DEBT CONVERSION AGREEMENT
THIS DEBT
CONVERSION AGREEMENT is made as of the 24th day of April, 2008 by and between
ALLIANCE RECOVERY CORPORATION. a Delaware corporation (the "Company" or "ARVY").
and Xxxxxx Xxxxxx (the "Holder").
RECITALS:
WHEREAS.
on January 30, 2007 the Company and the Holder entered into a Promissory Note
which accrued interest at a rate of ten percent (10%) interest per annum before
the January 30, 2009 maturity date, and on May 17, 2007 the Company and the
Holder entered into a Convertible Promissory Note at a rate of eight percent
(8%) interest per annum before the June 30, 2008 maturity date. and on November
25, 2007 the Company and the Holder entered into a Convertible Promissory Note
at a rate of ten percent (10%) interest per annum before the November 25, 2008
(collectively, the "Notes").
WHEREAS.
the Holder desires to convert the S163,104.11 which represents the principal and
interest accrued as of April 11, 2008 on the Notes into shares of common stock
of ARVY, and ARVY desires to issue shares of its common stock and warrants in
full and complete satisfaction of the Notes.
NOW
THEREFORE. in consideration of the premises and the mutual agreements herein
contained the parties hereto agree as follows:
AGREEMENT
1. Conversion.
Effective as of the date hereof, the principal and interest accrued to
date on the Notes shall be converted into 1,087,361 sbares of ARVY Common Stock
at a conversion price of $0.15 per share (the "Shares") and ARVY shall be fully
discharged at' all obligations under the Notes.
2. The
Holder shall execute the attached Conversion Notice on Exhibit A attached hereto
and deliver to ARVY any and all evidence of indebtedness in ARVY of the Notes.
including. without limitation, any promissory notes, so that the same may be
cancelled. If no such evidence exists. the Holder shall acknowledge this
affirmatively on the signature page hereto.
3. As soon
as practicable after the Holder complies with the requirements of Section 2
above. ARVY shall deliver a duly executed a Stock certificate representing the
shares to be issued to the Holder and a dub executed warrant representing the
warrants to be issued to
the Holder pursuant to Section I
above.
4. Representations and Warranties of the
Company. The Company hereby
represents and
warrants to the Holder as of the date hereof, as follows:
4.1 Organization and Standing:
Articles and Bylaws. The Company is a
corporation
duty organized, validly existing. and in good standing under the laws of the
State
of Delaware and has all requisite
corporate power and authority to carry on Its business as proposed to be
conducted.
4.2 Corporate Power. The
Company has all the requisite corporate power to enter into this Agreement and
to sell and issue the Shares. This Agreement shall constitute a valid and
binding obligation of the Company enforceable in accordance with its respective
terms. except as the same may be limited by bankruptcy. insolvency. moratorium.
and other laws of general application affecting the enforcement of creditors'
rights.
4.3 Authorization. All
corporate action on the part of the Company necessary for the authorization,
execution and delivery of this Agreement.. the sale and issuance of the Shares
and the performance of the Company's obligations hereunder has been obtained.
This Agreement constitutes a valid and legally binding obligation of the
Company. enforceable in accordance with its terms.
4.4 Valid Issuance. The
Shares. when issued in compliance with the provisions of this Agreement. will be
duly authorized, validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances caused or created by the Company: provided.
however. that all such shares may be subject to restrictions on transfer under
state and federal securities laws as set forth herein. and as may be required by
future changes in such laws.
5. Representations and
Warranties
of Holder hereby represents and warrants to the
Company that the statements in the following paragraphs of this Section 5 are
all true and complete as of the xxxx hereof:
5.1 Exempt Transaction.
Holder understands that the offering and sale of the Stock is intended to
be exempt from registration under the Securities Act of 1933. as amended (the
-Act-) and exempt from registration or qualification under any state
law.
5.2 Full Power and Authority.
Holder represents that he has full power and authority
to enter into this Agreement.
5.3 Stock. The Stock to
be purchased by Holder hereunder will be acquired
for investment for Holder's own account. not as a nominee or agent. and not with
a view to the public resale or distribution thereof. and Holder has no present
intention of selling. granting any participation in. or otherwise distributing
the same.
5.4 Information Concerning the
Comoany. Holder has conducted his own due diligence with respect to the
Company and its liabilities and believes he has enough information upon which
to
base an investment decision in the Stock. Holder acknowledges that ARVY
has made no representations with respect to the Company.
