or entity indicated on the cover of this Questionnaire (the "Selling
Shareholder") whose common shares of the Company are being registered pursuant
to a Registration Statement on Form S-3. Retain a duplicate copy for your files.
If you are uncertain about any of the following questions as they
apply to your situation, please supply all relevant facts. Include separate
sheets with details if necessary. If you have any questions, please call the
Company's counsel, David Petkun, Esquire, at (215) 665-4634.
Please notify me immediately if any of the information disclosed
in your answers changes. Please answer all questions. Indicate "none" or "not
applicable" when appropriate. Information should be given as of the date of this
Questionnaire, even if previously reported to the Company.
IN ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT
THE BEGINNING OF THIS QUESTIONNAIRE.
Dated: _________, 2005
- ------------------
- ------------------
- ------------------
- ------------------
- ------------------
Name of Selling Shareholder: _________________________________
15
Instructions and Definitions
The following instructions and definitions are furnished to aid
you in preparing your answers to this Questionnaire.
1. For purposes of this Questionnaire the term "Company" means
International Thoroughbred Breeders, Inc.
2. "Beneficial" ownership. The SEC has taken the position that
if you have sole or shared voting power or dispositive power
or the ability to acquire either sole or shared voting or
dispositive power of a security within 60 days, you are the
beneficial owner of that security, even though that security
is not registered in your name. Thus, for example, you could
be the beneficial owner of securities in a trust or estate
of which you are a trustee or executor, or of which you are
one of the trustees or executors, or you could be the
beneficial owner of securities which you have a right to
purchase.
3. The term "affiliate" for purposes of this Questionnaire
means any person directly or indirectly controlling,
controlled by, or under common control with the Selling
Shareholder.
4. An example response has been provided to assist you in
preparing your response.
16
1. Broker-Dealer Status.
(a) Are you, or are you an affiliate of, a broker-dealer
registered under the Securities Exchange Act of 1934?
Yes ____ No ____
If "yes," please give details below.
(b) Please confirm the following statement: The Company's equity
securities that are being purchased by you were purchased in the ordinary course
of your business, and at the time the securities were purchased, you did not
have any agreement or understanding, directly or indirectly, with any person to
distribute the securities.
Confirmed ____ Cannot Confirm ____
If "cannot confirm," please give details below.
2. Relationships with the Company.
(a) Have you held any position or office with the Company, its
predecessors or affiliates within the last three years?
Yes ____ No ____
If "yes," please give details below.
17
(b) Have you had any other material relationship with the
Company, its predecessors or affiliates within the last three years?
Yes ____ No ____
If "yes," please give details below.
3. Equity Securities Beneficially Owned By You.
(a) Please state the number and type of equity securities of the
Company beneficially owned (please see instructions and definitions on page 2)
by you as of the date of this Questionnaire, including securities which are
exercisable or convertible into equity securities within 60 days of the date of
this Questionnaire.
Class Number of Shares
of Security Beneficially Owned
(b) If any natural person or entity other than you holds or
shares voting power or dispositive power with respect to the Company's equity
securities listed in response to Question 3(a), please provide the names of the
natural persons (including titles) or entities that hold or share such voting
power or dispositive power and indicate the number of the Company's equity
securities covered thereby.
18
(c) With respect to the Company's equity securities listed in
response to Questions 3(a) and 3(b) for which an entity holds or shares voting
power or dispositive power, please provide the names of the natural persons
(including titles) or entities that control the entity or entities listed in
response to Questions 3(a) and 3(b).
(d) Please continue to list the natural persons or entities that
control the entities listed in response to Question 3(c) and the entities listed
in response to this Question 3(d) until you have listed only natural persons
(including titles) that control the applicable entity or entities.
(e) If any person or entity disclaims beneficial ownership of any
of the equity securities you have listed in response to Question 3, please so
indicate:
19
EXAMPLE RESPONSE
The following is an example of a response to items 1 through 3. Please assume
ABC Corporation is the Selling Shareholder for purposes of this example.
