EXHIBIT 99.1
AGREEMENT TO CONVERT DEBT
Dated: April 10, 2003 to be effective as of March 31, 2003
Between: Nova Communications Ltd., a Nevada corporation
000 Xxxxxxx Xxx., Xxxxx 000
Xxxxxxxx, XX 00000 ("Nova")
And: Palaut Management, Inc., a California corporation
00000 Xxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000 ("Palaut")
RECITALS
A. Nova is indebted to Palaut pursuant to a Promissory Note, which
as of the date of this Agreement cannot be located by the parties hereto
("Note").
B. Nova owes Palaut accrued and unpaid management fees and
unreimbursed expenses pursuant to a Management Agreement dated June 15, 2000
("Management Fees");
C. Nova and Palaut desire to satisfy Nova's obligations to Palaut
under the Note and arrange for the payment of the Management Fees through the
issuance to Palaut of common stock of Nova.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. BALANCE OWED ON NOTE. Nova and Palaut agree that the aggregate
amount of principal and interest owing by Nova under the Note as of the
effective date of this Agreement is $625,000.00 ("Note Amount");
2. UNPAID MANAGEMENT FEES AND EXPENSES. Nova and Palaut agree that
the aggregate amount of the unpaid Management Fees is $317,197.00 ("Fee
Amount").
3. SATISFACTION OF NOTE AMOUNT AND FEE AMOUNT/ ISSUANCE OF COMMON
STOCK. In full and complete satisfaction of the Note Amount and the Fee Amount,
Nova shall issue to Palaut and Palaut shall accept from Nova One Hundred Million
(100,000,000) shares of the common stock of Nova ("Nova Shares"). The Nova
Shares shall be represented by a stock certificate registered in the name of
Palaut which certificate shall be delivered to Palaut within five (5) days of
the date of this Agreement.
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4. CANCELLATION OF NOTE. Upon the delivery of the Nova Shares,
Palaut and Nova shall make a reasonable effort to locate the Note. If located,
Palaut agrees to deliver the Note to Nova marked "Cancelled".
5. PURCHASE ENTIRELY FOR OWN ACCOUNT. Palaut hereby confirms, that
the Nova Shares to be received by Palaut hereunder are being acquired for
investment for its own account and not with a view to the distribution of any
part thereof and that Palaut has no present intention of selling, granting any
participation in, or otherwise distributing the same.
6. DISCLOSURE OF INFORMATION; DUE DILIGENCE. Palaut represents
that it and/or its representatives and agents have had an opportunity to ask
questions of and receive answers from Nova regarding Nova's business and
financial affairs and that Palaut and/or its representatives and agents have had
an opportunity to review all of Nova's periodic reports filed with the United
States Securities and Exchange Commission.
7. RESTRICTED SECURITIES. Palaut understands that the Nova Shares
have not been registered under the Securities Act of 1933 and therefore are
characterized as "restricted securities" under the Securities Act of 1933 and
that consequently the transferability and resale of the Nova Shares will be
limited. Palaut understands that the certificate evidencing the Nova Shares will
bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED WITHOUT A VIEW
TO DISTRIBUTION AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SHARES UNDER THE ACT AND UNDER ANY APPLICABLE SECURITIES LAWS, OR AN
OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
8. AUTHORIZATION. All corporate action on the part of Nova and
Palaut, their respective officers, directors necessary for the authorization,
execution and delivery of this Agreement and the other agreements and
transactions contemplated herein, the performance of the respective obligations
of Nova and Palaut hereunder and the authorization, issuance and delivery of the
Nova Shares have been or will be taken. This Agreement and the other agreements
contemplated herein constitute valid and legally binding obligations of Nova and
Palaut, respectively, enforceable in accordance with their terms.
9. MISCELLANEOUS.
9.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as may be expressly
provided in this Agreement.
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9.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
9.3 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 ATTORNEYS' FEES. If any suit or action arising out of or
related to this Agreement is brought by any party, the prevailing party shall be
entitled to recover its costs, including reasonable attorneys' fees, incurred by
such party in such suit or action, including any appellate proceeding.
9.5 AMENDMENTS AND WAIVERS. After the execution of this
Agreement, any provision of this Agreement may be amended and the observance of
any provision may be waived only with the prior written consent of parties.
9.6 ENTIRE AGREEMENT. This Agreement and the other instruments
or agreements to be delivered hereunder constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NOVA COMMUNICATIONS LTD. PALAUT MANAGEMENT, INC.
By: /s/ XXXXXXX XXXX, President By: /s/ XXXXXX X. XXXXXXXXXX, President
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