CONVERSION AGREEMENT
This
Conversion Agreement is dated as of July 26, 2006 (the “Conversion Agreement”)
by and among the persons listed on the signature page hereto (each a “Lender”
and collectively, the “Lenders”), on the one hand, and XACT AID, Inc., a Nevada
corporation (the “Company”), on the other hand. The Lenders and the Company are
collectively referred to herein as the “Parties.” This Conversion Agreement is
made with reference to the following:
A. Pursuant
to that certain Securities Purchase Agreement dated as of November 9, 2004,
(the
“Purchase Agreement”) among the Lenders and the Company, the Company issued to
the Lenders an aggregate of $1,000,000 principal amount of 10% Callable Secured
Notes (the “Notes”) and, in connection therewith, issued warrants to purchase an
aggregate of 3,000,000 shares of the Company’s Common Stock (the
“Warrants”).
B. To
secure
the Company’s obligations under the Purchase Agreement and the Notes, the
Company executed and delivered to the Lenders a Security Agreement dated as
of
November 9, 2004 (the “Security Agreement”) and an Intellectual Property
Security Agreement dated as of November 9, 2004 (the “Intellectual Property
Security Agreement”) pursuant to which the Company granted to the Lenders
security interests (the “Security Interests”) in certain property of the Company
as described in such agreements (collectively, the “Collateral”). Additionally,
pursuant to a Guaranty and Pledge Agreement dated as of November 9, 2004 (the
“Guaranty Agreement”) among the Company, the Lenders and Xxxxxxxx X. Cabo
(“Cabo). Cabo guaranteed certain of the obligations of the Company under the
Notes and, in connection therewith, granted to the Lenders a security interest
in all of the shares owed by Cabo (the “Pledged Shares”).
C. In
connection with the issuance of the Notes and Warrants, the Company and the
Lenders entered into a Registration Rights Agreement dated as of November 9,
2004 (the “Registration Rights Agreement”) pursuant to which the Company was
obligated to register the resale of shares of the Company’s common stock
issuable upon conversion of the Notes and exercise of the Warrants together
with
certain other securities.
D. Pursuant
to that certain Share Exchange Agreement dated as of July 15, 2006 (the
“Exchange Agreement”) among the Company, Xxxx XxXxxx, Xxxxxx Enterprises, Inc.
(“Xxxxxx”), Xxxxxxx Xxxxxxxx (“Xxxxxxxx”) and Technorient Limited
(“Technorient”) the Company has agreed to acquire from Xxxxxx and Xxxxxxxx (the
“Sellers”) and Sellers have agreed to sell to the Company shares of the capital
stock of Technorient representing 49% of the outstanding capital stock of
Technorient on a fully diluted basis (the “Technorient Shares”) in exchange (the
“Share Exchange”) for the issuance to Sellers and Orient Financial Services Ltd.
of 972,728 shares of the Company’s Series A Convertible Preferred Stock,
convertible into 89,689,881 shares of the Company’s Common Stock representing
53.5% of the Company’s capital stock on a fully diluted basis after taking into
account the transactions set forth in the Exchange Agreement.
C. It
is a
condition to the closing of the Exchange Agreement that the Notes be converted
into the common stock of the Company.
D. The
Lenders are willing to agree to such conversion on the terms and conditions
set
forth herein.
NOW
THEREFORE, the parties hereto agree as follows:
ARTICLE
I
CONVERSION
Upon
the
terms and conditions set forth herein, concurrently with the closing of the
Exchange (the “Closing”), the Lenders hereby agree to convert (the “Conversion”)
all of the Notes including all accrued and unpaid interest thereon through
the
date of Closing, into 5,029,337 shares of the Company’s Common Stock. In
connection with the Conversion and as additional consideration for the issuance
of the Conversion Shares, at the Closing (a) all executory obligations of the
Company to the Lenders shall be extinguished and cancelled including, without
limitation, all amounts due under the Purchase Agreement, the Notes, the
Security Agreement, the Intellectual Property Security Agreement, and the
Registration Rights Agreement, and (b) the Warrants shall be
cancelled.
