AGREEMENT TO CONVERT DEBT INTO EQUITY
Exhibit 10.17
This Agreement to Convert Debt into Equity (“Agreement”) is made as of April 1, 2011, by and between the Pacific Entertainment Corporation, a California corporation (the “Company”), and Xxxxxx Xxxxxxx, an individual (“Xx. Xxxxxxx” and collectively with the Company, the “Parties”).
WHEREAS, on September 30, 2010, the Company issued that certain promissory note to Xx. Xxxxxxx wherein Xx. Xxxxxxx agreed to extend the maturity date for repayment of all accrued interest and principal then owed her by the Company pursuant to previously issued notes in the amount of $377,323.07, including accrued but unpaid interest (the “Debt”) to December 31, 2012 and agreed to a revised rate of 6% per annum (the “Note”); and
WHEREAS, Xx. Xxxxxxx desires to invest $200,000 in the Company’s current private placement of restricted, no par value common stock (the “Common Stock”), which is being offered pursuant to applicable exemptions from registration to accredited investors only at a purchase price of $0.20 per share (the “Offering”); and
WHEREAS, it is the desire of the Parties that $200,000 of the principal balance of the Debt be converted into 1,000,000 shares of the Common Stock in lieu of Xx. Xxxxxxx making cash payment for the Common Stock in the Offering; and
NOW THEREFORE, in consideration of the covenants and agreements hereafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Conversion of the Debt into the Shares. Xx. Xxxxxxx and the Company hereby agree that, effective April 1, 2011, $200,000 of the principal balance of the Debt shall be converted into 1,000,000 shares of restricted Common Stock (the “Shares”). No fractional shares will be issued in the conversion. After the conversion, the principal balance of the Debt shall be reduced by $200,000 and such portion of the Debt shall no longer be outstanding and is hereby extinguished in its entirety.
2. Representations and Warranties of Xx. Xxxxxxx. The conversion of the Debt is conditioned upon Xx. Xxxxxxx submitting all required subscription documents in the Offering, including verification of her status as an “accredited investor” pursuant to Rule 501(a) of the Securities Act of 1933, as amended, and all representations and warranties required thereby. Xx. Xxxxxxx further represents and warrants as follows:
a. Xx. Xxxxxxx has the power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby and thereby.
b. Xx. Xxxxxxx is not a U.S. Person, as defined in Rule 901 of Regulation S, promulgated under the Securities Act, and Xx. Xxxxxxx represents and warrants to the Company that:
(i) Xx. Xxxxxxx is not acquiring the Shares as a result of, and Xx. Xxxxxxx covenants that she will not engage in any “directed selling efforts” (as defined in Regulation S under the Securities Act) in the United States in respect of the Shares which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Shares;
(ii) Xx. Xxxxxxx is not acquiring the Shares for the account or benefit of, directly or indirectly, any U.S. Person;
1
(iii) Xx. Xxxxxxx is a resident of Portugal; and
(iv) Xx. Xxxxxxx is outside the United States when receiving and executing this Agreement and that Xx. Xxxxxxx will be outside the United States when acquiring the Shares.
3. Miscellaneous. This Agreement may be executed in any number of facsimile counterparts, all of which shall be but a single original. This Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns. The Parties shall execute and deliver from time to time hereafter, upon written request, all such further documents and instruments and shall do and perform all such acts as may be reasonably necessary to give full effect to the intent of this Agreement.
4. Governing Law. This Agreement and all actions arising out of or in connection with it shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California, or of any other state.
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date first set forth above.
| Pacific Entertainment Corporation | ||
| By: | /s/ Xxxx Xxxxxx | |
| Name: | Xxxx Xxxxxx | |
| Title: | President | |
| Xxxxxx Xxxxxxx | ||
| /s/ Xxxxxx Xxxxxxx | ||
| Xxxxxx Xxxxxxx | ||
2
