DEBT CONVERSION AGREEMENT
EXHIBIT
00.00.XX
THIS
DEBT
CONVERSION AGREEMENT (the “Agreement”) is made and entered into effective as of
the 14th day of February, 2007, by and between XXXXXXX X. XXXXX, an individual,
and as Trustee for the Xxxxxxx X. Xxxxx Xxxxx Plan XXX Xxxxxxx Xxxxxx & Co.,
Inc.; the Xxxxxxx X. Xxxxx Defined Benefit Pension Plan UA DTD 12/01/98, FBO:
Xxxxxxx X. Xxxx; and the Xxxxxxx X. Xxxxx XXX Rollover Dated 06/14/92, XXX
Xxxxxxx Xxxxxx & Co., Inc. (hereinafter collectively referred to as “Buyer”)
and MICRO IMAGING TECHNOLOGY, INC. (FORMERLY, ELECTROPURE, INC.), a California
corporation (hereinafter referred to as “MIT” or the “Company”).
RECITALS
WHEREAS,
Buyer loaned the Company One Million One Hundred Twenty Six Thousand Eight
Hundred Dollars ($1,126,800) all pursuant to various Convertible Term Notes
on
the dates and in the amounts reflected in the table below (collectively, the
“Term Notes”).
WHEREAS,
as of February 14, 2007, a total of $416,088.34 in interest accrued on the
above
loans is due and payable to Buyer by the Company.
WHEREAS,
Buyer wishes to convert all of the principal and interest accrued on the Term
Notes through February 14, 2007 into shares of Micro Imaging Technology, Inc.
Common Stock and the Company wishes to issue such shares to extinguish the
debt
owed Buyer in its entirety.
NOW,
THEREFORE, in consideration of the foregoing and of the mutual obligations
herein contained, it is agreed as follows:
1. CONVERSION
(a) On
the
date set forth above, Buyer hereby converts all of the principal and interest
accrued on the Term Notes, totaling $1,542,888.34, into Shares of Micro Imaging
Technology, Inc. Common Stock, $0.01 par value, at an effective conversion
rate
of $0.25 per share, in the names and amounts indicated in the table below,
for
an aggregate of 6,171,553 Shares (the “Conversion Shares”).
1
EXHIBIT
00.00.XX
|
PRINCIPAL
|
ACCRUED
|
TOTAL
|
|||||||
|
ORIGINAL
|
CURRENT
|
BALANCE
|
INTEREST
|
DUE
|
|||||
|
LOAN
|
LOAN
|
DUE
|
DUE
|
AT
|
AT
|
AT
|
CONVERSION
|
||
|
DATE
|
AMOUNT
|
DATE
|
DATE
|
2/14/2007
|
2/14/2007
|
2/14/2007
|
SHARES
|
||
|
Xxxxxxx
X. Xxxxx Xxxxx Plan XXX Xxxxxxx Xxxxxx & Co.,
Inc.
