CONVERTIBLE NOTE CONVERSION AGREEMENT
Exhibit
10.28
THIS
CONVERTIBLE NOTE CONVERSION AGREEMENT (this “Agreement”)
is
made and entered into as of the ___ day of March, 2007 by and between Xxxxxxxxx
Holdings, Inc., a Delaware corporation (the “Company”),
and
the individual listed on the signature page hereto (the “Noteholder”).
WHEREAS,
the Noteholder holds a 11% Convertible Note Due 2009, Series A issued by
the
Company
in the
principal amount set forth on the signature page hereto (the “Note”),
convertible into shares of the
Company’s
common
stock, $0.001 par value per share (the “Common
Stock”),
at a
conversion rate of one share of Common Stock for each $0.85 of principal and
accrued and due but unpaid interest at the rate of 11% per annum through the
conversion date (the “Original
Conversion Rate”);
WHEREAS,
in consideration of the NoteHolder’s agreement to convert the Note on the
Closing Date the Company is willing to change the Original Conversion Rate
to
one share of Common Stock for each $0.60 of principal and unpaid interest
accrued through the Closing Date plus an additional six months of interest
at
the rate of 11% per annum (the “New
Conversion Rate”).
NOW,
THEREFORE, for and in consideration of the mutual agreements set forth herein,
the parties hereto agree as follows:
1.
Conversion
of Note; Change in Exercise Price.
Subject
to the terms and conditions set forth herein, upon receipt by the Company of
this Agreement signed by NoteHolder (the “Closing
Date”)
all of
the outstanding principal amount and interest accrued through the Closing Date
plus an additional six months of interest will convert into the number of shares
of the
Company’s
Common
Stock determined based on the New Conversion Rate.
2.
Manner
of Conversion/Termination of Note.
On the
Closing Date, the
Company
shall
issue and deliver to the Noteholder, or to such other party as directed by
the
Noteholder, a certificate or certificates or other document evidencing the
shares of Common Stock issued upon conversion as set forth in Section 1 of
this
Agreement, and upon receipt of such certificate or certificates or other
document evidencing the shares of Common Stock by the Noteholder, the Note
will
be deemed paid in full and the accrued interest will be deemed satisfied, with
no further obligations thereunder or for the borrowing evidenced by the Note,
and all rights of the Noteholder under the Note shall cease and the Noteholder
shall be deemed to be a holder of record of the shares of Common Stock of
the
Company
into
which the Note was converted. On the Closing Date, the Noteholder shall deliver
to the Company the Note.
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3.
Representations
of Noteholder.
The
Noteholder represents and warrants to the
Company
that:
(i) Noteholder has, and at the time immediately prior to the Closing Date,
it
will have, good and valid title to the Note, free and clear of all liens,
security interests, encumbrances, equities and claims, with no defects of title
whatsoever and (ii) Noteholder is not a party to or bound by any agreement,
or
any judgment, decree or ruling of any governmental authority, affecting or
relating to Noteholder’s right to convert the Note.
4.
Unregistered
Securities.
The
Noteholder understands that the shares
of
Common Stock to be issued hereunder
have not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”),
and
agrees that none of the shares of Common Stock to be issued hereunder may be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Securities Act. The Buyer will not, directly
or
indirectly, voluntarily offer, sell, transfer, pledge, hypothecate or otherwise
dispose of (or solicit any offers to purchase or otherwise acquire or take
a
pledge of) any shares of Common Stock to be issued hereunder unless (i)
registered pursuant to the provisions of the Securities Act, or (ii) an
exemption from registration is available under the Securities Act. The Buyer
has
been advised that neither the Company nor the Company has an obligation, and
does not intend, to cause any shares of Common Stock to be issued hereunder
to
be registered under the Securities Act, or to take any action necessary for
the
Buyer to comply with any exemption under the Securities Act that would permit
such shares of Common Stock to be issued hereunder to be sold by the Buyer.
The
Buyer understands that the legal consequences of the foregoing mean that the
Buyer must bear the economic risk of his investment in the Company for an
indefinite period of time. The Buyer further understands that, if the Buyer
desires to sell or transfer all or any part of the shares of Common Stock to
be
issued hereunder, the Company may require the Buyer’s counsel to provide a legal
opinion that the transfer may be made without registration under the Securities
Act. The Buyer understands that the shares of Common Stock to be issued
hereunder will bear substantially the following restrictive legend:
THE
SHARES OF STOCK EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (“THE ACT”) NOR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATES, AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION FOR NONPUBLIC OFFERINGS. ACCORDINGLY, THE SALE,
TRANSFER, PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OF ANY SUCH SECURITIES
OR
ANY INTEREST THEREIN MAY NOT BE ACCOMPLISHED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY IN FORM
AND
SUBSTANCE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND QUALIFICATION
ARE NOT REQUIRED.
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5. Covenants.
The
Noteholder hereby covenants and agrees that (a) for a period of thirty (30)
days
following the Closing Date, Noteholder shall not sell or otherwise dispose
of,
whether directly or indirectly, any Common Stock currently held by Noteholder
and (b) for a period of six (6) months following the Closing Date Noteholder
shall not, without the prior consent of the Company, sell or otherwise dispose
of, whether directly or indirectly, the Common Stock issued upon conversion
pursuant to Section 1.
6. Waiver
of Notice.
The
Company
and the
Noteholder hereby waive any and all notice required pursuant to the Note.
7.
Survival
of Representations and Warranties.
All
representations and warranties made hereunder shall survive the consummation
of
the transactions contemplated hereunder.
8.
Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto, their legal representatives, successors, and assigns.
8.
Non-waiver.
No
delay or failure by any party to exercise any right under this Agreement, and
no
partial or single exercise of that right, shall constitute a waiver of that
or
any other right, unless otherwise expressly provided herein.
9.
Headings.
Headings in this Agreement are for convenience only and shall not be used to
interpret or construe its provisions.
10.
Governing
Law.
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of Delaware.
11.
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall be one and the same
instrument.
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IN
WITNESS WHEREOF the parties have signed this instrument as of the date first
set
forth above.
XXXXXXXXX
HOLDINGS, INC.
By:
/s/ Xxxx X.
Sans
Name:
Xxxx X. Xxxx
Title:
President
NOTEHOLDER:
Name:___________________________________
Signature:________________________________
Principal
Amount of Note:
$___________________
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