5.5 Investment Experience,
The Holder understands that the Stock involves substantial
risk. The Holder: (i) has experience as a purchaser in securities of companies
in the
development stage and acknowledges that he can bear the economic risk of
Holder's investment in the Stuck: and (ii) has such knowledge and experience in
financial. tax. and business matters so as to enable Holder to evaluate the
merits and risks of an investment in the Stock. to protect Holder's own
interests in connection with the investment and to make an informed investment
decision with respect thereto.
5.6 No
Oral
Representations. No oral or written representations have been made other
than or in addition to those stated in this Agreement. Holder is
not relying on any oral statcanents made by the Company. the Company's
representatives or affiliates.
5.7 Restricted
Securities Holder understands and acknowledges that the Stock is
characterized as "restricted securities" as that term is defined in Rule 144 of
the 1933 Securities Act (the "Act") in as much as they were acquired from the
Company in a transaction not involving a public offering. Holder further
acknowledges that the offering and sale of securities contemplated by this
Agreement are exempt from registration under the Securities Act pursuant to
Section 4(2) thereof and exempt from registration pursuant to applicable state
securities or blue sky laws. and the Company's reliance upon such exemptions is
predicated upon such Holder's representations set forth in this Agreement The
Company is under no obligation to register such shares under the Securities Act,
or otherwise. The Holder acknowledges and understands that the Shares must be
held indefinitely unless the Shares arc subsequently registered under the
Securities Act and
qualified under state law or unless an exemption from such registration
and such qualification is available.
5.8 Opinion
Necessary Holder acknowledges that if any transfer of the Stock is
proposed to be made in reliance upon an exemption under the Act. the Company may
require an opinion of counsel satisfactory to the Company that such transfer may
be made pursuant to an applicable exemption under the Act: Holder acknowledges
that a restrictive legend appears on the Stock and must remain on the Stock
until such time as it may be removed under the Act.
6. Intentionally
Omitted
7. Piegyback
Registration Rights. If the Company shall determine to proceed with the
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale of any of its securities by it or
any of its security holders (other than a registration statement on Form S-4.
S-8 or other limited purpose form). then the Company will give written notice of
its determination to the Holder. Upon the written request from the Holder, the
Company will cause all shares of the Shares issuable upon the conversion of the
Notes, all to the extent requisite to permit the resale by the Holder of the
Shares.
8. Upon the request of
any party at any time after the date hereof, the other parties shall forthwith
execute and deliver, without any further payment of consideration by the
requesting party, such
further instruments of assignment. transfer, conveyance.
endorsement, direction or
authorization and other
documents as the requesting party or their counsel may reasonably
request to effectuate the purposes of this Agreement.
9. This
Aureeinent contains the entire understanding among the parties hereto with
respect to the transactions contemplated hereby and supersedes all other
agreements and understandings between such parties with respect to such
transactions.
10. THIS
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS DOCTRINE OF CONFLICTS OF
LAWS.
11. No
amendment. modification or discharge of this Agreement, and no waiver hereunder.
shall be valid or binding unless set forth in writing and duly executed by the
party against which enforcement oldie amendment, modification. discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time.
12. This
Agreement may be executed in multiple counterparts.
IN WITNESS WHEREOF. the parties hereto have executed this Debt Conversion
Agreement as of the day and year first above written.
THE
COMPANY:
ALLAINCE
RECOVERY CORPORATION
By
/s/ Xxxxx
Xxxxxxx
Name :
Xxxxx Xxxxxxx
Title:
Chief Executive Officer
HOLDER:
/s/
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
EXHIBIT A
NOTICE
OF CONVERSION
(To be
Executed by the Registered Holder
in order
to Convert the Notes)
The
undersigned hereby irrevocably elects to convert $163.104.11 including principal
amount of the Notes and all accrued interest to date (defined below) into shares
of common stock no par value per share (-Common Stock"), of Alliance Recovery
Corporation. a Delaware corporation (the ''Company-) according to the conditions
of the convertible promissory notes of the Company dated as of 1/30/07 and
5/17/07 and 11/25/07 (the "Notes"). as of the date written below. If securities
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be charged to the Holder for
any conversion. except for transfer taxes. if any. A copy of each Notes is
attached hereto (or evidence of loss. theft or destruction
thereof).
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable to the undersigned upon conversion of the Notes shall
be made pursuant to registration of the securities under the Securities Act of
1933. as amended (the -ital. or pursuant to an exemption from registration under
the Act.
Date of
Conversion: May 23,2008
Applicable
Conversion Price: $0.15
Number of
Shares o Common Stock to be Issued Pursuant to
Conversion
Debentures: 1,087,361
Signature: /s/
Xxxxxx
Xxxxxx
Name: Xxxxxx
Xxxxxx
Address: 00
Xxxxxxxxx XXX
Xxxxxx,
XXX
THIS DEBT
CONVERSION AGREEMENT is made as of the 23th day of May, 2008 by and between
ALLIANCE RECOVERY CORPORATION. a Delaware corporation (the -Company" or "ARVY").
and Xxxxx Xxxxxxxx (the "Holder").
