STOCK CONVERSION AGREEMENT
Exhibit
10.2
THIS STOCK CONVERSION
AGREEMENT (“Agreement”) is made on January ___, 2009, by and between
XXXXXXXXXXXXXXXXX.XXX, Inc., a Michigan corporation (the “Company”) and
_______________________, a Michigan ______________ (“Lender”).
R
E C I T A L S:
WHEREAS, on or about [November 28, 2007/January 3,
2008], Lender and the Company entered into a Loan Agreement, [as Amended and Restated on January
3, 2008] (the “Loan Agreement”) pursuant to which Lender loaned the
Company the principal amount of ______________ (“Loan”); and
WHEREAS, in order to evidence
the Loan, the Company issued the Lender a Promissory Note (the “Note”) in the
principal amount of the Loan dated [November 28, 2007/January 3,
2008]; and
WHEREAS, pursuant to Section 3
of the Loan Agreement, Lender may convert (“Conversion Right”) all of the
outstanding principal amounts of the Loan into shares of the
Company’s common stock; and
WHEREAS, the Lender desires to
exercise the Conversion Right, pursuant to the terms and conditions of this
Agreement.
NOW THEREFORE, in
consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agrees as follows:
1. Conversion. The
Lender hereby elects to exercise the conversion right and convert the Loan into
___ (_____) shares of the Company’s common stock (the “Conversion Shares”),
according to the conditions set forth herein. Lender shall surrender
the Note upon execution of this Agreement (the “Conversion”). Upon
the issuance of the Conversion Shares, the rights of Lender pursuant to the Note
and the Loan Agreement shall cease and the Company shall issue and deliver to
Lender a stock certificate representing the Conversion Shares. Upon
the Conversion, the Note shall be cancelled and the Note and the Loan Agreement
shall be of no further force and effect.
2. Representations
and Warranties of Company. The Company represents and warrants
to each Lender, the following:
2.1. The Company’s Existence and
Authority. The Company is a corporation, duly organized and
validly existing under the laws of the State of Michigan. The person
executing this Agreement has full power and complete authority to execute this
Agreement and all related documents and, when executed, this Agreement will be
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms.
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2.2. Capitalization. The
authorized capital of the Company consists solely of 60,000 shares of common
stock. Upon issuance of the Conversion Shares to the Lender, the
Conversion Shares will be validly issued, fully paid and
nonassessable.
2.3. No
Litigation. There are no pending or, to the Company’s
knowledge, threatened suits or proceedings before any court, governmental
agency, regulatory body, or administrative tribunal to which the Company is a
party or by which its property may be effected and which may result in any
material change in the financial condition of the Company.
3. Representations
and Warranties of Lenders. Each Lender hereby
represents and warrants to the Company that:
3.1. Lender is
a citizen of the United States;
3.2. The
Conversion Shares are being acquired for the Lender’s own account and solely for
investment. The Lender has no present intention of distributing or
selling any portion of the Conversion Shares;
3.3. The
Conversion Shares are not registered under either the Securities Act of 1933 as
amended (“Securities Act”) or any applicable state securities laws and,
therefore, cannot be resold unless they are registered or unless an exemption
from registration is available thereunder. Consequently, the Lender
may be required to hold the Conversion Shares indefinitely, unless and until
registered under the Securities Act and any applicable State securities laws,
unless an exemption from registration is available, in which case the Lender may
still be limited as to the number of Conversion Shares that may be sold or
hereinafter acquired by such Lender. In any case, the Lender may not
sell, assign, pledge, hypothecate, donate or otherwise transfer (whether or not
for consideration) unless and until the Conversion Shares are registered or
determined to be exempt from registration on the basis of a favorable opinion of
the Company’s counsel and/or submission to the Company of such other evidence as
may be satisfactory to such counsel that any such transfer shall not be in
violation of the Securities Act or any applicable State securities
laws;
3.4. The
Lender’s investment in the Conversion Shares involves a high degree of risk and
the Lender has taken full cognizance of and understand all of the risks
associated therewith;
3.5. The
Lender’s financial condition is such that he/she/it is able to bear the risk of
holding the Conversion Shares for an indefinite period of time, and is further
able to bear the risk of loss of his investment in the Company;
3.6. The
Lender has such knowledge and experience in financial and business matters that
he/she/it is capable of evaluating the merits and risks associated with their
investment in the Conversion Shares or that they have each obtained the advice
of an attorney, certified public accountant or registered investment advisor
with respect thereto;
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3.7. The
Lender has adequate means of providing for his/her/its own current needs and
possible personal contingencies and they have no need for liquidity in their
investment in the Conversion Shares and they are each able to bear the economic
risks of such an investment for an indefinite period;
3.8. The
Lender has had an opportunity to ask questions and receive answers concerning
their investment in the Conversion Shares and to obtain any additional
information which the Company possesses or can obtain without unreasonable
effort and expense that might be necessary in their judgment to verify any
information which has been provided to them; and
3.9. The
Lender is fully aware of the financial condition and business operations of the
Company.