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES
OF THE COMPANY
The
Company represents and warrants to the Lenders that:
2.1 Due
Organization and Qualification; Due Authorization.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada, with full corporate power and
authority to own, lease and operate its respective business and properties
and
to carry on its business in the places and in the manner as presently conducted
or proposed to be conducted.
(b) The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, and to consummate the transactions contemplated hereby. The
Company has taken all corporate action necessary for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
and this Agreement constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as may
be
affected by bankruptcy, insolvency, moratoria or other similar laws affecting
the enforcement of creditors’ rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of
the
court before which any proceeding therefore may be brought.
2.2 No
Conflicts or Defaults.
The
execution and delivery of this Agreement by the Company and the consummation
of
the transactions contemplated hereby do not and shall not (a) contravene the
Articles of Incorporation or By-laws of the Company, or (b) with or without
the
giving of notice or the passage of time (i) violate, conflict with, or result
in
a breach of, or a default or loss of rights under, any material covenant,
agreement, mortgage, indenture, lease, instrument, permit or license to which
the Company is a party or by which the Company is bound, or any judgment, order
or decree, or any law, rule or regulation to which the Company is subject,
(ii)
result in the creation of, or give any party the right to create, any lien,
charge, encumbrance or any other right or adverse interest upon any of the
assets of the Company, (iii) terminate or give any party the right to terminate,
amend, abandon or refuse to perform, any material agreement, arrangement or
commitment to which the Company is a party or by which the Company’s assets are
bound, or (iv) accelerate or modify, or give any party the right to accelerate
or modify, the time within which, or the terms under which, the Company is
to
perform any duties or obligations or receive any rights or benefits under any
material agreement, arrangement or commitment to which it is a
party.
2
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF LENDERS
Each
of
the Lenders severally represents and warrants to the Company that:
3.1 Due
Organization and Qualification; Due Authorization.
(a) Each
Lender is a company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, with full power and authority
to
own, lease and operate its business and properties and to carry on its business
in the places and in the manner as presently conducted or proposed to be
conducted.
(b) Each
Lender has all requisite power and authority to execute and deliver this
Agreement, and to consummate the transactions contemplated hereby and thereby.
Each Lender has taken all action necessary for the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
and
this Agreement constitutes the valid and binding obligation of each Lender,
enforceable against each Lender in accordance with its terms, except as may
be
affected by bankruptcy, insolvency, moratoria or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of
the
court before which any proceeding therefore may be brought.
3.2 No
Conflicts or Defaults.
The
execution and delivery of this Agreement by each Lender and the consummation
of
the transactions contemplated hereby do not and shall not (a) contravene the
constitutional documents of such Lender, or (b) with or without the giving
of
notice or the passage of time, (i) violate, conflict with, or result in a breach
of, or a default or loss of rights under, any material covenant, agreement,
mortgage, indenture, lease, instrument, permit or license to which such Lender
is a party or by which such Lender or any of its assets are bound, or any
judgment, order or decree, or any law, rule or regulation to which their assets
are subject, (ii) result in the creation of, or give any party the right to
create, any lien upon any of the assets of such Lender, (iii) terminate or
give
any party the right to terminate, amend, abandon or refuse to perform any
material agreement, arrangement or commitment to which such Lender is a party
or
by which such Lender or any of its assets are bound, or (iv) accelerate or
modify, or give any party the right to accelerate or modify, the time within
which, or the terms under which such Lender is to perform any duties or
obligations or receive any rights or benefits under any material agreement,
arrangement or commitment to which it is a party.
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3.3 Title
to Notes and Warrants.
Each of
the Lenders is the legal and beneficial owner of the Notes and Warrants as
set
forth on the signature page hereto and has not assigned, pledged or entered
into
any agreement pertaining to the sale, disposition or encumbrance of the Notes
or
Warrants or the securities underlying the Notes or Warrants.
3.4 Purchase
for Investment.
(a) Each
of
the Lenders is acquiring the Conversion Shares to be issued to such Lender
for
investment for such Lender's own account and not as a nominee or agent, and
not
with a view to the resale or distribution of any part thereof, and Lenders
have
no present intention of selling, granting any participation in, or otherwise
distributing the same.