|
|||||||||
|
(A)
|
01/17/01
|
600,000
|
01/17/04
|
08/17/08
|
107,733.33
|
107,733.33
|
|||
|
12/02/02
|
50,000
|
12/02/03
|
08/17/08
|
50,000
|
17,304.11
|
67,304.11
|
|||
|
(B)
|
12/18/02
|
100,000
|
12/18/03
|
08/17/08
|
-
|
-
|
|||
|
(B)
|
09/09/03
|
(100,000
|
)
|
08/17/08
|
7,422.45
|
7,422.45
|
|||
|
(B)
|
01/09/03
|
100,000
|
01/09/04
|
08/17/08
|
-
|
-
|
|||
|
(B)
|
09/09/03
|
(100,000
|
)
|
08/17/08
|
6,799.19
|
6,799.19
|
|||
|
(A)
|
01/23/03
|
100,000
|
01/23/04
|
08/17/08
|
33,468.50
|
33,468.50
|
|||
|
(A)
|
02/23/03
|
100,000
|
02/23/04
|
08/17/08
|
32,789.04
|
32,789.04
|
|||
|
(A)
|
11/04/03
|
100,000
|
11/04/04
|
08/17/08
|
27,221.92
|
27,221.92
|
|||
|
(A)
|
08/21/06
|
40,000
|
08/21/08
|
08/21/08
|
1,939.73
|
1,939.73
|
|||
|
(A)
|
10/06/06
|
60,000
|
10/06/08
|
10/06/08
|
2,153.42
|
2,153.42
|
|||
|
11/10/06
|
50,000
|
11/10/08
|
11/10/08
|
50,000
|
1,315.07
|
51,315.07
|
|||
|
12/05/06
|
50,000
|
12/05/08
|
12/05/08
|
50,000
|
972.60
|
50,972.60
|
|||
|
12/29/06
|
56,800
|
12/29/08
|
12/29/08
|
56,800
|
731.40
|
57,531.40
|
|||
|
1,206,800
|
206,800.00
|
239,850.77
|
446,650.77
|
1,786,603
|
|||||
|
Xxxxxxx
X. Xxxxx Defined Benefit Pension Plan UA DTD 12/01/98, FBO: Xxxxxxx
X.
Xxxx
|
|||||||||
|
01/17/01
|
400,000
|
01/17/04
|
08/17/08
|
400,000
|
71,822.23
|
471,822.23
|
|||
|
05/03/02
|
150,000
|
07/03/03
|
08/17/08
|
150,000
|
58,915.07
|
208,915.07
|
|||
|
550,000
|
550,000
|
130,737.29
|
680,737.29
|
2,722,949
|
|||||
|
Xxxxxxx
X. Xxxxx XXX Rollover Dated 06/14/92, XXX Xxxxxxx Xxxxxx & Co.,
Inc.
|
|||||||||
|
|
|||||||||
|
07/01/04
|
35,000
|
07/01/05
|
08/17/08
|
35,000
|
7,686.58
|
42,686.58
|
170,746
|
||
|
Xxxxxxx
X. Xxxxx (an individual)
|
|||||||||
|
11/21/03
|
100,000
|
11/21/04
|
08/17/08
|
100,000
|
11,287.68
|
111,287.68
|
|||
|
12/19/03
|
100,000
|
12/19/04
|
08/17/08
|
100,000
|
11,287.67
|
111,287.67
|
|||
|
07/01/04
|
50,000
|
07/01/05
|
08/17/08
|
50,000
|
5,643.84
|
55,643.84
|
|||
|
07/01/04
|
15,000
|
07/01/05
|
08/17/08
|
15,000
|
1,693.15
|
16,693.15
|
|||
|
09/16/04
|
50,000
|
03/16/05
|
08/17/08
|
50,000
|
5,643.83
|
55,643.83
|
|||
|
01/12/05
|
20,000
|
07/12/05
|
08/17/08
|
20,000
|
2,257.53
|
22,257.53
|
|||
|
335,000
|
335,000
|
37,813.70
|
372,813.70
|
1,491,255
|
|||||
|
TOTAL
|
2,126,800
|
1,126,800
|
416,088.34
|
1,542,888.34
|
6,171,553
|
||||
| (A) |
Principal
balance paid via wire transfer on February 14, 2007 from the Xxxxxxxxx
& Associates Trust Account for the benefit of Micro Imaging
Technology, Inc.
|
| (B) |
Principal
converted on September 9, 2003 to MIT private placement shares
and
warrants and ELTP warrants. Balance due is interest
accrued.
|
(b) The
Conversion Shares shall have the rights, preferences, privileges, restrictions
and other terms set forth in the By-laws of the
Company.
(c) Upon
conversion, Buyer acknowledges that all principal and interest accrued and
due
through the date hereof pursuant to the terms of the respective Term Notes
referenced above has been satisfied in full by the Company. Buyer also
acknowledges that pursuant to this Debt Conversion Agreement any default
by MIT
for failure to pay interest due on the Term Notes through the date hereof
has
been cured.
