AGREEMENT TO CONVERT DEBT
THIS AGREEMENT is made and entered into this 30th day of September, 1995,
by and between INTELLIGENT FINANCIAL HOLDING CORPORATION, a Colorado
corporation ("IFHC" or the "Company"), and REDWOOD MICROCAP FUND, INC., a
Colorado corporation ("Redwood" or "Claimant").
WITNESSETH
WHEREAS, IFHC has an outstanding account with or is otherwise obligated to
Claimant in the particulars hereinbelow set forth; and
WHEREAS, IFHC desires to satisfy that obligation by the issuance to
Claimant of shares of its $.004 par value Common Stock (the "Shares"); and
WHEREAS, Claimant is willing to accept said Shares in lieu of cash or
money payment of IFHC's obligation to it;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinbelow set forth, and for such good and other valuable consideration, the
receipt and sufficiency whereof is hereby acknowledged, the parties agree as
follows:
SECTION I.: CONVERSION OF DEBT
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A. Claimant and IFHC affirm and agree that as of the date of this
Agreement, IFHC or its affiliates or subsidiaries is indebted to Claimant in
the principal amount of $180,000.00 together with all accrued and unpaid
interest thereon (the "Indebtedness").
B. Subject to, among other things, the grant and issuance of the
Shares pursuant to the terms hereof, Claimant, for its self, successors in
interest and assigns, hereby agrees to accept 150,000 Shares (the "Conversion
Shares") in full satisfaction and payment of the Indebtedness.
C. Claimant agrees that upon the issuance of the Conversion Shares,
Claimant, for itself, successors in interest and assigns, shall be deemed to
have released and forever discharged IFHC, its officers, directors,
shareholders, affiliates, employees and agents, from any liability, payment or
obligation whatsoever in connection with or arising out of the Indebtedness.
Claimant's acceptance of such Shares shall constitute a full and complete
release, settlement and discharge of any of IFHC's obligation to Claimant, in
connection with the Indebtedness, without the necessity of Claimant executing
any further documentation, release or settlement agreement; it being the
express understanding of the parties hereto that this Agreement, upon its
performance, shall constitute such evidence of release and discharge.
D. With respect to accepting the Shares in lieu of other forms of
payment of the Indebtedness, Claimant represents and warrants as follows:
1. Claimant fully understands that the number of Shares to
be granted in satisfaction of the Indebtedness was arbitrarily determined
without regard to any value of the Shares or the shares of Common Stock
issuable upon exercise of the Shares.
2. Claimant fully understands that the issuance of the
Shares shall be made only pursuant to an effective Registration Statement to be
filed by the Company under the Act and the delivery by the Company of a
Prospectus conforming to the requirements of Section 10(a) of the Act (the
"Prospectus").
3. The Claimant will accept the Shares in satisfaction of
the Indebtedness, subject to all of the risk factors and other disclosures more
fully set forth by the Company in the Prospectus.
SECTION II.: REPRESENTATIONS AND WARRANTIES BY IFHC
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IFHC represents and warrants to Claimant that, as of the date of this
Agreement, and as of the date of closing:
A. ORGANIZATION AND CORPORATION POWER.
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The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Colorado; and has all
required corporate power and authority to own its property and to carry on its
business as now being conducted, and to carry out the transactions contemplated
hereby.
B. AUTHORIZATION.
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1. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, violate any
provision of any charter, by-law, mortgage, lien, lease, agreement, contract,
instrument, order judgment, or decree to which the Company is a party, or by
which it is bound, and will not violate any other restriction of any other kind
or character of which Company is subject.
2. The Board of Directors of the Company has taken or will
take all action required by law, the Company's Articles of Incorporation and
By-Laws, or otherwise, to authorize execution and delivery of this Agreement,
the Shares and the consummation of the transactions described herein.
3. This Agreement, upon execution and delivery in
accordance herewith, is the valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to the terms of bankruptcy
and similar laws, and any rules and regulations adopted thereunder. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate and other action.
C. CAPITALIZATION.
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There are sufficient authorized shares of Common Stock of the
Company to cover the issuance of all shares to be issued and sold pursuant to
this Agreement. There are no restrictions on the transferability of shares of
the Company's Common Stock imposed by or pursuant to the Company's Articles of
Incorporation, as amended, or the Company's By-Laws, or by agreement to which
the Company is a party, except for restrictions imposed by or on account of
federal and state securities laws. The common shareholders of the Company have
no preemptive rights with respect to the issue or sale of the Company's Common
Stock.
SECTION III.: MISCELLANEOUS
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A. PAYMENT OF EXPENSES OF PREVAILING PARTY IN DISPUTE.
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Unless otherwise specifically provided for herein, in the event
that there is a dispute concerning this Agreement, including, without
limitation, the issue of compliance with any term of this Agreement, the court
may in its discretion, direct that the prevailing party shall be entitled to
reimbursement from the other party of reasonable attorneys' fees and other
expenses incurred in resolving the said dispute.
B. SURVIVAL AND INCORPORATION OF REPRESENTATIONS.
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The representations, warranties, covenants and agreements made
herein or in any certificates or documents executed in connection herewith
shall survive the execution and delivery thereof, and all statements contained
in any certificate or other document delivered by the Company hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by the Company in this Agreement.
C. AMENDMENTS AND WAIVERS.
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This Agreement may not be amended, nor may compliance with any
term, covenant, agreement, condition or provision set forth herein be waived
(either generally or in a particular instance and either retroactively or
prospectively) unless such amendment or waiver is agreed to in writing by all
parties hereto.
D. GOVERNING LAW.
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This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Colorado.
E. COUNTERPARTS.
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This Agreement may be executed by telex, telecopy or other
facsimile transmission, and such facsimile transmission shall be valid and
binding to the same extent as if it were an original. Further, this Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which shall together constitute one agreement.
F. SEVERABILITY.
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Wherever there is any conflict between any provision of this
Agreement and any statute, law, regulation or judicial precedent, the latter
shall prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to bring it within
the requirement of the law. In the event that any part, section, paragraph or
clause of this Agreement shall be held by a court of proper jurisdiction to be
invalid or unenforceable, the entire Agreement shall not fail on account
thereof, but the balance of the Agreement shall continue in full force and
effect unless such construction would clearly be contrary to the intention of
the parties or would result in unconscionable injustice.
G. ENTIRE AGREEMENT.
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This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof. There are no
representations, warranties, conditions, or obligations except as herein
specifically provided. Any amendment or modification hereof must be in
writing.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
INTELLIGENT FINANCIAL HOLDING CORPORATION, a
Colorado corporation
Attest:
_______________________________ By: ______________________________________
Secretary
CLAIMANT:
REDWOOD MICROCAP FUND, INC., a Colorado
corporation
Attest:
________________________________ By: _______________________________________
Secretary