(b) Each
of
the Lenders understands that the Conversion Shares to be issued to such Lender
are not registered under the Securities Act on the ground that the sale and
the
issuance of securities hereunder is exempt from registration under the Act
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on such Lender's representations set forth herein.
Each
Lender is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D under the Act.
3.5 Investment
Experience.
Each of
the Lenders acknowledges that it can bear the economic risk of its investment,
and has such knowledge and experience in financial and business matters that
it
is capable of evaluating the merits and risks of the investment in the
Conversion Shares to be issued to such Lender.
3.6 Information.
Each of
the Lenders has carefully reviewed such information as such Lender deemed
necessary to evaluate an investment in the Conversion Shares to be issued to
such Lender. To the full satisfaction of each Lender, it has been furnished
all
materials that it has requested relating to the Company and Technorient and
the
issuance of the Conversion Shares hereunder, and each of the Lenders has been
afforded the opportunity to ask questions of representatives of the Company
to
obtain any information necessary to verify the accuracy of any representations
or information made or given to the Lenders.
3.7 Restricted
Securities.
Each of
the Lenders understands that the Conversion Shares may not be sold, transferred,
or otherwise disposed of without registration under the Act or an exemption
therefrom, and that, in the absence of an effective registration statement
covering the Conversion Shares or any available exemption from registration
under the Act, the Conversion Shares must be held indefinitely. Each of the
Lenders is aware that the Conversion Shares to be issued to it may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions
of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the
Company.
ARTICLE
IV
COVENANTS
4.1 Further
Assurances.
Each of
the Parties shall use its reasonable commercial efforts to proceed promptly
with
the transactions contemplated herein, to fulfill the conditions precedent for
such party’s benefit or to cause the same to be fulfilled and to execute such
further documents and other papers and perform such further acts as may be
reasonably required or desirable to carry out the provisions of this Agreement
and to consummate the transactions contemplated herein.
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ARTICLE
V
CONDITIONS
PRECEDENT
5.1 Conditions
Precedent to Closing.
The
obligations of the Parties under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing, of each of the following
conditions:
(a) That
each
of the representations and warranties of the Parties contained herein shall
be
true and correct at the time of the Closing date as if such representations
and
warranties were made at such time except for changes permitted or contemplated
by this Agreement; and
(b) That
the
Parties shall have performed or complied with all agreements, terms and
conditions required by this Agreement to be performed or complied with by them
prior to or at the time of the Closing.
5.2 Conditions
to Obligations of Lenders.
The
obligations of Lenders shall be subject to fulfillment prior to or at the
Closing, of each of the following conditions:
(a) Lenders
shall have received certificates evidencing the Conversion Shares in such
denominations as indicated by Lenders at least three business days prior to
Closing; and
(b) The
Share
Exchange shall be completed in accordance with the terms of the Exchange
Agreement concurrently with the Conversion.
5.3 Conditions
to Obligations of the Company.
The
obligations of the Company shall be subject to fulfillment at or prior to or
at
the Closing, of each of the following conditions:
(a) The
Company shall have received the originals of the Notes and the Warrants marked
cancelled;
(b) Lenders
shall have provided the Company with appropriate release documents with respect
to all Security Interests in the Collateral granted to the Lenders.
(c) The
Lenders shall have executed such release documents as are necessary to release
Cabo from the Guaranty and shall have returned to Cabo all of the Pledged
Shares.
ARTICLE
VI
MISCELLANEOUS
6.1 Survival
of Representations, Warranties and Agreements.
All
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Closing Date for two years. Each of the parties hereto is executing
and carrying out the provisions of this agreement in reliance upon the
representations, warranties and covenants and agreements contained in this
agreement or at the closing of the transactions herein provided for and not
upon
any investigation which it might have made or any representations, warranty,
agreement, promise or information, written or oral, made by the other party
or
any other person other than as specifically set forth herein.
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6.2 Further
Assurances.
