EX-10.1



 






Exhibit 10.1




Hartville Group, Inc.




3840 Greentree Avenue SW

Canton, Ohio 44706




July 29, 2005




	 	 	 
	Via Facsimile
	 	 
	 
	 	 
	Islandia, L.P.

	 	Midsummer Investment, Ltd.
	c/o John Lang, Inc.

	 	c/o Midsummer Capital LLC
	485 Madison Avenue, 23rd Floor

	 	485 Madison Avenue, 23rd Floor
	New York, NY 10022

	 	New York, NY 10022
	Attn: Richard O. Berner

	 	Attn: Scott D. Kaufman
	 
	 	 
	Satellite Strategic Finance Associates, LLC

	 	Bristol Investment Fund, Ltd.
	c/o Satellite Asset Management, L.P.

	 	c/o Bristol Capital Advisors, LLC
	623 Fifth Avenue, 20th Floor

	 	10990 Wilshire Blvd., Suite 1410
	Attn: Charles Gassenheirner

	 	Los Angeles, CA 90024
	 

	 	Attn: Amy Wang, Esq.
	 
	 	 
	Crescent International Ltd

	 	Palisades Master Fund, L.P.
	c/o Greenlight (Switzerland SA)

	 	200 Mansell Court East, Ste. 550
	84, ay. Louis-Casai

	 	Roswell, GA 30076
	CH 1216 COINTRIN, Geneva, Switzerland

Mannion, Jr. Attn: Mel Craw/Maxi Brezzi

	 	Attn: Paul T. 






     Re: Extension of Registration Obligations and Forbearance



Dear Purchasers:




     Reference is made to that certain Securities Purchase Agreement, dated November 11, 2004, by
and among Hartville Group, Inc., a Nevada corporation (“we” or the “Company”), and the purchasers
signatory thereto, as amended (the “November 11 Purchasers” and the agreement, the “November 11
Purchase Agreement”) and the Securities Purchase Agreement, dated November 26, 2004, by and among
the Company and the purchasers signatory thereto, as amended (the “November 26 Purchasers” and the
agreement, the “November 26 Purchase Agreement”) (collectively, the November 11 Purchasers and the
November 26 Purchasers shall be the “Purchasers” and the November 11 Purchase Agreement and the
November 26 Purchase Agreement, the “Purchase Agreements”). Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreements or the other Transaction
Documents (as defined in the Purchase Agreements) shall have the meanings given such terms in the
Purchase Agreements or the other Transaction Documents, as applicable.



     Pursuant to the Registration Rights Agreement entered into by and among the Company and the
November 11 Purchasers, dated November 11, 2004, as amended (the “November 11



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Registration Rights Agreement”), and Registration Rights Agreement entered into by and among
us and the November 26 Purchasers, dated November 26, 2004, as amended (the “November 26
Registration Rights Agreement”; collectively, the “Registration Rights Agreements”), each of which
was entered into in connection with the Purchase Agreements, we were obligated to (i) file a
Registration Statement with the Securities and Exchange Commission (the “SEC”) by the
40th calendar day following the date of the November 11 Purchase Agreement, December 21,
2004 (the “Original Filing Date”) and (ii) cause such Registration Statement to be declared
effective by the SEC no later than the 120th calendar day following the date of the
November 11 Purchase Agreement, March 11, 2005 (the “Original Effectiveness Date”). Pursuant to
the letter dated January 14, 2005, the Purchasers agreed to extend the Original Filing Date of the
Registration Statement until January 21, 2005 (the “January 2005 Letter Agreement”). Pursuant to
the letter agreement dated February 17, 2005, the Purchasers agreed to extend the Original Filing
Date and Original Effectiveness Date of the Registration Statement until June 30, 2005 (the
“February 2005 Letter Agreement”). By executing this letter agreement, each Purchaser hereby
approves, agrees to be bound by and becomes a party to the January 2005 Letter Agreement and the
February 2005 Letter Agreement, with the same effect as if such Purchaser executed such agreements
on the respective dates of such agreements.




