CONVERSION AGREEMENT November 12, 2010
Exhibit 10.2
November
12, 2010
000
Xxxxxx Xxxxxx
Xxxxx
000
Xxx Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxx
Re: SONA
13% Series AA Secured Convertible Debentures, AA-1 Warrants, and AA-2
Warrants
Gentlemen:
The
undersigned (the “Holder”), is a party to a
Subscription Agreement dated ____________________ (the “Purchase Agreement”) with
Sibling Entertainment Group Holdings, Inc. formerly known as Sona Development
Corp. (“SIBE”) pursuant
to which Holder purchased from SIBE, _____________ Units, at price of $10,000
per Unit, with each unit consisting of (a) a 13% interest bearing secured
promissory note in the principal amount of $10,000 (the “Debenture”), (b) a five
year warrant to purchase 10,000 shares of SIBE common stock at an exercise price
of $1.00 per share (the “AA-1
Warrant”), and (c) a five year warrant to purchase 10,000 shares of
SIBE common stock at an exercise price of $2.50 per share (the “AA-2 Warrant”, and together
with the Purchase Agreement, the Debenture, and the AA-1 Warrant, are sometimes
collectively referred to as the “Debenture Transaction
Documents”).
1. You
have informed me that:
(a) The
proceeds from the sale of the debentures were loaned to Sibling Theatricals,
Inc. (the “Theatricals
Loan”). The collectability of the Theatricals loan is in
doubt.
(b) SIBE
intends to acquire Newco4education, LLC (the “Acquisition”). SIBE
believes that Newco4education, LLC has the management expertise, know-how, and
intellectual property that would permit SIBE to manage and operate charter
schools.
(c) The
Acquisition is conditioned, among other things, upon:
(i) the
conversion of all outstanding Debentures, AA-1 Warrants, and AA-2 Warrants into
approximately 1,052,632 shares
of Series B Common Stock, having the terms set forth on Exhibit A
hereto, and
(ii) the
transfer and conveyance of all of SIBE’s interest in the Theatricals Loan to a newly organized
limited liability company (the “Company”), pursuant to a Loan
Assignment Agreement in substantially the form of Exhibit B
hereto for the benefit of the holders of the Debentures and the distribution of
the membership interests in the Compnay pro rata to the holders of the
Debentures; and
(iii) the
execution and delivery by each of the holders of the Debentures of this
Agreement.
(d) The
Series B Common Stock issued to the holders of all of the Debentures will
convert into 10% of the issued and outstanding common stock on the date of
conversion.
2. Holder
hereby irrevocably converts all Debentures, AA-1 Warrants, and AA-2 Warrants
registered in the name of Holder into __________________ shares of SIBE’s Series
B Common Stock and a ______ % limited liability company membership interest of
the Company (collectively, the “Conversion Shares”),
effective on the day before the closing of the Acquisition, currently
anticipated to be November 30, 2010 (the “Anticipated Closing
Date”). If the closing of the Acquisition occurs after the
Anticipated Closing Date, no additional interest shall accrue under the
Debentures and no change shall be made in the number of Conversion Shares issued
to Holder.
3. Holder
hereby irrevocably accepts delivery of the Conversion Shares in full payment,
accord, and satisfaction of the Debentures, the AA-1 Warrants, the AA-2
Warrants, and all obligations of SIBE due Holder under the Debenture Transaction
Documents, and any other document or instrument held by
Holder. Holder acknowledges and agrees that upon delivery of the
Conversion Shares: (i) SIBE will no longer be indebted to Holder,
(ii) any security interest in the assets of SIBE related to the Debentures
is released, extinguished, and terminated, (iii) SIBE will have no further
obligations to Holder under the Debentures, the AA-1 Warrants, and the AA-2
Warrants, and (iv) that each of the Debenture Transaction Documents will be
terminated and of no further force and effect.
4. Effective
upon delivery of the Conversion Shares to Holder, Holder releases, acquits, and
forever discharges SIBE, and its past, present, and future officers, directors,
partners, agents, employees, attorneys, heirs, successors, assigns, parents,
subsidiaries, affiliates, and representatives (collectively, the “Releasees”) of and from any
and all actions, causes of action, claims, suits, damages, judgments, and
demands whatsoever in law and/or equity, known or unknown, accrued or unaccrued,
suspected or unsuspected, fixed or contingent, liquidated or unliquidated,
matured or unmatured, developed or undeveloped, discoverable or undiscoverable,
which Holder had, now has, or may later have or claim to have, against the
Releasees, or any of them, involving or arising out of any act or failure to
act, or any transaction, event, circumstance, occurrence, or state of facts,
which existed, occurred, or transpired, or which is alleged to have existed,
occurred, or transpired, at any time from the beginning of time through and
including the date Holder receives the Conversion Shares, including without
limitation, all matters arising out of or related to the offer, sale, and
issuance of the Units, the Debenture Transaction Documents, the Theatricals
Loan, this Agreement, the Acquisition, and all other matters whatsoever which
have or allegedly have occurred or transpired from the beginning of time through
and including the date Holder receives the Conversion Shares, excluding only the
rights of Holder to receive the Conversion Shares as provided pursuant to this
Agreement.
