EXHIBIT 10.8
DEBT CONVERSION AGREEMENT
This Debt Settlement Agreement (the "Agreement"), entered into this
11th day of February 2002, is by and between PayStar Corporation, a Nevada
corporation (hereinafter the "Company"), and Xxxxxxxx Securities Limited
(hereinafter the "Creditor").
RECITALS:
WHEREAS, the Creditor has loaned $300,000 to the Company, as evidenced
by the promissory note dated July 31, 2000 (the "Note");
WHEREAS, the Creditor is willing to accept, and the Company is willing
to issue, shares of common stock of the Company to the Creditor in full and
complete satisfaction of monies owed by the Company to the Creditor
pursuant to the Note at the rate of $0.10 per share for the total amount of
principal and interest due pursuant to the Note on the effective date of
this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions of this
Agreement, the parties hereto agree as follows:
1. Issuance of Shares. The Company shall, and hereby agrees to,
issue to the Creditor 3,000,000 shares of common stock of the Company
(hereinafter the "Shares") in full and complete satisfaction of $300,000,
plus interest, owed by the Company to the Creditor and cancellation of the
Note. Immediately upon execution of this Agreement by the Creditor, and
the return of the original Note marked "CANCELED," the Company shall
instruct the transfer agent for the common stock of the Company to issue to
the Creditor one or more stock certificates representing the Shares.
2. Conversion of Debt. The Creditor, for itself and for its
administrators and assigns, shall, and by these presents does, accept,
receive, and take the Shares from the Company as full and complete
satisfaction of the $300,000, plus interest, owed to it by the Company, and
hereby converts such debt into the Shares.
3. Effective Date. The effective date of this Agreement shall be
February 11, 2002.
4. Representations and Warranties of the Company. The Company
represents and warrants to the Creditor as set forth below. These
representations and warranties are made as an inducement for the Creditor
to enter into this Agreement and, but for the making of such
representations and warranties and their accuracy, the Creditor would not
be parties hereto.
a. Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
b. Performance of This Agreement. The execution and
performance of this Agreement and the issuance of the Shares contemplated
hereby have been authorized by the board of directors of the Company.
c. Legality of Shares to be Issued. The Shares to be issued by
the Company pursuant to this Agreement, when so issued and delivered, will
have been duly and validly authorized and issued by the Company and will be
fully paid and nonassessable.
d. Accuracy of All Statements Made by the Company. No
representation or warranty by the Company in this Agreement, nor any
document or certificate delivered to the Creditor pursuant to this
Agreement, contains or shall contain any untrue statement of material fact
or omits to state or shall omit to state a material fact necessary to make
the statements contained therein not misleading.
5. Representations and Warranties of the Creditor. The Creditor
represents and warrants to the Company as set forth below. These
representations and warranties are made as an inducement for the Company to
enter into this Agreement and, but for the making of such representations
and warranties and their accuracy, the Company would not be a party hereto.
a. No Assignment or Transfer of Debt. The Creditor is the sole
owner and holder of the Note and has not bargained, sold, assigned,
conveyed, or otherwise transferred any interest in the Note.
b. Accredited Investor Status. The Creditor is an "accredited
investor" as defined in Rule 501 of Regulation D promulgated by the U.S.
Securities and Exchange Commission (the "SEC").
c. Restricted Securities. The Creditor understands that the
Shares have not been registered pursuant to the Securities Act, or any
state securities act, and thus are "restricted securities" as defined in
Rule 144 promulgated by the SEC. Accordingly, the Creditor hereby
acknowledges that it is prepared to hold the Shares for an indefinite
period.
d. Investment Purpose. The Creditor acknowledges that the
Shares are being purchased for its own account, for investment, and not
with the present view towards the distribution, assignment, or resale to
others or fractionalization in whole or in part. The Creditor further
acknowledges that no other person has or will have a direct or indirect
beneficial or pecuniary interest in the Shares.
e. Limitations on Resale; Restrictive Legend. The Creditor
acknowledges that it will not sell, assign, hypothecate, or otherwise
transfer any rights to, or any interest in, the Shares except (i) pursuant
to an effective registration statement under the Securities Act, or (ii) in
any other transaction which, in the opinion of counsel acceptable to the
Company, is exempt from registration under the Securities Act, or the rules
and regulations of the SEC thereunder. The Creditor also acknowledges that
an appropriate legend will be placed upon each of the
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certificates representing the Shares stating that the Shares have not
been registered under the Securities Act and setting forth or referring
to the restrictions on transferability and sale of the Shares.
f. Information. The Creditor's representative has been
furnished (i) with all requested materials relating to the business,
finances, and operations of the Company; (ii) with information deemed
material to making an informed investment decision; and (iii) with
additional requested information necessary to verify the accuracy of any
documents furnished to the Creditor by the Company. Such person has been
afforded the opportunity to ask questions of the Company and its management
and to receive answers concerning the terms and conditions of this
transaction.
g. Documents. The Creditor's representative has received and
read in their entirety: (i) this Agreement, including each representation,
warranty, and covenant set forth herein; (ii) the Company's annual report
on Form 10-KSB for the year ended December 31, 2000; (iii) the Company's
quarterly reports on Form 10-QSB for 2001; and (v) each other document
filed by the Company with the SEC since December 31, 2000. Such person has
relied upon the information contained therein and has not been furnished
any other documents, literature, memorandum, or prospectus.
g. Knowledge and Experience in Business and Financial Matters.