1. Broker-Dealer Status.
ABC Corporation is an affiliate of a broker-dealer because its sole
shareholder, DEF Corporation, is a broker-dealer.
2. Relationships with the Company.
(a) ABC Corporation has not held any position or office with the Company,
its predecessors or affiliates within the last three years.
(b) ABC Corporation provided consulting services to the Company in March
2002.
3. Equity Securities Beneficially Owned By You.
Question 3(a).
Class Number of Shares
of Security Owned Beneficially
- ----------- --------------------
Common Shares 100,000
Warrants to purchase Common Shares 200,000
Question 3(b).
Not applicable
Question 3(c).
ABC Corporation is controlled by DEF Corporation, ABC Corporation's sole
shareholder.
Question 3(d).
DEF Corporation is controlled by XYZ Corporation, DEF Corporation's sole
shareholder. XYZ Corporation is controlled by John Doe, XYZ Corporation's sole
shareholder and its President and Chief Executive Officer.
20
Question 3(e).
John Doe disclaims beneficial ownership of the 100,000 Common Shares and
the Warrants to purchase 200,000 Common Shares.
21
The undersigned hereby acknowledges that the information
contained herein is true to the best of his knowledge and will notify the
Company immediately of any changes in such information.
DATED: , 2005 FOR INDIVIDUALS:
--------------------
----------------------------------
Name of Selling Shareholder [please print]
----------------------------------
Signature
FOR CORPORATIONS, PARTNERSHIPS OR TRUSTS:
----------------------------------
Name of Selling Shareholder [please print]
By:_________________________________
Signature
Name:___________________________
[please print]
Title:__________________________
[please print]
22
CONFIDENTIAL
June 30, 2005
International Thoroughbred Breeders, Inc.
1105 N. Market Street
Suite 1300
Wilmington, Delaware 19899
Attention: Mr. Francis W. Murray
Re: Advisory Agreement
Dear Mr. Murray:
This Advisory Agreement ("Agreement") will serve to document and confirm the
arrangement, effective at the Closing Date as hereunder defined, under which MBC
GLOBAL, LLC, an Illinois limited liability company ("MBC GLOBAL"), will be
retained to act as the non- exclusive Financial Advisor to INTERNATIONAL
THOROUGHBRED BREEDERS, INC. ("ITGB" or the "Company"), a Delaware corporation;
for a period of twenty-four (24) months from the closing of the purchase of ITGB
Series B preferred stock (the "Closing Date") by Investors as defined in the
Term Sheet attached hereto as Exhibit "A" and made a part hereof by reference.
1. Scope of the Work to be Performed
As the Company's non-exclusive Financial Advisor, MBC GLOBAL will use its best
efforts to provide the Company with financial consulting services to the extent
requested by the Company, including the following:
(a) Assist the Company in identifying, evaluating, and developing a list
of potential Investors interested in investing in securities or loans
or lines of credit issued to or obtained by the Company;
(b) Assist the Company in identifying, evaluating and developing potential
mergers, acquisitions, strategic partnerships, reverse mergers or
other combinations of the foregoing;
(c) Introduce the Company to broker-dealers, investment bankers, research
analysts and investor relation contacts to assist in business
development;
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 2
(d) Assist the Company in the identification of individuals to serve on
the Company's Board of Directors and/or Executive Management as
needed;
(e) Assist the Company in pursuing a listing on a larger National Exchange
such as the AMEX or NASDAQ.
(f) Assist the Company in assembling materials to b provided to certain
potential Investors describing the Company;
(g) Contact potential Investors which the Company believes meet certain
financial and strategic criteria;
(h) Assist the Company in negotiations with potential Investors, whether
or not introduced to the Company by MBC GLOBAL, including transaction
structures proposed by Investors;
(i) Provide introductions in connection with the placement of debt or
equity with prospective investors in transactions that are exempt from
registration under the Securities Act of 1933, as amended;
(j) Assist the Company as requested in other ways a agreed to by MBC
GLOBAL and the Company.