RECITALS:
WHEREAS.
in February 2006 the Company and the Holder entered into a Promissory
Note which accrued interest at a rate of zero percent (0%) interest per
annum for the first nine (9) months and six percent (6%) per annum for the
remaining months before the June 28, 2008 maturity
date and in December 2006 the the Company and the Holder entered into a
second Promissory Note at a rate of zero percent (0%) interest per annum for the
first nine (9) months and six percent (6%) per annum for the remaining months
before the June 30, 2008 maturity date (collectively, the "Notes').
WHEREAS.
the Holder desires to convert the $170,942.47 which represents the
principal and interest accrued as of April 11, 2008 on the Notes into shares of
common stock of ARVY, and ARVY desires to issue shares of its common stock and
warrants in full and complete satisfaction of the Notes.
NOW
THEREFORE. in consideration of the premises and the mutual agreements herein
contained. the parties hereto agree as follows:
AGREEMENT
1. Conversion.
Effective as of the date hereof, the principal and interest accrued to
date on the Notes shall be converted into 1,139,613 shares of ARVY Common Stock
at a conversion price of $0.15 per share (the "Shares") and ARVY shall be fully
discharged at' all obligations under the Notes.
2. The
Holder shall execute the attached Conversion Notice on Exhibit A attached hereto
and deliver to ARVY any and all evidence of indebtedness in ARVY of the Notes.
including. without limitation, any promissory notes, so that the same may be
cancelled. If no such evidence exists. the Holder shall acknowledge this
affirmatively on the signature page hereto.
3. As soon
as practicable after the Holder complies with the requirements of Section 2
above. ARVY shall deliver a duly executed a Stock certificate representing the
shares to be issued to the Holder and a dub executed warrant representing the
warrants to be issued to
the Holder pursuant to Section I
above.
4. Representations and Warranties of the
Company. The Company hereby
represents and
warrants to the Holder as of the date hereof, as follows:
4.1 Organization and Standing:
Articles and Bylaws. The Company is a
corporation
duty organized, validly existing. and in good standing under the laws of the
State
of Delaware and has all requisite
corporate power and authority to carry on Its business as proposed to be
conducted.
4.2 Corporate Power. The
Company has all the requisite corporate power to enter into this Agreement and
to sell and issue the Shares. This Agreement shall constitute a valid and
binding obligation of the Company enforceable in accordance with its respective
terms. except as the same may be limited by bankruptcy. insolvency. moratorium.
and other laws of general application affecting the enforcement of creditors'
rights.
4.3 Authorization. All
corporate action on the part of the Company necessary for the authorization,
execution and delivery of this Agreement.. the sale and issuance of the Shares
and the performance of the Company's obligations hereunder has been obtained.
This Agreement constitutes a valid and legally binding obligation of the
Company. enforceable in accordance with its terms.
4.4 Valid Issuance. The
Shares. when issued in compliance with the provisions of this Agreement. will be
duly authorized, validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances caused or created by the Company: provided.
however. that all such shares may be subject to restrictions on transfer under
state and federal securities laws as set forth herein. and as may be required by
future changes in such laws.
5. Representations and
Warranties
of Holder hereby represents and warrants to the
Company that the statements in the following paragraphs of this Section 5 are
all true and complete as of the xxxx hereof:
5.1 Exempt Transaction.
Holder understands that the offering and sale of the Stock is intended to
be exempt from registration under the Securities Act of 1933. as amended (the
-Act-) and exempt from registration or qualification under any state
law.
5.2 Full Power and Authority.
Holder represents that he has full power and authority
to enter into this Agreement.
5.3 Stock. The Stock to
be purchased by Holder hereunder will be acquired
for investment for Holder's own account. not as a nominee or agent. and not with
a view to the public resale or distribution thereof. and Holder has no present
intention of selling. granting any participation in. or otherwise distributing
the same.
5.4 Information Concerning the
Comoany. Holder has conducted his own due diligence with respect to the
Company and its liabilities and believes he has enough information upon which
to
base an investment decision in the Stock. Holder acknowledges that ARVY
has made no representations with respect to the Company.