The Creditor's representative has such knowledge and experience in business
and financial matters that he or she is capable of evaluating the risks of
the prospective investment, and that the financial capacity of the Creditor
is of such proportion that the total cost of such entity's commitment in
the Shares would not be material when compared with its total financial
capacity.
h. No Advertisements. The Creditor did not enter into this
Agreement as a result of or subsequent to any advertisement, article,
notice, or other communication published in any newspaper, magazine, or
similar media or broadcast on television or radio, or presented at any
seminar or meeting.
i. Relationship to Company. The Creditor, through its
representative, has a preexisting personal or business relationship with
the Company or one of its officers, directors, or controlling persons, or,
by reason of the business or financial experience of its professional
advisors who are unaffiliated with and who are not compensated by the
Company, the Creditor has the capacity to protect its own interests in
connection with the acquisition of the Shares in this transaction.
j. Compliance with Local Laws and Regulations. To the best
knowledge and reasonable belief of the Creditor, the issuance of the Shares
does not violate any laws or regulations governing the issuance of
securities in the jurisdiction in which the Creditor is domiciled, or in
which it maintains its principal executive offices.
k. Accuracy of All Statements Made by the Creditor. No
representation or warranty by the Creditor in this Agreement, nor any
document or certificate delivered to the Company pursuant to this
Agreement, contains or shall contain any untrue statement of material
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fact or omits to state or shall omit to state a material fact necessary
to make the statements contained therein not misleading.
6. Piggyback Registration Rights. The Company hereby grants to the
Creditor one-time piggyback registration rights as set forth in the
attached Registration Rights Agreement attached hereto and incorporated
herein. The parties hereto agree to execute and deliver such agreement
contemporaneous with this Agreement.
7. Miscellaneous Provisions
a. Notices. All communications provided for herein shall be in
writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt
requested, addressed as follows, or at such other address as shall be
designated by any party hereto in written notice to the other party hereto
delivered pursuant to this subsection:
Shareholder: Xxxxx 0X
Xxxxxxx Xxxxx
000 Xxxx Xxxxxx
Gibraltar
Company: Xxxxx X. Xxxxxx, CFO
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 00
Xxxx, XX 00000
with copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
b. Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or
parties will be entitled to recover reasonable attorneys' fees and other
costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
c. Rights Are Cumulative. The rights and remedies granted to
the parties hereunder shall be in addition to and cumulative of any other
rights or remedies either may have under any document or documents executed
in connection herewith or available under applicable law. No delay or
failure on the part of a party in the exercise of any power or right shall
operate as a waiver thereof nor as an acquiescence in any default nor shall
any single or partial exercise
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of any power or right preclude any other or further exercise thereof or the
exercise of any other power or right.
d. Governing Law. This Agreement and the rights and duties of
the parties hereto shall be construed and determined in accordance with the
laws of the State of California, and any and all actions to enforce the
provisions of this Agreement, shall be brought in a court of competent
jurisdiction in the State of California and in no other place.
e. Successors and Assigns. This Agreement shall be binding
upon the parties and their successors and assigns and shall inure to the
benefit of the other parties and successors and assigns.
f. Counterparts. This Agreement may be executed in any number
of counterparts and all such counterparts taken together shall be deemed to
constitute one instrument.
g. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions,
and preliminary agreements between the parties hereto relating to the
subject matter of this Agreement.
h. Survival of Covenants, Etc. All covenants, representations
and warranties made herein shall survive the making of this Agreement and
shall continue in full force and effect until the obligations of this
Agreement have been fully satisfied.
i. Partial Invalidity. If any term of this Agreement shall be
held to be invalid or unenforceable, such term shall be deemed to be
severable and the validity of the other terms of this Agreement shall in no
way be affected thereby.
j. Headings. The descriptive headings of the various sections
or parts of this Agreement are for convenience only and shall not affect
the meaning or construction of any of the provisions hereof.
k. Full Knowledge. By their signatures, the parties
acknowledge that they have carefully read and fully understand the terms
and conditions of this Agreement, that each party has had the benefit of
counsel, or has been advised to obtain counsel, and that each party has
freely agreed to be bound by the terms and conditions of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
document the day and year first above written.
COMPANY: PayStar Corporation
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Chairman
CREDITOR: Xxxxxxxx Securities Limited
By /s/ Xxxxx X. Xxxxxxx
Its Director
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