5. From
the date of this Agreement until December 31, 2010, and forever after the
delivery of the Conversion Shares, Holder covenants and agrees not to xxx the
Releasees or any of them with respect to any matter within the scope of the
release in this Agreement. Holder agrees to indemnify each of the
Releasees for all costs or expenses, including attorneys’ fees, incurred by such
Releasee in the defense of such suit.
6. Holder
agrees to execute and deliver such other documents and instruments to evidence
the termination of the obligations of SIBE under the Debentures and the
Debenture Transaction Documents, without any additional consideration therefor,
as SIBE may reasonably request.
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7. The
Conversion Shares being acquired by Holder will be acquired for Holder's own
account without the participation of any other person, with the intent of
holding the Conversion Shares for investment and without the intent of
participating, directly or indirectly, in a distribution of the Conversion
Shares and not with a view to, or for resale in connection with, any
distribution of the Conversion Shares, nor is Holder aware of the existence of
any distribution of the Conversion Shares. Holder has such knowledge
and experience in financial tax and business matters as to be capable of
evaluating the merits and risks of, and bearing the economic risks entailed by,
an investment in SIBE and the Company and of protecting Holder’s interests in
connection with this transaction. Holder recognizes and acknowledges
that its investment in SIBE and the Company involves a high degree of
risk. Holder is able to bear the economic risks of the investment in
the Conversion Shares, including the risk of a complete loss of Holder's
investment therein. Holder understands and agrees that the Conversion
Shares will be issued and sold to Holder without registration under any state
law relating to the registration of securities for sale, and will be issued and
sold in reliance on the exemptions from registration under the 1933 Act,
provided by Sections 3(b) and/or 4(2) thereof and the rules and regulations
promulgated thereunder. The Conversion Shares cannot be offered for
sale, sold or transferred by Holder other than pursuant to: (A) an effective
registration under the 1933 Act or in a transaction otherwise in compliance with
the 1933 Act; and (B) evidence satisfactory to the Company of compliance with
the applicable securities laws of other jurisdictions. The Company
shall be entitled to rely upon an opinion of counsel satisfactory to it with
respect to Holder’s compliance with such laws. Holder has had the
opportunity to ask questions of and receive answers from the Company and any
person acting on its behalf and to obtain all material information reasonably
available with respect to SIBE and the Company and their respective
affairs. Holder is an “accredited investor” as such term is defined
in Rule 501 of Regulation D, promulgated under the Securities Act of
1933
8. Holder
has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with Holder’s own legal counsel and investment
and tax advisors. Holder is relying solely on such counsel and
advisors and not on any statements or representations of SIBE or the Company or
any of its or their representatives or agents, for legal, tax, or investment
advice with respect to this Agreement, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction. Holder
acknowledges that Xxxxxxxx & Xxxxx, LLC are attorneys for Newco4education,
LLC and not SIBE, the Company, or Holder..
9. Holder
has full power and authority to execute, deliver, and perform this Agreement
without the consent or approval of any other person that has not been obtained
on or prior to the date hereof. This Agreement is the legal, binding,
and valid obligation of Holder, enforceable against Holder in accordance with
its terms.
10. This
Agreement and the rights of SIBE and Holder shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to its
conflicts of laws rules. The parties agree that any appropriate state
court sitting in Xxxxxx County, Georgia or any Federal Court sitting in the
Northern District of Georgia (Atlanta Division) (collectively, the “Permitted Courts”), shall
have exclusive jurisdiction of any case or controversy arising under or in
connection with this Agreement and shall be a proper forum in which to
adjudicate such case or controversy, and each party irrevocably:
(a) consents to the jurisdiction of the Permitted Courts in such actions,
(b) agrees not to plead or claim that such litigation brought in the
Permitted Courts has been brought in an inconvenient forum, and (c) waives
the right to object, with respect to such suit, action, or proceeding, that such
court does not have jurisdiction over such party. In any suit,
arbitration, mediation, or other proceeding to enforce any right or remedy under
this Agreement or to interpret any provision of this Agreement, the prevailing
party will be entitled to recover its costs, including reasonable attorneys’
fees, and all costs and fees incurred on appeal or in a bankruptcy or similar
action.
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Holder
Name
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Holder
Address:
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Holder
Telephone:
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Holder
Email Address:
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IN
WITNESS WHEROF, the undersigned hereby executes and delivers this Agreement as
of this __ day of November, 2010.
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Holder
Signature - Individual
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Holder
Signature - Entity
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By:
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Name:
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Title:
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ACCEPTED
this __ day of November, 2010.
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By:
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Xxxxxxxx
Xxxxxxx, Chief Executive Officer
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EXHIBIT
A
TO
Certificate
of Designation of Series Common Stock
Omitted
in Exhibit 10.2
EXHIBIT
B
TO
Loan
Assignment Agreement
Omitted
in Exhibit 10.2