     As of the date hereof, the Registration Statement, on Form SB-2, was filed by the Company with
the SEC on June 2, 2005 (the “Form SB-2”), but such Registration Statement has not been declared
effective.



     Each Purchaser acknowledges and agrees that (i) by filing the Form SB-2, the Company
satisfied its obligations pursuant to the Transaction Documents to file the Registration Statement
by the Filing Date, as such date was extended pursuant to the January 2005 Letter Agreement and
the February 2005 Letter Agreement, and (ii) the Original Effectiveness Date, as modified by the
January 2005 Letter Agreement and the February 2005 Letter Agreement, shall hereby be extended
until September 30, 2005 (the “Revised Effectiveness Date”).



     Each Purchaser further agrees (x) that any failure to cause the Registration Statement to
become effective prior to the Revised Effectiveness Date shall not constitute an Event of Default
under the Debentures, (y) to forbear the demand of partial liquidated damages as set forth in
Section 2(b) of the Registration Rights Agreements for the period through the Revised
Effectiveness Date and (z) to release the Company from any other liabilities, damages or
obligations pursuant to the Transaction Documents resulting from the extensions, agreements and
forbearances contemplated by the January 2005 Letter Agreement, the February 2005 Letter Agreement
and this Agreement; provided that the Company shall use commercially reasonable efforts to cause
such Registration Statement to be declared effective as soon as possible prior to the Revised
Effectiveness Date. If the Registration Statement has not been declared effective on or before
the Revised Effectiveness Date, each Purchaser, acting individually, may demand payment of the
partial liquidated damages as set forth in Section 2(b) of the Registration Rights Agreements
retroactively for the period commencing with the Original Filing Date and take any other actions
to which the Purchasers are entitled as provided for under the Transaction Documents, including
declaring an Event of Default, if applicable.



     As consideration for the extension of the registration obligations and forbearance of each



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Purchaser’s rights, (a) the Conversion Price of the Debentures issued pursuant to the
Purchase Agreements shall be automatically and forever reduced to be equal to $0.75 per share,
subject to further adjustment therein and (b) the Exercise Price of the Warrants issued pursuant
to the Purchase Agreements shall be automatically and forever reduced to be equal to $0.75 per
share, subject to further adjustment therein. Such reductions shall be effective immediately and
require no further action by the Purchasers.




     The Company hereby agrees that upon its receipt from each of you of the original Debenture and
Warrant, it shall promptly issue and send to you an amended and restated Debenture and Warrant
reflecting the revisions made herein.



     Except as specifically amended by the terms of this letter agreement, the Transaction
Documents shall remain unmodified and in full force and effect, and shall not be in any way
changed, modified or superseded by the terms set forth herein.



     The Company acknowledges and agrees that no consideration other than the consideration set
forth herein has been or shall be offered or paid to any other person to obtain your agreement to
enter into this letter agreement. The first sentence of this paragraph and the simultaneous
distribution of this letter agreement to you is intended to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in concert or as a group with respect to
the purchase, disposition or voting of the Company’s securities or otherwise. For clarification
purposes, the Company agrees and acknowledges that each Purchaser’s agreement to the terms
hereunder constitutes a separate and independent decision by such Purchaser.



     Except as otherwise specifically set forth by the terms of this letter agreement, this letter
agreement shall be governed by and construed in accordance with Sections 5.3, 5.4, 5.5, 5.6, 5.7,
5.8, 5.9, 5.11, 5.12 and 5.18 of the Purchase Agreements as if such provisions are made a part
hereof.



	 	 	 
	 

	 	Sincerely,
	 

	 	 
	 

	 	Hartville Group, Inc.
	 

	 	 
	 

	 	Dennis C. Rushovich
President
& CEO






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	Agreed to and accepted by:	 	 
	 
	 	 	 	 
	Islandia, L.P.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Midsummer Investment, Ltd.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Satellite Strategic Finance Associates, LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Bristol Investment Fund, Ltd.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Crescent International Ltd	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Palisades Master Fund, L.P.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 






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