EXHIBIT 10.32
DEBT CONVERSION AGREEMENT
BETWEEN XXXXXXX XXXXX AND JANEX
EXHIBIT 10.32
DEBT CONVERSION AGREEMENT
THIS AGREEMENT is entered into as of the 18th day of September, 2000,
by and between Xxxxxxx X. Xxxxx ("Xxxxx") and Janex International, Inc., a
Colorado corporation ("Janex").
R E C I T A L S:
A. Janex owes Xxxxx the sum of $67,081.90 pursuant to a Promissory
Note, dated September 18, 2000. Said Promissory Note is sometimes hereinafter
collectively referred to as the "Note."
X. Xxxxx is willing to exchange the debt (the "Debt") owing to under
the Note for 1,341,638 shares of common stock of Janex.
NOW THEREFORE, in consideration of the covenants and agreements
contained in this Agreement, and Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
T E R M S:
1. As soon as practicable after the date of this Agreement, Janex shall
issue Xxxxx One Million, Three Hundred Forty-One Thousand, Six Hundred
Thirty-Eight (1,341,638) shares of Janex common stock.
Xxxxx agrees, and will confirm said agreement by executing one or more
documents so confirming, with content acceptable to Janex, that: (A) the stock
to be issued under this Agreement will be a restricted security, issued pursuant
to one or more exemptions to the registration requirements of the Securities
Act; (B) the obligation of Janex to issue the stock is subject to Janex
determining to the satisfaction of Janex that these transactions are in
compliance with the Securities Act and all other applicable federal and state
laws; and (C) Xxxxx will execute such documents as are necessary and/or
appropriate to ensure compliance with applicable federal and state laws. Janex
obtaining documentation as to the foregoing shall be a condition to the issuance
of the stock.
In furtherance, but not in limitation, of the foregoing, Xxxxx'x stock
will be subject to all of the terms and restrictions of said stock, Janex shall
have no obligation under this Agreement to register Xxxxx'x stock or to make
registered stock available to Xxxxx under this Agreement, no representation,
warranty or guarantee is made by Janex as to the value of the stock to be issued
pursuant to this Agreement, and Xxxxx takes full risk and responsibility as to
said value.
Xxxxx hereby makes the representations and warranties set out in
Exhibit "A" attached hereto and hereby made a part hereof. On said Exhibit "A,"
Xxxxx is referred to as the "Subscriber," Janex is referred to as the
"Corporation," and the shares of stock to be acquired to Xxxxx under this
Section are referred to as the "Shares." Xxxxx acknowledges and understands the
meaning and legal consequences of the representations and warranties contained
herein and agrees to indemnify and defend and hold harmless Janex, and the
directors, officers, agents, employees and attorneys of Janex, from and against
any and all claims, loss, damage, liability, cost or expense, including
attorneys' fees and court costs, due to or arising out of or connected directly
or indirectly with or to any breach of any such representation or warranty made
by Xxxxx. Xxxxx'x representations and warranties appearing herein are made as of
the date hereof and as of the date of issuance of stock pursuant to this
Section. Xxxxx'x acceptance of stock under this Section shall constitute Xxxxx'x
confirmation of the representations and warranties appearing herein as of the
date of the acceptance.
1
2. Xxxxx hereby releases and forever discharges the Debt, effective
automatically upon the issuance of the stock as described in Section 1 above.
DATED as of the date first hereinabove written.
XXXXX: BY /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
JANEX: Janex International, Inc., a Colorado corporation
BY /s/ XXXXXX XXXXXXX
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Xxxxxx Xxxxxxx, President
LIST OF EXHIBITS:
Subscriber Representations and Warranties "A"
EXHIBIT "A"
SUBSCRIBER REPRESENTATIONS AND WARRANTIES
Subscriber hereby represents, warrants and acknowledges to the
Corporation as follows:
1. The Shares will be acquired by Subscriber for Subscriber's own
account and not with the view to, or for resale in connection with, any
distribution, public offering or transfer thereof within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), and Subscriber is not,
directly or indirectly, participating in an underwriting of any such
distribution, offering, or transfer.
2. Subscriber understands that the Shares have not been registered
under the 1933 Act by reason of issuance in transactions exempt from the
registration and prospectus delivery requirements of the 1933 Act pursuant to
Section 4(2) thereof.
3. Subscriber understands that the Shares have not been registered
under the 1933 Act or any state securities laws, that they are "restricted
securities" in the hands of Subscriber with the meaning of the Act, and that any
future sale of the Shares will be regulated by the Act and applicable state
securities laws. Subscriber understands that the Shares may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act or
an exemption therefrom, and that in the absence of an effective registration
statement covering the Shares, or an available exemption from registration under
the 1933 Act, the Shares must be held indefinitely.
4. Subscriber will not sell or otherwise transfer or dispose of any of
the Shares: (A) except in strict compliance with (1) the provisions of the
Agreement to which this Exhibit is attached, and (2) the restrictions on
transfer described herein, and (B) unless such securities are (X) registered
under the 1933 Act, and any applicable state securities laws, or (Y) Subscriber
represents that such securities may be sold in reliance on an exemption from
such registration requirements.
5. No federal or state agency, including the Securities and Exchange
Commission or the securities regulatory agency of any state, has approved or
disapproved the Shares, passed upon or endorsed the merits of the Shares, or
made any finding or determination as to the fairness of the Shares for private
investment.
6. The investment in the Shares is being made in reliance on specific
exemptions from the registration requirements of federal and state securities
laws, and the Corporation is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings set
forth herein in order to establish such exemptions.
7. Subscriber agrees to deliver to the Corporation, if requested by the
Corporation, an investment letter in customary form.
8. Based on personal knowledge and experience in financial and business
matters in general, Subscriber understands the nature of this investment, is
fully aware of and familiar with the business operations of the Corporation, and
is able to evaluate the merits and risks of an investments in the Shares.
9. Subscriber has been given the opportunity to ask questions about the
Corporation and has been granted access to all information, financial and
otherwise, with respect to the Corporation which has been requested, has
examined such information, and is satisfied with respect to the same.
10. Subscriber has been encouraged to rely upon the advice of
Subscriber's legal counsel and accountants or other financial advisors with
respect to the tax and other considerations relating to the acquisition of the
Shares.
11. Subscriber, in determining to acquire the Shares, has relied solely
upon: (A) the advice of Subscriber's legal counsel and accountants or other
financial advisers with respect to the tax, economic and other consequences
involved in acquiring the Shares, and (B) Subscriber's own independent
evaluation of the business, operations and prospects of the Corporation and the
merits and risks of the acquisition of the Shares.
12. Subscriber has been advised and understands that this investment
is, by its nature, very speculative.
13. Subscriber has sufficient income and net worth such that Subscriber
does not contemplate being required to dispose of any portion of the investment
in the Shares to satisfy any existing or expected undertaking or indebtedness.
Subscriber is able to bear the economic risks of an investment in the Shares,
including, without limiting the generality of the foregoing, the risk of losing
all or any part of the investment and probable inability to sell or transfer the
Shares for an indefinite period of time.
14. Subscriber is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated by the Securities and Exchange Commission, as
presently in effect.
15. The investment in the Shares has been privately proposed to
Subscriber without the use of general solicitation or advertising.
16. Subscriber understands that the certificates representing the
Shares may bear restrictive legends as to the restricted nature of such
securities and may bear a legend substantially in the following form, and agrees
to will hold the Shares subject thereto:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR
INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED, AT THE
EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