If required, MBC GLOBAL may work through broker-dealers in order to complete the
necessary transactions.
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 3
2. Fees
(a) Merger and Acquisition Services Fee: The Company agrees to pay MBC
GLOBAL a Merger and Acquisition Services Fee ("M&A Fee") upon the
closing of a merger/acquisition transaction with a target introduced
to the Company by MBC GLOBAL. The M&A Fee will be two percent (2%) of
the purchase price of the Target company. The M&A Fee shall be due in
the event a merger or acquisition where no equity or debt is obtained
by the Company as part of the transaction. In addition to this M&A
Fee, if equity or debt is provided from sources introduced by MBC
Global, then the fees set forth in Section 2 (b) below shall also be
due.
(b) Advisory Fee. Subject to Section 5 hereof, the Company agrees to pay
MBC GLOBAL an advisory fee (the "Advisory Fee"), in cash based upon
the aggregate gross proceeds received by the Company or any of its
subsidiaries upon closing of a financing transaction with a capital
source introduced to the Company by MBC
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 3
Global in the following amounts, to wit: (i) seven percent (7%) of any
equity[1]; (ii) three percent (3%) of any mezzanine debt; and (iii)
one percent (1%) of any senior debt. For purposes hereof "aggregate
gross proceeds received" shall refer to the gross consideration,
before the deduction of any fees, expenses or other costs, received
by, contributed to or invested in the Company in any form (including
but not limited to cash or securities of any other party including the
exercise of options or warrants). If such consideration is not in the
form of cash, then for the purposes of calculating the aggregate gross
proceeds, such consideration shall be valued at its then fair market
value.
(c) Consulting Fee. The Company shall and hereby agrees to pay MBC GLOBAL
a monthly Consulting Fee, in the amount of $10,000 each payable on the
first day of each of the next succeeding twenty-four (24) months,
commencing with the first such payment on July 1, 2005, following the
signing of this Agreement.
(d) Warrants.
Upon closing:
(i) The Company agrees to immediately issu to MBC GLOBAL, a Four (4)
year warrant to purchase 150,000 common shares of the Company
exercisable at $2.50 per share. MBC GLOBAL will have the right to
assign the warrants to third parties subject to all applicable
securities laws.
1 Excepting only the Company's Series B Convertible Preferred
Stock and warrants specifically related thereto as to which a
five percent (5%) fee shall apply.
(ii) The Company agrees to immediately issu to MBC GLOBAL, a Four (4)
year warrant to purchase 100,000 common shares of the Company
exercisable at $3.50 per share. MBC GLOBAL will have the right to
assign the warrants to third parties subject to all applicable
securities laws.
(iii) The Company agrees to immediately issu to MBC GLOBAL, a Four (4)
year warrant to purchase 150,000 common shares of the Company
exercisable at $4.50 per share. MBC GLOBAL will have the right to
assign the warrants to third parties subject to all applicable
securities laws.
(e) Expenses. The Company shall reimburse MBC GLOBAL for reasonable
out-of- pocket expenses incurred by MBC Global for services outlined
in Section 2 above.
________________________
[1] Excepting only the Company's Series B Convertible Preferred Stock and
warrants specifically related thereto as to which a five percent (5%) fee shall
apply.
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 4
IT IS UNDERSTOOD THAT THE COMPANY MAY REJECT ANY TRANSACTION PRESENTED TO IT BY
MBC GLOBAL FOR ANY REASON WITH NO LIABILITY TO MBC GLOBAL.
