EXHIBIT 10.7
DEBT CONVERSION AGREEMENT
This DEBT CONVERSION AGREEMENT (the "Agreement") is entered into as of
the 11/th/ day of December, 2001 by and among WOLFPACK CORPORATION, a Delaware
corporation ("Wolfpack"), LANCER OFFSHORE, INC., a British Virgin Islands
corporation ("Lancer Offshore"), and LANCER PARTNERS, LIMITED PARTNERSHIP, a
Connecticut limited partnership ("Lancer Partners").
WHEREAS, the parties executed a Term Sheet on or about December 11,
2001 describing a transaction in which outstanding indebtedness owed by Wolfpack
to Lancer Offshore and Lancer Partners is to be cancelled and converted into
shares of Wolfpack common stock; and
WHEREAS, this Debt Conversion Agreement is intended to document such
cancellation and conversion.
NOW, THEREFORE, the parties agree as follows:
1. Conversion of Debt owed to Lancer Partners. Lancer Partners and
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Wolfpack agree that $2,624,558 of outstanding principal and interest owed by
Wolfpack to Lancer under Senior Subordinated Convertible Promissory Note dated
on or about September 28, 2001 ("Partners' September Note") is cancelled and
converted into 5,249,116 shares of Wolfpack common stock, which Partners'
September Note shall be of no further force or effect, the original of which
shall be returned to Wolfpack marked cancelled.
2. Conversion of Debt owed to Lancer Offshore. Lancer Offshore and
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Wolfpack agree that $5,400,779 of outstanding principal and interest owed by
Wolfpack to Lancer under Senior Subordinated Convertible Promissory Note dated
on or about September 28, 2001 ("Offshore's September Note") is cancelled and
converted into 10,801,558 shares of Wolfpack common stock, which Offshore's
September Note shall be of no further force or effect, the original of which
shall be returned to Wolfpack marked cancelled.
3. Loan and Issuance of Senior Subordinated Convertible Promissory
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Notes. Lancer Partners agrees to lend $350,000 to Wolfpack, which funds Wolfpack
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acknowledges receiving, and in exchange therefor Wolfpack agrees to issue to
Lancer Partners a Senior Subordinated Convertible Promissory Note dated December
11, 2001 in such principal amount in the form attached hereto as Exhibit A.
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Lancer Offshore agrees to lend $500,000 to Wolfpack, which funds Wolfpack
acknowledges receiving, and in exchange therefor Wolfpack agrees to issue to
Lancer Offshore a Senior Subordinated Convertible Promissory Note dated December
11, 2001 in such principal amount in the form attached hereto as Exhibit B.
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Collectively, such notes are referred to as "Wolfpack Notes").
4. Waiver of Notices and Defaults. Each of the parties hereto, by
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executing this Agreement, does hereby waive any and all defaults and notices
which are, or may be, required pursuant to the terms of the debt cancelled under
Sections 1 and 2 hereof and the notes
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evidencing the same, in connection with the conversion and/or cancellation
thereof provided for in this Agreement.
5. Representations and Warranties of Debt Holder. As an
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inducement to Wolfpack to enter into and perform this Agreement, each of Lancer
Partners and Lancer Offshore (each, a "Debt Holder") hereby represents and
warrants to Wolfpack as follows:
(a) Debt Holder has had the opportunity to discuss this
Agreement and related documents with Debt Holder's legal counsel.
(b) Debt Holder understands that no federal or state agency
has made any finding or determination regarding the fairness of the
offering of the shares of Wolfpack common stock (the "Shares") issuable
in connection with the conversion of the Wolfpack Notes, for
investment, or any recommendation or endorsement of the offering of the
Shares, and Debt Holder must forego the security, if any, such a review
would provide.
(c) Debt Holder will acquire the Shares for Debt Holder's own
account, with the intention of holding the Shares for investment, with
no intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or
indirectly, in a distribution of the Shares; and shall not make any
sale, transfer or other disposition of the Shares without registration
under the Securities Act of 1933, as amended ( the "1933 Act"), and any
applicable securities laws of any state or unless an exemption from
registration is available under those Federal and state laws.
(d) Debt Holder represents that it has no need for liquidity
in its investment in the Shares, and at the present time, could afford
a complete loss of such investment.
(e) Debt Holder is an accredited investor as that term is
defined in Section 501(a) under Regulation D promulgated by the
Securities and Exchange Commission under the 1933 Act. Debt Holder is
financially able to bear the economic risk of this investment,
including the ability to afford holding the Shares for an indefinite
period.
(f) Except as otherwise noted, Debt Holder and/or its
purchaser representative has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares.
(g) Debt Holder has made an independent evaluation of the
merits of the investment and acknowledges the high risk nature of the
investment.
(h) Debt Holder understands that the provisions of Rule 144
promulgated under the 1933 Act may not be available to permit resales
of the Shares, and that registration or compliance with some other
registration exemption will be required.
(i) Debt Holder agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend
stating in substance as follows:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE
UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE 1933
ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED,
NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED AS AN
OWNER HEREOF BY THE ISSUER FOR ANY PURPOSES, EXCEPT IN
TRANSACTIONS REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, UNLESS THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO ANY PROPOSED TRANSFER OR
DISPOSITION OF SUCH SECURITIES SHALL BE ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER."
(j) Debt Holder is not subscribing for Wolfpack Notes or the
Shares as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented at
any seminar or meeting, or any solicitation of a subscription by a
person not previously known to Debt Holder in connection with
investments the Wolfpack Notes and Shares generally.
6. Governing Law. This Agreement, and the rights and obligations
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of the parties hereunder, shall be construed and governed under the laws of the
State of Delaware.
7. Counterparts. This Agreement may be executed in counterparts,
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all of which together shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.
8. Effect of Headings. The Section headings herein are for
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convenience only, and shall not affect the construction hereof.
9. Entire Agreement. This Agreement includes the parties'
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complete agreement with respect to the matters described herein. This Agreement
includes Exhibits thereto.
[SIGNATURES APPEAR ON THE NEXT PAGE]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective as of the date first above written.
WOLFPACK CORPORATION
By:______________________________________
Title:___________________________________
LANCER OFFSHORE, INC.
By:______________________________________
Its:_____________________________________
Address:
_________________________________________
_________________________________________
_________________________________________
LANCER PARTNERS, LIMITED PARTNERSHIP
By:______________________________________
Its:_____________________________________
Address:
_________________________________________
_________________________________________
_________________________________________
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