EXHIBIT 10.1 - DEBT CONVERSION AGREEMENT
DEBT CONVERSION AGREEMENT
This Debt Conversion Agreement made as of this 10th day of May, 2004
between PetCARE Television Network, Inc., a Florida corporation (the "Company")
having a principal place of business at 0000 Xxxxxxxx Xxxx, Xxxxx X, Xxxxx,
Xxxxxxx 00000 and Victus Capital, LP ("Lender") having an address at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
WHEREAS, Lender loaned the Company $1,000,000 on February 13, 2004, as
evidenced by a Promissory Note and Note Purchase Agreement (the "Loan"); and
WHEREAS, to insure that interest payments were made pursuant to the
Loan $250,000 was deposited into an interest-bearing escrow account supervised
by Xxxxxxx & Xxxxxxxxx Xxxxxx Xxxxxx LLP ("Escrow Agent"); and
WHEREAS, Lender is willing to accept the Company's securities as
interest in lieu of the $250,000 in cash being held by the Escrow Agent.
NOW THEREFORE, in consideration of the terms, conditions and agreements
contained in this Agreement, the parties agree as follows:
1. Issuance of Securities.
(a) Lender agrees to accept 357,143 shares (at $.70 per share)
of the Company's common stock $.0005 par value ("Shares") and 714,286 Common
Stock Purchase Warrants ("Warrants") in lieu of the payment of $250,000 in
interest. Each Warrant is exercisable into the Company's common stock a $1.00
per share. The Warrants are exercisable at any time for five years from the date
of issuance.
(b) The certificates, in due and proper form, representing the
Shares, Warrants and the shares underlying the Warrants will bear a legend
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR
AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT".
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2. RELEASE OF FUNDS FROM ESCROW.
Upon the delivery of this Agreement and the Shares and Warrants, the
Lender will instruct the Escrow Agreement to wire the $250,000 plus earned
interest directly to the Company.
3. Lender's Representations and Warranties.
The Lender hereby acknowledges, represents and warrants to, and agrees
with, the Company as follows:
(a) The Lender is acquiring the Shares and Warrants for its
own account as principal, for investment purposes only, and not with a view to,
or for, resale, distribution or fractionalization thereof, in whole or in part,
and no other person has a direct or indirect beneficial interest in such Shares
and Warrants.
(b) The Lender acknowledges its understanding that the
issuance of the Shares and Warrants is intended to be exempt from registration
under the Act by virtue of Section 4(2) of the Securities Act of 1933, as
amended (the "Act") and the provisions of Regulation D thereunder.
(c) The Lender has the financial ability to bear the economic
risk of its investment, has adequate means for providing for its current needs
and personal contingencies and has no need for liquidity with respect to its
investment in the Company.
(d) The Lender is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D under the Act (17 C.F.R. 230.501(a)).
(e) The Lender has made an independent investigation of the
Company's business, been provided an opportunity to obtain additional
information concerning the Company he deems necessary to make an investment
decision and all other information to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense.
(f) The Lender represents, warrants and agrees that it will
not sell or otherwise transfer the Shares or Warrants unless registered under
the Act or in reliance upon an exemption therefrom, and fully understands and
agrees that it must bear the economic risk of its purchase for an indefinite
period of time because, among other reasons, the Shares and Warrants or
underlying securities have not been registered under the Act or under the
securities laws of certain states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Act and under the applicable securities laws of such states or an exemption
from such registration is available. The Lender also understands that the
Company is under no obligation to register the Shares or Warrants on its behalf
or to assist the Lender in complying with any exemption from registration under
the Act. The Lender further understands that sales or transfers of the Shares or
Warrants or underlying securities are restricted by the provisions of state
securities laws.
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(g) The foregoing representations, warranties and agreements
shall survive the delivery of the Shares and Warrants under the Agreement.
4. Company Representations and Warranties.
The Company hereby acknowledges, represents and warrants to, and agrees
with the Lender as follows:
(a) The Company has been duly organized, is validly existing
and is in good standing under the laws of the State of Florida. The Company has
full corporate power and authority to enter into this Agreement and this
Agreement has been duly and validly authorized, executed and delivered by the
Company and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforcement may
be limited by the United States Bankruptcy Code and laws effecting creditors
rights, generally.
(b) Subject to the performance by the Lenders of its
obligations under this Agreement and the accuracy of the representations and
warranties of the Lender, the issuance of the Shares and Warrants will be exempt
from the registration requirements of the Act.
(c) The execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement in accordance
with the terms of this Agreement will not contravene any provision of applicable
law or the charter documents of the Company or any agreement or other instrument
binding upon the Company, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement in accordance with the terms of this Agreement.
(d) The foregoing representations, warranties and agreements
shall survive the Closing.
5. Miscellaneous.
(a) Modification. Neither this Agreement nor any provisions
hereof shall be modified, discharged or terminated except by an instrument in
writing signed by the party against whom any waiver, change, discharge or
termination is sought.
(b) Notices. Any notice, demand or other communication which
any party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a
United States mail letter box, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, or (b) delivered
personally at such address.
(c) Counterparts. This Agreement may be executed through the
use of separate signature pages or in any number of counterparts and each of
such counterparts shall, for all purposes, constitute one agreement binding on
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all the parties, notwithstanding that all parties are not signatories to the
same counterpart.
(d) Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns. If the undersigned is more than one person, the obligation of the
Investor shall be joint and several, and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, administrators
and successors.
(e) Entire Agreement. This instrument contains the entire
agreement of the parties, and there are no representations, covenants or other
agreements except as stated or referred to herein.
(f) Applicable Law. This Agreement shall be governed and
construed under the laws of the State of New York.
IN WITNESS WHEREOF, the Company and Lender have caused this Agreement
to be executed and delivered by their respective officers, thereunto duly
authorized.
PETCARE TELEVISION NETWORK, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx, President and CEO
VICTUS CAPITAL, LP
By: /s/ Xxxx Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx, Managing Director
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