3. Term
The initial term of this Agreement (the "Initial Term") shall be for a period of
twenty-four (24) months from the date of this Agreement, provided, however, that
either party may terminate this Agreement, except for the Surviving Provisions
(as hereinafter defined) (the "Early Termination"), by giving the other party at
least sixty (60) days prior written notice of such Early Termination. Upon
termination of this Agreement by the Company by Early Termination the Company
shall pay MBC GLOBAL a sum that is the lesser of 12 months of the retainer
(i.e., $120,000) or the retainer applicable to the remaining term of this
Agreement. Notwithstanding any termination or expiration of this Agreement: (i)
Sections 2(a), 2(b), 4, and 6 and Addendum A shall survive any termination or
expiration of this Agreement (collectively, the "Surviving Provisions"), and
(ii) MBC GLOBAL shall be compensated as set forth in Section 2(a) and 2(b)
above, as applicable, if a Transaction is agreed upon or consummated within six
(6) months after any termination or expiration of this Agreement.
4. Indemnification
In consideration of MBC GLOBAL signing this Agreement and agreeing to perform
services pursuant hereto, the Company and its Board of Directors agrees to
indemnify and hold harmless MBC GLOBAL and each of its directors, officers,
agents, employees and controlling persons (within the meaning of the Securities
Act of 1933, as amended) to the extent and as provided in Addendum A attached
hereto and incorporated herein by reference. The provisions of this Section 4
and Addendum A shall survive any expiration or termination of this Agreement and
shall be binding upon any successors or assigns of the Company. In addition, the
Company's D&O insurance carrier will be notified of this indemnification and the
parties shall determine whether will attach aa rider to the Company's D&O policy
will be attached which will indemnify MBC GLOBAL as stated above.
5. PlacementAgents
MBC GLOBAL, where applicable, may introduce placement agents and/or licensed
broker/dealers to aid in initiating transactions. Any fees paid such parties,
together with fees payable to MBC Global, shall not exceed the fees detailed in
Section 2(b) above without the prior consent of the Company.
6. General Terms
(a) The Company agrees that MBC GLOBAL shall have the right to place
advertisements at its own cost in financial and other newspapers and
journals
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 5
describing its services hereunder, provided that MBC GLOBAL shall submit a copy
of any such advertisements to the Company for its approval, which approval shall
not be unreasonably withheld or delayed.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(c) The Company is a sophisticated SEC reporting business enterprise with
competent internal financial advisors and legal counsel, and the
Company has retained MBC GLOBAL for the limited purposes set forth in
this Agreement. The parties acknowledge and agree that: (i) MBC GLOBAL
has been retained solely for the purposes outlined in this letter; and
(ii) the Company's engagement of MBC GLOBAL is as an independent
contractor and that the respective rights and obligations of the
parties set forth herein are contractual in nature. Accordingly, the
Company acknowledges and disclaims any intention to impose fiduciary
or agency obligations on MBC GLOBAL by virtue of the engagement
contemplated by this Agreement, and MBC GLOBAL shall not be deemed to
have any fiduciary or agency duties or obligations to other business
entities or the Company, or any of their respective officers,
directors, shareholders, affiliates or creditors, as a result of this
Agreement or the services to be provided pursuant hereto. MBC GLOBAL
understands and agrees that it does not have authority to act as an
agent of the Company or to bind the Company, and that it shall not
hold itself out to third parties as an agent of the Company.
(d) This Agreement may be executed in counterparts, each of which shall be
an original but all of which shall together constitute one instrument.
Signatures to this Agreement may be delivered by facsimile or other
means of electronic transmission, and any signatures so delivered
shall be valid and binding to the same extent as original signatures.