5.5 Investment Experience,
The Holder understands that the Stock involves substantial
risk. The Holder: (i) has experience as a purchaser in securities of companies
in the
development stage and acknowledges that he can bear the economic risk of
Holder's investment in the Stuck: and (ii) has such knowledge and experience in
financial. tax. and business matters so as to enable Holder to evaluate the
merits and risks of an investment in the Stock. to protect Holder's own
interests in connection with the investment and to make an informed investment
decision with respect thereto.
5.6 No
Oral
Representations. No oral or written representations have been made other
than or in addition to those stated in this Agreement. Holder is
not relying on any oral statcanents made by the Company. the Company's
representatives or affiliates.
5.7 Restricted
Securities Holder understands and acknowledges that the Stock is
characterized as "restricted securities" as that term is defined in Rule 144 of
the 1933 Securities Act (the "Act") in as much as they were acquired from the
Company in a transaction not involving a public offering. Holder further
acknowledges that the offering and sale of securities contemplated by this
Agreement are exempt from registration under the Securities Act pursuant to
Section 4(2) thereof and exempt from registration pursuant to applicable state
securities or blue sky laws. and the Company's reliance upon such exemptions is
predicated upon such Holder's representations set forth in this Agreement The
Company is under no obligation to register such shares under the Securities Act,
or otherwise. The Holder acknowledges and understands that the Shares must be
held indefinitely unless the Shares arc subsequently registered under the
Securities Act and
qualified under state law or unless an exemption from such registration
and such qualification is available.
5.8 Opinion
Necessary Holder acknowledges that if any transfer of the Stock is
proposed to be made in reliance upon an exemption under the Act. the Company may
require an opinion of counsel satisfactory to the Company that such transfer may
be made pursuant to an applicable exemption under the Act: Holder acknowledges
that a restrictive legend appears on the Stock and must remain on the Stock
until such time as it may be removed under the Act.
6. Intentionally
Omitted
7. Piegyback
Registration Rights. If the Company shall determine to proceed with the
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale of any of its securities by it or
any of its security holders (other than a registration statement on Form S-4.
S-8 or other limited purpose form). then the Company will give written notice of
its determination to the Holder. Upon the written request from the Holder, the
Company will cause all shares of the Shares issuable upon the conversion of the
Notes, all to the extent requisite to permit the resale by the Holder of the
Shares.
8. Upon the request of
any party at any time after the date hereof, the other parties shall forthwith
execute and deliver, without any further payment of consideration by the
requesting party, such
further instruments of assignment. transfer, conveyance.
endorsement, direction or
authorization and other
documents as the requesting party or their counsel may reasonably
request to effectuate the purposes of this Agreement.
9. This
Aureeinent contains the entire understanding among the parties hereto with
respect to the transactions contemplated hereby and supersedes all other
agreements and understandings between such parties with respect to such
transactions.
10. THIS
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS DOCTRINE OF CONFLICTS OF
LAWS.
11. No
amendment. modification or discharge of this Agreement, and no waiver hereunder.
shall be valid or binding unless set forth in writing and duly executed by the
party against which enforcement oldie amendment, modification. discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time.
12. This
Agreement may be executed in multiple counterparts.
IN WITNESS WHEREOF. the parties hereto have executed this Debt Conversion
Agreement as of the day and year first above written.
THE
COMPANY:
ALLAINCE
RECOVERY CORPORATION
By
/s/ Xxxxx
Xxxxxxx
Name :
Xxxxx Xxxxxxx
Title:
Chief Executive Officer
HOLDER:
/s/
Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
EXHIBIT A
NOTICE
OF CONVERSION
(To be
Executed by the Registered Holder
in order
to Convert the Notes)
The
undersigned hereby irrevocably elects to convert $170,942.47 including principal
amount of the Notes and all accrued interest to date (defined below) into shares
of common stock no par value per share ("Common Stock"), of Alliance Recovery
Corporation. a Delaware corporation (the ''Company") according to the conditions
of the convertible promissory notes of the Company dated as of 6/28/06 and
12/20/06 (the "Notes"). as of the date written below. If securities are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates. No fee will be charged to the Holder for any conversion.
except for transfer taxes. if any. A copy of each Notes is attached hereto (or
evidence of loss. theft or destruction
thereof).
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable to the undersigned upon conversion of the Notes shall
be made pursuant to registration of the securities under the Securities Act of
1933. as amended (the -ital. or pursuant to an exemption from registration under
the Act.
Date of
Conversion: May 23,2008
Applicable
Conversion Price: $0.15
Number of
Shares o Common Stock to be Issued Pursuant to
Conversion
Debentures: 1,139,613
Signature: /s/
Xxxxx
Xxxxxxxx
Name: Xxxxx
Xxxxxxxx
Address: 00 Xxxxxxxxxx
XX
Xxxxxxx X0X XX0