If, at
any time after the Closing, the parties shall consider or be advised that any
further deeds, assignments or assurances in law or that any other things are
necessary, desirable or proper to complete the merger in accordance with the
terms of this agreement or to vest, perfect or confirm, of record or otherwise,
the title to any property or rights of the parties hereto, the Parties agree
that their proper officers and directors shall execute and deliver all such
proper deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or rights
and otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors the parties are fully authorized to take any and all
such
action.
6.3 Notice.
All
communications, notices, requests, consents or demands given or required under
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered to, or received by prepaid registered or certified mail or
recognized overnight courier addressed to, or upon receipt of a facsimile sent
to, the party for whom intended, as follows, or to such other address or
facsimile number as may be furnished by such party by notice in the manner
provided herein:
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Attention:
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If
to the Lenders:
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AJW
Partners, LLC
AJW
Offshore, Ltd.
AJW
Qualified Partners, LLC
New
Millennium Capital Partners II, LLC
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attn:
Xxxxx X. Xxxxxxxx
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If
to the Company:
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000
Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xx. Xxxx Xx Xxxx
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6.4 Entire
Agreement.
This
Agreement and any instruments and agreements to be executed pursuant to this
Agreement, sets forth the entire understanding of the parties hereto with
respect to its subject matter, merges and supersedes all prior and
contemporaneous understandings with respect to its subject matter and may not
be
waived or modified, in whole or in part, except by a writing signed by each
of
the parties hereto.
6
6.5 Successors
and Assigns.
This
Agreement shall be binding upon, enforceable against and inure to the benefit
of, the parties hereto and their respective heirs, administrators, executors,
personal representatives, successors and assigns, and nothing herein is intended
to confer any right, remedy or benefit upon any other person. This Agreement
may
not be assigned by any party hereto except with the prior written consent of
the
other parties, which consent shall not be unreasonably withheld.
6.6 Governing
Law.
This
Agreement shall in all respects be governed by and construed in accordance
with
the laws of the State of Nevada are applicable to agreements made and fully
to
be performed in such state, without giving effect to conflicts of law
principles.
6.7 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same
instrument.
6.8 Construction.
Headings contained in this Agreement are for convenience only and shall not
be
used in the interpretation of this Agreement. References herein to Articles,
and
Sections are to the articles, sections and exhibits, respectively, of this
Agreement. As used herein, the singular includes the plural, and the masculine,
feminine and neuter gender each includes the others where the context so
indicates.
6.9 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable by a court
of
competent jurisdiction, this Agreement shall be interpreted and enforceable
as
if such provision were severed or limited, but only to the extent necessary
to
render such provision and this Agreement enforceable.
6.10 Expenses.
Each
Party shall separately pay for their respective costs of legal services,
accounting, auditing, communications and due diligence in connection with the
transactions contemplated hereby.
IN
WITNESS WHEREOF, the Lenders and the Company have caused this Conversion
Agreement to be executed as of the date first written above.
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COMPANY:
XACT
AID, INC.
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| By | ||
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President
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7
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Amount
of Note:
Number
of Warrants:
Number
of Conversion Shares:
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LENDERS:
AJW
PARTNERS, LLC
By:
SMS Group, LLC
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| By | ||
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Xxxxx
X. Xxxxxxxx, Manager
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Amount
of Note:
Number
of Warrants:
Number
of Conversion Shares:
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AJW
OFFSHORE, LTD.
By:
First Street Manager II, LLC
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| By | ||
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Xxxxx
X. Xxxxxxxx, Manager
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Amount
of Note:
Number
of Warrants:
Number
of Conversion Shares:
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AJW
QUALIFIED PARTNERS, LLC.
By:
AJW
Manager, LLC
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| By | ||
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Xxxxx
X. Xxxxxxxx, Manager
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Amount
of Note:
Number
of Warrants:
Number
of Conversion Shares:
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NEW
MILLENNIUM CAPITAL
PARTNERS
II, LLC.
By:
FIRST
STREET MANAGER II, LLC
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| By | ||
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Xxxxx
X. Xxxxxxxx, Manager
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