(e) All claims arising out of the interpretation, application or
enforcement of this Agreement, including, without limitation, any
breach hereof, shall be settled by final and binding arbitration in
Chicago, Illinois, in accordance with the commercial rules then
prevailing of the American Arbitration Association by a panel of three
(3) arbitrators appointed by the American Arbitration Association. The
decision of the arbitrators shall be final and binding on MBC GLOBAL
and the Company and may be entered and enforced in any court of
competent jurisdiction by either party. The arbitration shall be
pursued and brought to conclusion as rapidly as is possible. The cost
of such arbitration shall be shared equally by the parties. EACH OF
MBC GLOBAL AND THE COMPANY
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 6
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED
TO OR ARISING OUT OF THE ENGAGEMENT OF MBC GLOBAL PURSUANT TO, OR THE
PERFORMANCE BY MBC GLOBAL OF, THE SERVICES CONTEMPLATED BY THIS
AGREEMENT.
(f) This Agreement, Exhibit "A," and Addendum A attached hereto constitute
the entire Agreement and understanding between MBC GLOBAL and the
Company regarding the subject matter hereof and supersede any and all
prior, contrary agreements and understandings, whether oral or
written, relating to the subject matter hereof. This Agreement shall
not be modified or changed nor can any of its provisions be waived,
except by a writing signed by all parties hereto.
(g) The services provided by MBC GLOBAL hereunder are solely for the
benefit of the Company and are not intended to confer any rights upon
any persons or entities not a party hereto (including, without
limitation, security holders, employees or creditors of the Company)
as against MBC GLOBAL or its affiliates or their respective directors,
officers, agents and employees.
(h) In conjunction with the engagement outlined herein, the Company agrees
to provide the necessary assistance and information reasonably
required at all steps and to have management reasonably available as
may be required by MBC GLOBAL. In connection with MBC GLOBAL's
services, the Company agrees to furnish to MBC GLOBAL such information
and data relating to the Company as MBC GLOBAL may reasonably request.
The Company recognizes and confirms that MBC GLOBAL, in the
performance of its services hereunder: (i) may rely upon such
information received from the Company or its advisors, without
independent verification by MBC GLOBAL; and (ii) does not assume
responsibility for the accuracy or completeness of such information
received from the Company or its advisors whether or not MBC GLOBAL
makes an independent verification thereof.
(i) In connection with this Agreement, the term " Confidential
Information" shall mean all information furnished to MBC GLOBAL which
is not otherwise publicly disclosed or independently disclosed by
third parties not in breach of any obligation of confidentiality. MBC
GLOBAL agrees that during the term of this Agreement, unless the
Company has consented, or unless ordered to do so by a court or
agency, MBC GLOBAL shall not reveal or disclose any such Confidential
Information to any third party, except for its agents, advisors,
officers, directors, partners, employees and representatives who have
a need to utilize such Confidential Information during the term of
this Agreement.
International Thoroughbred Breeders, Inc.
June 30, 2005
Page 7
Following the termination of this Agreement and this engagement, all
such non- public Confidential Information in MBC GLOBAL's possession
will be promptly returned to the Company.
(j) Any and all sub-agreements entered into by MBC GLOBAL in connection
with this Agreement, shall be documented in writing and disclosed to
the Company.
Except as required by applicable law, including the Securities and Exchange Act
of 1934, as amended, and the rules promulgated thereunder, the Company shall not
publish, refer to, describe or characterize MBC GLOBAL's engagement hereunder,
or the advice provided to the Company by MBC GLOBAL, without the prior written
approval of MBC GLOBAL in each instance.
If this Agreement conforms to your understanding of the terms of our engagement,
please sign and return to us the enclosed duplicate hereof.
