DEBT CONVERSION AGREEMENT
Exhibit 10.16
This
Debt
Conversion Agreement (the “Agreement”) dated January 2, 2007, is by and between,
Data Call Technologies, Inc., a Nevada corporation (the "Company") and Xxxxxxx
Xxxx, an individual (the “Creditor”).
W I T N E S S E T H:
WHEREAS,
the
Company owes $50,000 to the Creditor in consideration for $50,000 loaned to
the
Company in October 2006, which loan was to bear interest at the rate of 7%
per
annum and was due and payable on December 31, 2007 (the “Loan”);
WHEREAS,
the
Company desires to convert the Loan into shares of newly issued restricted
common stock of the Company, $0.001 par value per share at a rate of one (1)
share of Common Stock for every $0.10 of the Loan (the “Common Stock” and the
“Conversion Rate;
WHEREAS,
the
Creditor agrees to convert the Loan into Common Stock at the Conversion Rate
and
to forgive any accrued and unpaid interest on the Loan (“Accrued
Interest”);
WHEREAS,
the
Company and the Creditor desire to set forth in writing the terms and conditions
of their agreement and understanding concerning conversion of the Loan;
and
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants, agreements, and
considerations herein contained, the parties hereto agree as
follows:
1.
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Consideration.
In consideration and in satisfaction of the forgiveness of the entire
$50,000 owed pursuant to and in connection with the Loan, which amount
is
owed to the Creditor, the Company agrees to issue the Creditor an
aggregate of 500,000 shares of Common Stock (one share for every
$0.10 of
the Loan converted into shares of common stock)(the
“Shares”).
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In
consideration for the issuance of the Shares, the Creditor agrees
to
forgive the Loan and to waive and forgive any accrued and unpaid
interest
payable there under.
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2.
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Restricted
Shares.
The Creditor agrees and understands that the Shares of the Company
to be
issued to the Creditor have not
been registered under the Securities Act of 1933, as amended (the
“1933
Act”), nor registered under any state securities law, and will be
"restricted securities" as that term is defined in Rule 144 under
the 1933
Act. As such, the Shares may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement
under
the 1933 Act, or pursuant to an exemption from registration under
the 1933
Act. The shares to be issued to the Creditor will bear an appropriate
restrictive legend.
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The
Creditor understands that the Company has not registered the Shares
under
the 1933 Act or the applicable securities laws of any state in reliance
on
exemptions from registration and further understands that such exemptions
depend upon the Creditor’s investment intent at the time he acquires the
Shares. The Creditor therefore represents and warrants he is receiving
the
Shares for his own account for investment and not with a view to
distribution, assignment, resale or other transfer of the Shares.
Because
the Shares are not registered, the Creditor is aware that he must
hold
them indefinitely unless they are registered under the 1933 Act and
any
applicable state securities laws or he must obtain exemptions from
such
registration. Creditor acknowledges that the Company is under no
duty to
comply with any exemption in the connection with the Creditor’s sale,
transfer or other disposition under applicable rules and regulations.
Creditor understands that in the event he desires to sell, assign,
transfer, hypothecate or in any way alienate or encumber the Shares
in the
future, the Company can require that the Creditor provide, at Creditor’s
own expense, an opinion of counsel satisfactory to the Company to
the
effect that such action will not result in a violation of applicable
federal or state securities laws and regulations or other applicable
federal or state laws and
regulations.
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3.
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Full
Satisfaction.
Creditor agrees that it is accepting the Shares in full satisfaction
of
the Loan which is being converted into Common Stock and that as such
Creditor will no longer have any rights of repayment against the
Company
as to the $50,000 previously outstanding under the Loan which is
being
converted into Shares pursuant to this Agreement (or any accrued
or unpaid
interest which is being waived by Creditor as described above), at
such
time as the Shares have been issued to Creditor.
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4.
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Mutual
Representations, Covenants and Warranties.
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(a)
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The
parties have all requisite power and authority, corporate or otherwise,
to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and thereby. The parties have duly and validly
executed and
delivered
this Agreement and will, on or prior to the consummation of the
transactions contemplated herein, execute, such other documents
as may be
required hereunder and, assuming the due authorization, execution
and
delivery of this Agreement by the parties hereto and thereto, this
Agreement constitutes, the legal, valid and binding obligation
of the
parties enforceable against each party in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and general equitable
principles.
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(b)
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The
execution and delivery by the parties of this Agreement and the
consummation of the transactions contemplated hereby and thereby
do not
and shall not, by the lapse of time, the giving of notice or otherwise:
(a) constitute a violation of any law; or (b) constitute a breach
or
violation of any provision contained in the Articles of Incorporation
or
Bylaws, or such other document(s) regarding organization and/or management
of the parties, if applicable; or (c) constitute a breach of any
provision
contained in, or a default under, any governmental approval, any
writ,
injunction, order, judgment or decree of any governmental authority
or any
contract to which either the Company or the Creditor is a party or
by
which either the Company or the Creditor is bound or
affected.
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5.
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Creditor
Representations and Warranties.
The Creditor represents and warrants to the Company that the Creditor
has
such knowledge and experience in financial and business matters that
the
Creditor is capable of evaluating the merits and risks of an investment
in
the Shares and that the Creditor is an “accredited investor” as such term
is defined under the 1933 Act. The Creditor represents that it is
familiar
with the Company’s business objectives and the financial arrangements in
connection therewith and he believes that the Shares are the kind
of
securities that he wishes to hold for investment and that the nature
and
amount of the Shares are consistent with his investment program.
The
Creditor has been advised and is fully aware that investing in securities
such as the Shares is a speculative and uncertain undertaking whose
advantages and benefits are generally limited to a certain class
of
investors who understand the nature of the proposed operations of
the
Company and for whom the investment is suitable. The Creditor recognizes
that an investment in the Shares involves certain risks and he has
taken
full cognizance of and understands all of the risk factors related
to the
business objectives of the Company and the
Shares.
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6. Miscellaneous.
(a)
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Assignment.
All of the terms, provisions and conditions of this Agreement shall
be
binding upon and shall inure to the benefit of and be enforceable
by the
parties hereto and their respective successors and permitted
assigns.
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(b)
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Applicable
Law.
This Agreement shall be construed in accordance with and governed
by the
laws of the State of Texas, excluding any provision which would require
the use of the laws of any other jurisdiction.
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(c)
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Entire
Agreement, Amendments and Waivers.
This Agreement constitutes the entire agreement of the parties regarding
the subject matter of the Agreement and expressly supersedes all
prior and
contemporaneous understandings and commitments, whether written or
oral,
with respect to the subject matter hereof. No variations, modifications,
changes or extensions of this Agreement or any other terms hereof
shall be
binding upon any party hereto unless set forth in a document duly
executed
by such party or an authorized agent or such party.
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(d)
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Section
Headings.
Section headings are for convenience only and shall not define or
limit
the provisions of this Agreement.
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(e)
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Effect
of Facsimile and Photocopied Signatures. This
Agreement may be executed in several counterparts, each of which
is an
original. It shall not be necessary in making proof of this Agreement
or
any counterpart hereof to produce or account for any of the other
counterparts. A copy of this Agreement signed by one party and faxed
to
another party shall be deemed to have been executed and delivered
by the
signing party as though an original. A photocopy of this Agreement
shall
be effective as an original for all
purposes.
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IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first written
above.
Data
Call Technologies, Inc.
/s/ Xxxxx Xxxxxx
Xxxxx
Xxxxxx,
Chief
Executive Officer
“Creditor”
/s/ Xxxxxxx Xxxx
Xxxxxxx Xxxx