EXHIBIT 99.1
SERIES B PREFERRED STOCK CONVERSION AGREEMENT
This Agreement (the "Agreement"), entered into this 29th day of May
2003, is by and between DIRECTVIEW, INC., a Nevada corporation, with offices at
000 Xxxx 000 Xxxxx, Xxxxxxxx Xxxxx, Xxxx 00000 (hereinafter the "Company"), and
CAPITAL HOLDINGS, LLC, a Utah limited liability company, with offices at 0000
Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, XX 00000 (hereinafter the
"Preferred Stockholder").
RECITALS:
WHEREAS, the Preferred Stockholder is the record and beneficial owner
of 10,000 Series B Preferred Shares of the Company; and
WHEREAS, the Company has entered into an acquisition agreement which
requires it to convert the outstanding Series B Preferred Shares into common
shares of the Company; and
WHEREAS, the parties believe that the proposed acquisition would be in
the best interests of the Company; and
WHEREAS, the Preferred Stockholder is willing to accept, and the
Company is willing to issue, shares of common stock of the Company to the
Preferred Stockholder in exchange for the preferred shares owned by the
Preferred Stockholder at the rate set forth in 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 Preferred Stockholder 18,000,000 shares of common stock of the
Company (hereinafter the "Shares") in exchange for the cancellation of the
10,000 Series B Preferred Shares owned by the Preferred Stockholder. Immediately
upon execution of this Agreement by the Preferred Stockholder, and the receipt
of the stock certificate representing the 10,000 shares of the Series B
Preferred Stock duly executed by the Preferred Stockholder, the Company shall
instruct the transfer agent for the common stock of the Company to issue to the
Preferred Stockholder one or more stock certificates representing the Shares.
2. Cooperation in Sale of Shares. For a period beginning one year
from the date of this Agreement and ending two years following the date of this
Agreement, or until all of the Shares are sold by the Preferred Stockholder,
whichever shall first occur, the Company shall use its reasonable best efforts
to maintain current public information as defined in paragraph (c) of Rule 144
promulgated by the Securities and Exchange Commission. Following the one-year
holding period of Rule 144, the Company shall cooperate with the Preferred
Stockholder in the resale of the Shares under Rule 144. Such cooperation shall
include, but not be limited to, the
clearing of the Shares, or a portion thereof, from time-to-time by the Company
for resale under Rule 144 within two business days of receipt of the standard
broker and seller's representation forms and the signed Form 144, provided that
the Preferred Stockholder shall have met, or shall agree to meet, the
requirements of paragraphs (d), (e), (f), (g), (h), and (i) of Rule 144. In
addition, if required, the company shall, at no cost to the Preferred
Stockholder, provide an opinion of its counsel to the transfer agent authorizing
the sale under Rule 144, provided such requirements of Rule 144 are satisfied by
the Preferred Stockholder.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Preferred Stockholder as set forth below. These
representations and warranties are made as an inducement for the Preferred
Stockholder to enter into this Agreement and, but for the making of such
representations and warranties and their accuracy, the Preferred Stockholder
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.
4. Representations and Warranties of the Preferred Stockholder.
The Preferred Stockholder 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. Ownership of Preferred Shares. The Preferred
Stockholder is the record and beneficial owner and holder of the 10,000 Series B
Preferred Shares of the Company and all such shares are owned free and clear of
all liens, encumbrances, charges and assessments of every nature and subject to
no restrictions with respect to transferability. Except for this Agreement,
there are no outstanding options, contracts, calls, commitments, agreements or
demands of any character relating to these preferred shares.
b. Restricted Securities. The Preferred Stockholder
understands that the Shares to be issued to him will not have been registered
pursuant to the Securities Act of 1933, or any state securities act, and thus
will be restricted securities as defined in Rule 144 promulgated by the
Securities and Exchange Commission (the "SEC"). Therefore, under current
interpretations and applicable rules, he will probably have to retain such
shares for a period of at least one year and at the expiration of such one year
period his sales may be confined to
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brokerage transactions of limited amounts requiring certain notification filings
with the SEC and such disposition may be available only if the issuer is current
in its filings with the SEC under the Securities Exchange Act of 1934, as
amended, or other public disclosure requirements.