Sincerely,
MBC GLOBAL, LLC
By: S/ Paul Moore
-----------------
Name: Paul Moore
-----------------
Title: Managing Member
-----------------
AGREED AND ACCEPTED:
INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By: S/ Francis W. Murray
---------------------
Name: Francis W. Murray
---------------------
Title: President
---------------------
Attachment
ADDENDUM A
Pursuant to the foregoing letter dated June 16, 2005 (the "Agreement"),
INTERNATIONAL THOROUGHBRED BREEDERS, INC. (the "Company") agrees to indemnify
and hold harmless MBC GLOBAL, LLC ("MBC GLOBAL"), together with their respective
officers, directors, shareholders, employees and agents, and each person, if
any, who controls MBC GLOBAL and any of its affiliates within the meaning of the
Securities Act of 1933 or the Securities Exchange Act of 1934 (all of the
foregoing are referred to collectively as "Indemnified Parties" and individually
as an "Indemnified Party"), from any and all losses, suits, actions, judgments,
penalties, fines, costs, damages, liabilities or claims of any kind or nature,
whether joint or several, (including, without limitation, any legal or any other
expenses as they are incurred by an Indemnified Party in connection with the
preparation for or defense of any action, claim or proceeding, whether or not
resulting in any liability) (all of the foregoing being collectively defined as
the "Indemnified Claims") to which such Indemnified Party may become subject or
liable or which may be incurred by or assessed against any Indemnified Party
under any statute, common law, contract or otherwise, relating to or arising out
of any of: (a) any actions or omissions of the Company or anyone acting on the
Company's behalf, including its employees, officers, advisors, directors and
agents; (b) the Agreement or the services to be performed pursuant to the
Agreement; (c) any securities, tax, corporate, or other filings of the Company;
or (d) any transactions referred to in the Agreement or any transactions arising
out of the transactions contemplated by the Agreement; provided, however, that
the Company shall not be liable to an Indemnified Party in any such case, to the
extent that any such Indemnified Claim is found, in a final, unappealable
judgment by a court of competent jurisdiction, to have resulted from said
Indemnified Party's willful misconduct or gross negligence in the performance of
their duties on behalf of MBC GLOBAL. Promptly after receipt by an Indemnified
Party of notice of the occurrence of an Indemnified Claim, or any claim or the
commencement of any action or proceeding in respect of which indemnity may be
sought against the Company, such Indemnified Party will notify the Company in
writing of the commencement thereof or of such Indemnified Claim, and the
Company shall immediately assume the full defense thereof (including the
employment of counsel satisfactory to the Indemnified Party and the payment of
the fees and expenses of such counsel). Notwithstanding the preceding sentence,
the Indemnified Party will be entitled to employ its own counsel in such
circumstance if the Indemnified Party is advised in a written opinion of counsel
that a conflict of interest exists which makes representation by counsel chosen
by the Company not advisable. In such event, the reasonable fees and
disbursements of such separate counsel will be paid by the Company.
If for any reason (other than as specifically provided herein) the foregoing
indemnity for an Indemnified Claim is unavailable to an Indemnified Party or
insufficient to fully hold any Indemnified Party harmless, then the Company
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Indemnified Claim in such proportion as is appropriate to reflect
the relative benefits received by and fault of the Company on the one hand, and
the relative benefits received by and fault of the Indemnified Party on the
other hand, as well as any relevant equitable considerations. Notwithstanding
any provisions herein to the contrary, the aggregate contribution of all of the
Indemnified Parties for all Indemnified Claims shall not exceed the amount of
fees actually received by MBC GLOBAL pursuant to the Agreement. It is hereby
further agreed that the relative fault of the Company on the one hand and an
Indemnified Party on the other hand with respect to the transactions shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or incorrect opinion or conclusion or the
omission or alleged omission to state a material fact related to information
supplied by the Company on the one hand or by the Indemnified Party on the other
hand, as well as the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement, opinion, conclusion or
omission. No Indemnified Party shall have any liability to the Company or any
other person in connection with the services rendered pursuant to this Agreement
except for any liability for losses, claims, damages or liabilities finally
judicially determined to have resulted from actions taken or omitted to be taken
as a result of such Indemnified Party's gross negligence or willful misconduct.
The indemnity, contribution and expense reimbursement agreements and obligations
set forth herein shall be in addition to any other rights, remedies or
indemnification which any Indemnified Party may have or be entitled to at common
law or otherwise, and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party.