4. MISCELLANEOUS. The
Company and the Lender further agree as follows:
4.1. Governing
Law. This Agreement shall be construed according to the laws
of the State of Michigan.
4.2. Successors and
Assigns. This Agreement shall be binding upon the permitted
successors and assigns of the Company, and the rights and privileges of the
Lender under this Agreement shall inure to the benefit of its successors and
assigns. The Company shall not assign its rights, duties and
obligations under this Agreement without the Lender’s written consent, which
consent may be given or withheld in the Lender’s sole discretion.
4.3. Notices. Notice
from one party to another relating to this Agreement shall be deemed effective
if made in writing (including telecommunications) and delivered to the
recipient’s address, telex number or telecopier number, if any set forth in this
Agreement by any of the following means: hand delivery,
registered or certified mail, postage prepaid, express mail or other
overnight courier service, or telecopy, telex or other wire transmission
with request for assurance of receipt in a manner typical with respect to
communications of that type. Notice made in accordance with these
provisions shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by registered or
certified mail, or on the next business day after mailing or deposit with the
postal service or an overnight courier service if delivered by express mail or
overnight courier.
4.4. Amendments;
Reliance. Any amendment of this Agreement shall be in writing
and shall require the signature of the Company and all the
Lenders. In making this Agreement, the Company is not relying on any
oral promise or representation of the Lenders or any other person with respect
to any aspect of this Agreement.
4.5. Advice of
Counsel. The Lender agrees that
Company’s counsel, Xxxx, Xxxxxxx and Xxxxx, PLC, has prepared this Stock
Conversion Agreement on behalf of the Company in the course of its
representation of the Company and has not represented the interest of
the Lender in connection with this Stock Conversion Agreement, and
that: (i) the Lender has been advised to seek the advice of their own
independent legal counsel; (ii) Lender has had the opportunity to seek the
advice of his/her/its own independent legal counsel; and (iii) and Lender
consents to KRW’s representation of the Company.
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4.6. Consents and
Waivers. No consent or waiver granted by the Lender under or
in respect of this Agreement shall be effective unless it is in writing and
signed by the Lender.
4.7. Partial
Invalidity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions of this Agreement.
4.8. WAIVER OF JURY
TRIAL. THE COMPANY AND THE LENDER ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
TO, THIS AGREEMENT OR THE LOAN(S).
4.9. RELEASE. LENDER
HEREBY WAIVES, DISCHARGES AND FOREVER RELEASES THE COMPANY, THE COMPANY’S
EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS, AFFILIATES AND
SUCCESSORS AND ASSIGNS, FROM AND OF ANY AND ALL CLAIMS, CAUSES OF ACTION,
DEFENSES, COUNTERCLAIMS OR OFFSETS AND/OR ALLEGATIONS LENDER MAY HAVE OR MAY
HAVE MADE OR WHICH ARE BASED ON FACTS OR CIRCUMSTANCES ARISING AT ANY TIME UP
THROUGH AND INCLUDING THE DATE OF THIS STOCK CONVERSION AGREEMENT, WHETHER KNOWN
OR UNKNOWN, AGAINST ANY OR ALL OF THE COMPANY, THE COMPANY’S EMPLOYEES,
OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS, AFFILIATES AND SUCCESSORS AND
ASSIGNS.
4.10. Counterpart/Facsimile
&
PDF
Signatures. This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original of this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement. A facsimile, PDF or other electronic
signature of any Party shall be considered to have the same binding legal effect
as an original signature upon delivery thereof. Upon the request of any Party,
each Party or signatory hereto shall also deliver this Agreement with its
original signature, provided that any failure to do so shall not affect the
preceding sentence or any provisions of this Agreement or obligations of any
Party or signatory hereto.
[Signatures
on Following Page]
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This
Stock Conversion Agreement is executed and delivered on the day and year set
forth above.
COMPANY:
XXXXXXXXXXXXXXXXX.XXX,
INC.,
a Michigan corporation
By:
Its:
LENDER:
,
a Michigan
___________________
By:
Its:
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