CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT is made and entered into on
September 30, 2004, by and between NOCOPI TECHNOLOGIES, INC., a Maryland
corporation (the "Company") and the persons indicated on the signature page
below (each, an "Lender" and collectively, the "Lenders").
PREAMBLE
The Lenders are holders of demand loans made to the Company in
the aggregate principal amount of $149,900 (the "Loans") as more particularly
detailed on Exhibit A hereto. None of the Loans are evidence by a written
promissory note. The Lenders desire to convert the Loans into shares of Common
Stock of the Company and the Company desires to issue such shares to the
Lenders, in accordance with the terms and condition contained herein.
NOW THEREFORE, for and in consideration of the mutual
covenants contained herein, and for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
AGREEMENT
1. CONVERSION OF LOANS. The Lenders and the Company agree that, on the
date hereof, the Lenders shall convert the entire principal balance of and
accrued interest due on, the Loans into shares of Common Stock, par value $0.01
per share, of the Company as shown on Exhibit A hereto (the "Shares"). The
amount of the Shares issued to each Lender shall be the amount derived by
dividing the principal balance and accrued interest due on the Loans by $0.10,
the per share market value of the Common Stock, and rounded down to the nearest
whole number of shares.
2. PROCEDURES; CANCELLATION OF LOAN. Upon execution of this Agreement,
the Loans shall be deemed paid in full and the Company is hereby released from
all further obligations under the Loans. The Company shall promptly cause a
share certificate to be issued to each Lender for the applicable number of
shares of Common Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In order to induce
the Lenders to enter into this Agreement and to consummate the transactions
provided for herein, the Company hereby represents and warrants as follows:
(a) Organization, Good Standing and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Maryland. The Company has the requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted and enter into and perform its obligations
under this Agreement.
(b) Authorization of Agreements, Etc. All corporate action on the
part of the Company and its officers, directors and shareholders necessary for
the execution, delivery and performance of this Agreement and the issuance of
the Shares has been duly and validly taken. This Agreement will be, the valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency or similar laws and by equitable principles.
(c) Authorized Capital Stock. The issuance and sale of the Shares is
not subject to any preemptive right of shareholders of the Company or to any
right of first refusal or other right in favor of any person. The shares of
Common Stock to be issued pursuant to this Agreement, when issued in accordance
with the terms of this Agreement, will be, duly authorized and validly issued,
fully paid and non-assessable.
4. REPRESENTATIONS AND WARRANTIES OF THE LENDERS. Each Lender
represents and warrants to the Company as follows:
(a) The Lender acknowledges and agrees that the Lender's Loan is not
evidenced by a written promissory note or any other written instrument
purporting to evidence the terms of the Lender's Loan.
(b) The Lender acknowledges that the Shares have not been registered
under U.S. Securities Act of 1933, as amended (the "Securities Act") or any
state securities laws, and are being offered and sold pursuant to an exemption
from registration contained in the Securities Act and such state laws based in
part upon the representations of the Lenders contained herein. The Lender also
understands and acknowledges that no federal or state agency has made any
recommendation or endorsement of the Shares.
(c) The Shares are being acquired for the Lender's own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof. The Lender has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition of the Shares.
(d) The Lender acknowledges that the Shares must be held
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws, or is exempt from such
registration. The Lender understands that a restrictive legend will be placed on
the certificate for the Shares and related stop transfer instructions will be
entered with the Company's transfer agent.
(e) This Agreement constitutes the legal, valid and binding
obligation of the Lender enforceable against the Lender in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency or
similar laws and by equitable principles.
(f) The Lender has had access to and has obtained all material
information concerning the Company and its business and financial condition,
operations, prospects and investments, has personally made such independent
investigations of the Company as he deems necessary and advisable and has been
supplied with all information and data which he believes is necessary to reach
an informed decision as to the advisability of acquiring the Shares upon the
terms and conditions contained herein.
(g) The Lender is an "accredited investor" as defined in Regulation
D under the Securities Act, in that the Lender is an individual with a net worth
in excess of $1,000,000.
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(h) The Lender has such experience in financial and business matters
such that he is capable of evaluating the merits and risks of acquiring the
Shares hereunder.
5. MISCELLANEOUS.
(a) Survival. This Agreement shall inure to the benefit of the
parties hereto and their respective successors and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement without
the prior written consent of the other party hereto.
(b) Counterparts, etc. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument. The parties
may deliver execution copies of this Agreement by delivery of signature pages by
fax transmission, provided that such delivery is thereafter followed, within a
reasonable time, with delivery of originally executed signature pages.
(c) Entire Agreement etc. This Agreement constitutes the entire
contract between the parties hereto and shall supersede and take the place of
any other instrument purporting to be an agreement of the parties hereto
relating to the transactions contemplated hereby.
(d) Governing Law. This Agreement, including the validity thereof
and the rights and obligations of the parties hereunder and thereunder, shall be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania (without regard to its choice of law provisions).
[Remainder of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
NOCOPI TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxxx
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Title: Chief Financial Officer
THE INVESTORS:
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx, M.D.
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Xxxxxxx X. Xxxxxxxxx, M.D.
/s/ Xxxxxxxx Xxxxxxx, M.D.
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Xxxxxxxx Xxxxxxx, M.D.
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EXHIBIT A
SCHEDULE OF CONVERSION
MARKET NUMBER OF
ACCRUED VALUE OF SHARES TO BE
LENDER PRINCIPAL INTEREST* TOTAL LOAN SHARES ISSUED
---------------------------------- --------------------------------------------- -----------------------------
XXXX X. XXXXXXXX $70,000 $11,629 $81,629 $0.10 816,290
XXXXXXX X. XXXXXXXXX, M.D. 37,900 7,008 44,908 0.10 449,080
XXXXXXXX XXXXXXX, M.D. 42,000 6,857 48,857 0.10 488,570
-------- ------- -------- ---------
$149,900 $25,494 $175,394 1,753,940
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* Interest rate - 7%