In addition, the Company shall offer such indemnification and expense advance
and reimbursement as it may be permitted to offer or extend pursuant to its
Bylaws, Charter, Articles of Incorporation, or insurance. The Company further
agrees that the indemnification and expense advance and reimbursement
obligations set forth herein, shall apply whether or not MBC GLOBAL or any other
Indemnified Party is a formal party in any such Indemnified Claim. The Company
will not be permitted to settle any Indemnified Claim without the prior consent
of MBC GLOBAL or any Indemnified Party involved therein if any admission of
wrong doing, negligence or improper activity of any kind of MBC GLOBAL or such
Indemnified Party is a part of such settlement. The Company shall not, without
the prior written consent of an Indemnified Party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which an
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such action, suit or proceeding.
TERM SHEET
June 20, 2005
$7,500,000 Convertible Preferred Stock
with 4% PIK with Warrants
SUMMARY OF TERMS
Issuer: International Thoroughbred Breeders, Inc. (PNK ITGB) (the
"'Company").
Investors: Entity and accredited investors led by Paul Moore ("MBC
Group") and the Titan investor group ("Titan") cumulatively,
the "Investors".
Principal Amount: Seven and One-Half Million Dollars ($7,500,000). Two and One
Half Million Dollars ($2,500,000) from the Titan Investor
Group and Five Million Dollars ($5,000,000) from MBC Group
to close on or before June 30, 2005.
Securities: Convertible Preferred Stock (the "Preferred Shares"), par
value $10 per share, with Warrants.
Dividend Rate: 4% per annum paid in additional common shares.
Warrants: The Company will grant Investors four (4) year warrants to
purchase 600,000 common shares exercisable beginning on the
first anniversary following Closing at $3.25. Details of the
warrants to be described in final documentation.
Conversion: Once the registration statement is effective there will be a
forced conversion from preferred stock to common stock. The
shares will be converted at a value of $2.00 per common
share.
Registration Rights:The Company will use best efforts to register the stock
within One-Hundred Eighty (180) days of issuance.
Registration will include the convertible preferred shares
and the common shares underlying the warrants
Legal Fees: The legal fees of counsel to the Investors will be paid by
the Company and not exceed $10,000. The documents will be
prepared by Company counsel for review by MBC, the investors
and their legal counsel.
Definitive
Documentation: The definitive documentation shall contain such additional
and supplementary provisions, including, without limitation,
customary representations, warranties, covenants,
agreements, anti-dilution, payments and remedies, as are
appropriate to preserve and protect economic benefits
intended to be conveyed to the Company and to the Investors
pursuant hereto.
Special Rights: 1. MBC Group has the right to appoint one of seven Board
seats. Titan has the right to appoint one of seven Board
seats.
2. The Company, subject to meetings and diligence, agree to
hire an Investor Relations professional to create additional
Street awareness of the Company at a rate of up to Six
Thousand Dollars ($6,000) per month.
Use of Proceeds: Detailed Use of Proceeds to be include in the investment
documents.
Advisory Agreement: This Term Sheet is contingent on the Company entering into a
two year Advisory Agreement with MBC Global, LLC.
Fees: Finders' Fees will be 5% of gross proceeds from MBC Grou
payable to Eroom Securities.
This Term Sheet sets forth, for discussion purposes only, principal terms for a
definitive written agreement ("Definitive Agreement") regarding the purchase and
sale of convertible preferred stock. Nothing in this Term Sheet shall be deemed
binding upon any party. No offer, contract or agreement for the sale or purchase
of any shares shall be deemed to exist unless and until a Definitive Agreement
shall have been executed and delivered by the Company and the Investors, and no
person or entity shall have any obligation to engage in or continue discussions
or negotiations with respect thereto.
Agreed Hereby:
International Thoroughbred Breeders, Inc.
By: S/ Francis W. Murray DATE: June 20, 2005
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Its: President
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MBC Global, LLC
By: S/ Paul Moore DATE: June 20, 2005
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Its: Managing Member
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