c. Non-distributive Intent. The Preferred Stockholder
acknowledges that the Shares are acquired for his own account and not with the
present view towards the distribution thereof and he will not dispose of such
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 issuer, is exempt from registration under the
Securities Act, or the rules and regulations of the SEC thereunder, and that an
appropriate legend will be placed upon each of the certificates representing the
Shares, and stop transfer instructions shall be placed with the transfer agent
for the securities.
d. Evidence of Compliance with Private Offering
Exemption. The Preferred Stockholder has such knowledge and experience in
business and financial matters that he is capable of evaluating the risks of the
prospective investment, and that the financial capacity of the Preferred
Stockholder is of such proportion that the total cost of such person's
commitment in the Shares would not be material when compared with its total
financial capacity.
e. Access to Information. The Preferred Stockholder has
received and read and is familiar with all of the filings made by the Company
with the Securities and Exchange Commission, as well as the documents and
financial statements furnished to the Company by Xxxxxxx Communications, Inc.,
the proposed target company for acquisition, and confirms that all such
documents, records, and books pertaining to this proposed investment have been
made available to him.
f. Opportunity to Ask Questions. The Preferred
Stockholder has had the opportunity to question and receive answers from
representatives of the Company concerning the terms and conditions of the
proposed investment and the business of the Company. In addition, the Preferred
Stockholder has received all requested additional information and documents.
g. Limitations on Transfer of Shares. The Preferred
Stockholder acknowledges that it is aware that there are substantial
restrictions on the transferability of the Shares. Since the Shares will not be
registered under the Securities Act or any applicable state securities laws, the
Shares may not be, and the Preferred Stockholder agrees that they shall not be,
transferred unless the Shares are registered under the Securities Act and state
securities laws, or unless such sale is exempt from such registration under the
Securities Act and any other applicable state securities laws or regulations.
5. Miscellaneous Provisions
a. Default Costs. Should any party to this Agreement
default in any of the covenants, conditions, or promises contained herein, the
defaulting party shall pay all costs and expenses, including a reasonable
attorney's fee, which may arise or accrue from enforcing this Agreement, or in
pursuing any remedy provided hereunder or by the statutes of the State of *.
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b. 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 of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right.
c. Waiver and Amendment. Neither this Agreement nor any
provision hereof may be changed, waived, terminated or discharged orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, termination or discharge is sought.
d. Notices. All communications provided for herein shall
be in writing and shall be deemed to be given or made on (a) the date of
delivery, if delivered in person, by nationally recognized overnight delivery
service, or by facsimile, or (b) three days after mailing if mailed from within
the continental United States by registered or certified mail, return receipt
requested, to the party entitled to receive the same, if to the initial parties
hereto, to the address first above written, or at such other address or
facsimile number as shall be designated by any party hereto in written notice to
the other party hereto delivered pursuant to this Paragraph.
e. 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 Utah, 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 Utah and in no other place.
f. 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.
h. Counterparts. This Agreement may be executed in any
number of counterparts and all such counterparts taken together shall be deemed
to constitute one instrument.
i. 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.
j. Interpretation of Agreement. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
k. 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
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effect for a period of two years from the date of this Agreement, at the end of
which period no claim may be made with respect to any such covenant,
representation, or warranty unless such claim shall have been asserted in
writing to the indemnifying party during such period.
l. 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.
m. 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.
n. Number and Gender. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, the feminine, or the neuter gender shall include the masculine,
feminine, and neuter.
o. Further Assurances. At any time, and from time to
time, after the effective date, each party will execute such additional
instruments and take such action as may be reasonably requested by the other
party to confirm or perfect title to any property interests transferred
hereunder or otherwise to carry out the intent and purposes of this Agreement.
p. 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.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
document the day and year first above written.
COMPANY: DirectView, Inc.
By /s/ Xxxxx Xxxx
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President
PREFERRED STOCKHOLDER: Capital Holdings, LLC
By /s/ Xxx Xxxxxxx
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Its Managing Member
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