2
EXHIBIT
00.00.XX
2. REPRESENTATIONS
AND
WARRANTIES OF BUYER Buyer represents
and warrants to the Company:
(a) The
Conversion
Shares are being acquired by Buyer for investment for an indefinite period,
for
Buyer’s own account, not as a nominee or agent, and not with a view to the sale
or distribution of any part thereof, and the Buyer has no present intention
of
selling, granting participations in, or otherwise distributing the same except
as may be permitted by the Securities Act of 1933, as amended (the
“Act”).
(b) Buyer
does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participation to such person or to any third person, with
respect to the Conversion Shares.
(c) That
Buyer
understands that the Conversion Shares have not been registered under the
Securities Act of 1933, as amended (the “Act”), in reliance upon the exemptions
from the registration provisions of the Act contained in Section 4 (2) thereof,
and any continued reliance on such exemption is predicated on the
representations of the Buyer set forth herein.
(d) Buyer
understands
that the Conversion Shares must be held indefinitely unless the sale or other
transfer thereof is subsequently registered under the Act, as amended, or an
exemption from such registration is available. Buyer further understands
that the Company is under no obligation to register the Securities on its behalf
or to assist him in complying with any exemption from registration except as
otherwise provided herein.
(e) Buyer
(i) has
adequate means of providing for his current needs and possible contingencies,
(ii) has no need for liquidity in this investment, (iii) is able to bear the
substantial economic risks of an investment in the Conversion Shares for an
indefinite period, (iv) at the present time, can afford a complete loss of
such
investment, and (v) does not have an overall commitment to investments which
are
not readily marketable that is disproportionate to Buyer’s net worth, and
Buyer’s investment in the Conversion Shares will not cause such overall
commitment to become excessive.
(f) Buyer
is an
“accredited investor” (as defined in Regulation D promulgated under the Act)
and
the
undersigned’s total investment in the Conversion Shares does not exceed 10% of
the Buyer’s net worth.
(g) Buyer
recognizes
that the Company has had only limited revenues to date and that the Conversion
Shares as an investment involve significant risks.
(h) Buyer
will not
transfer the Conversion Shares without registering them under applicable federal
and state securities laws unless the transfer is exempt from registration.
Buyer realizes that the Company may not allow a transfer of Conversion Shares
unless the transferee is also an “accredited investor”. Buyer understands
that legends will be placed on certificates representing the Conversion Shares,
with respect to the above restrictions on resale or other disposition of the
Conversion Shares and that stop transfer instructions have or will be placed
with respect to the Conversion Shares so as to restrict the assignment, resale
or other disposition thereof.
(i) The
Company will
direct its transfer agent to, or will itself, place such a stop transfer order
in its books respecting transfer of the Conversion Shares, and the certificate
or certificates representing the Conversion Shares will bear the following
legend or a legend substantially similar thereto:
3
EXHIBIT
00.00.XX
“THESE
SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF: (1) AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT, OR (2) AN OPINION
OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.”
(j)
That Buyer understands that Rule 144, promulgated by the Securities and Exchange
Commission under the Act, may not be currently available for sale of the
Conversion Shares, and there is no assurance that it will be available at any
particular time in the future. If and when Rule 144 is available for sale
of the Common Stock underlying the Conversion Shares, such sales in reliance
upon Rule 144 may only be (i) in limited quantities after the Conversion Shares
have been held for one (1) year after being sold by the Company, or (ii) in
unlimited quantities by non-affiliates after the Conversion Shares have been
held for two (2) years after being sold by the Company, in each case in
accordance with the conditions of the Rule, all of which must be met (including
the requirement, if applicable, that adequate information concerning the Company
is then available to the public). The Company and Buyer acknowledge that
the Company has no
obligation to supply the information required for sales under Rule
144.
(k)
The Purchase Price to be paid by Buyer to Company for the Conversion Shares
has
been determined by Buyer as fair and appropriate based solely upon Buyer’s
independent investigation and due diligence of the Company, and neither Buyer
nor the Company nor any of their agents, including, without limitation, any
of
their officers, directors, employees, accountants and attorneys, has made any
representations or warranties whatsoever in connection with the sale of the
Conversion Shares by the Company to Buyer. Buyer has had sufficient
opportunity in connection with the sale of the Conversion Shares to review
the
Company’s business and affairs (including, without limitation, the Company’s
financial statements and other information). The Buyer has had answered to
his satisfaction any questions with respect to the Company’s business and
affairs. Buyer further has had the opportunity to obtain independent
financial, legal, accounting, business, tax and other appropriate advice with
respect to the transactions contemplated by this Agreement, and is not relying
upon the Company or any of its agents in any manner in connection with
same.
3. REGISTRATION
RIGHTS. The Company agrees to include
for registration under the Act all of the Conversion Shares issued hereby in
the
next Registration Statement filed by the Company with the Securities and
Exchange Commission.
4. REPRESENTATIONS
AND
WARRANTIES OF MIT
(a)
MIT is a corporation duly organized and validly existing under the laws of
the
State of California without limit as to duration of its existence, and is
authorized and in good standing to do business in no other state; MIT has the
corporate power and adequate authority, rights and franchise to own its property
and to carry on its business as now conducted; and, subject to ratification
by
its Board of Directors, MIT has the corporate power and adequate authority
to
enter into this Agreement.
(b)
The execution and delivery of this Agreement and subject to (1) ratification
by
the Board of Directors of the Company and (2) filing the Certificate with the
California Secretary of State, the performance of the provisions of this
Agreement are not in contravention of or in conflict with any law or regulation
or any term or provision of MIT’s Articles of Incorporation or By-Laws and are
duly authorized and do not require the consent or approval of any governmental
body or other regulatory authority; and this Agreement is a valid, binding
and
legal obligation of MIT, enforceable in accordance with the terms
herein.
4
EXHIBIT
00.00.XX
5.
ENTIRE AGREEMENT This Agreement
embodies the entire agreement and understanding between the parties hereto
with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings relating to such subject
matter.
6.
AMENDMENT This Agreement may not be
amended except by written document executed by the parties.
7.
SUBJECT HEADINGS Subject headings are
included for convenience only and shall not be deemed part of this
Agreement.
8.
SEVERABILITY If any provision of this
Agreement shall be held unenforceable as applied to any circumstance, the
remainder of this Agreement and the application of such provision to other
circumstances shall be interpreted so as best to effect the intent of the
parties. The parties further agree to replace any such unenforceable
provision with an enforceable provision (and to take such other action) which
will achieve, to the extent possible, the purposes of the unenforceable
provision.
9.
GOVERNING LAW This Agreement shall be
governed by and construed under the laws of the State of California in force
from time to time.
10.
PARTIES BOUND This Agreement is binding
on and shall inure to the benefit of the parties and their respective
successors, assign, heirs, and legal representatives.
11.
SURVIVAL The representations,
warranties, covenants, and agreements contained in this Agreement shall survive
the consummation of the transactions contemplated hereby.
12.
COUNTERPARTS This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
|
COMPANY:
|
|
BUYER:
|
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|
|
|
|
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|
|
|||||
|
|
|
|
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|
/S/
XXXXXXXXX XXXXXXXXX
|
|
/S/
XXXXXXX X. XXXXX
|
|||
|
Xxxxxxxxx
Xxxxxxxxx, CFO
|
|
Xxxxxxx
X. Xxxxx, Trustee
|
|||
|
00000
Xxxxx Xxxxxx Xxxxx
|
|
0
Xxxxxxxx Xxxxx, Xxxxx 000
|
|||
|
Xxxxxx
Xxxxx, XX 00000-0000
|
|
Xxx
Xxxxxxxxx, XX 00000
|
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5
