Phoenix Aerospace, Inc. Carson City, Nevada 89706
Phoenix
Aerospace, Inc.
0000
Xxxxxxxx Xxx
Xxxxxx
Xxxx, Xxxxxx 00000
December
12, 2006
Xx.
Xxxx
X. Kudlis
00
Xxxxx
Xxxxxx
Xxxxxx
Xxxx, XX 00000
Re: Debt
Conversion Agreement
Dear
Xxxx:
Reference
is made to promissory note dated September 1, 2005 issued by Phoenix Aerospace,
Inc. (the “Company”)
to
you, a copy of which is attached to this letter agreement as Exhibit
A.
This
letter agreement confirms our recent discussions during which you were informed
that the Company contemplates becoming a wholly owned subsidiary of Phoenix
International Ventures, Inc., a Nevada corporation, and our mutual desire that
the Company’s debt to you be converted under certain conditions into common
stock of Phoenix International Ventures, Inc. As a part of this transaction,
Xxxxx Xxxx will continue to serve as the President and CEO of the Company and
will also serve as President and CEO of Phoenix International Ventures,
Inc.
| 1. |
The
Debt.
As of the date hereof, the aggregate amount of the outstanding principal
amount, accrued but unpaid interest, and all other amounts due and
payable
under the Note is: $75,000 (collectively the “Debt”).
Aside from the Debt, the Company is not otherwise indebted to
you.
|
| 2. |
Agreement
to Convert Note into Common Stock.
Upon the terms and subject to the conditions hereinafter set forth,
you
hereby agree to accept in full satisfaction of the Debt the right to
receive such number of shares of the Company that equals 150,000 shares
of
Phoenix International Ventures, Inc. common stock, par value $.001
per
share (collectively, the “Securities”).
To this end, simultaneous with the execution and delivery of this letter
agreement, you hereby tender the Note, marked “cancelled”. The Company
will cause Phoenix International Ventures, Inc. (“PIV”)
to issue certificate(s) representing the Securities promptly after
the
closing of the anticipated acquisition of all the outstanding capital
stock of the Company by PIV (the “PIV
Acquisition”).
|
| 3. |
Representations
and Warranties.
You represent and warrant to the Company as follows, which representations
and warranties shall survive the execution and delivery of this letter
agreement and the consummation of the transactions contemplated
hereby:
|
|
(a)
|
In
making the decision to invest in the Securities, you have discussed
with
your counsel the representations, warranties and agreements which
you are
making in this letter agreement, the applicable limitations upon
the
resale of the Securities, and the investment, tax and legal consequences
of this investment. You disclaim reliance on any statements made
or
information provided by any person or entity in the course of your
consideration of an investment in the
Securities.
|
|
(b)
|
You
understand that no federal or state agency has made any finding or
determination regarding the fairness of this investment or any
recommendation or endorsement of this
investment.
|
|
(c)
|
You
are purchasing the Securities for your own account, with the intention
of
holding the Securities for investment purposes, with no present intention
of dividing or allowing others to participate in this investment
or of
reselling or otherwise participating, directly or indirectly, in
a
distribution of the Securities; and shall not make any sale, transfer
or
other disposition of the Securities without registration under the
1933
Act and applicable state securities laws unless an exemption from
registration is available under those laws. You are not acquiring
any
portion of the Securities or any interest therein, on behalf of another
person. No person other than you has
any direct or indirect beneficial interest in the Securities purchased
hereunder by you.
|
|
(d)
|
Your
overall commitment to investments which are not readily marketable
is not
disproportionate to your net worth, and your investment in the Securities
will not cause such overall commitment to become
excessive.
|
|
(e)
|
You
have adequate means of providing for your current needs and personal
and
family contingencies and have no need for liquidity in your investment
in
the Securities.
|
|
(f)
|
You
are an “accredited investor” as that term is defined in Rule 501(a) under
Regulation D promulgated by the Securities and Exchange Commission
(the
“SEC”)
under the 1933 Act. You are financially able to bear the economic
risk of
this investment, including the ability to afford holding the Securities
for an indefinite period or to afford a complete loss of this
investment.
|
|
(g)
|
The
address set forth above is your principal
residence.
|
|
(h)
|
You
have such knowledge and experience in financial business matters
as to be
capable of evaluating the merits and risks of an investment in the
Securities. You
acknowledge that this letter agreement does not contain all information
that is necessary to make an investment decision with respect to
the
Company and the Securities and that you must rely on your own examination
of the Company and the terms and conditions of this investment prior
to
making any investment decision with respect to the Securities.
|
|
(i)
|
You
have been given the opportunity to ask questions of and receive answers
from the Company and its executive officers concerning the business
and
operations of the Company and the terms, provisions, and conditions
of
this investment and to obtain any such additional information that
you
deem necessary or advisable in order to evaluate an investment in
the
Company; and you have availed yourself of such opportunity to the
extent
considered appropriate in order to evaluate the merits and risks
of the
proposed investment.
|
|
(j)
|
You
have made an independent evaluation of the merits of this investment
and
acknowledge the high risk nature of the
investment.
|
|
(k)
|
You
understand that none of the Securities have been registered under
the 1933
Act or any state securities laws in reliance on exemptions for private
offerings; the Securities cannot be resold or otherwise disposed
of unless
they are subsequently registered under the 1933 Act and applicable
state
securities laws or an exemption from registration is available. The
certificate(s) representing the Securities will bear a legend
substantially similar to the legend set forth immediately below until
(1)
such Securities shall have been registered under the 1933 Act and
effectively disposed of in accordance with a registration statement,
or
(2) in the opinion of counsel reasonably satisfactory to the Company
such
securities may be sold without registration under the 1933
Act:
|
| “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE "BLUE SKY" OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE 1933 ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT BUT ONLY UPON A HOLDER THEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE 1933 ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAWS." |
| (l) | You understand that in the absence of registration by the Company, the Securities will not be, and, except as set forth below, you will have no rights to require that the Securities shall be, registered under the 1933 Act or any state securities laws; you may have to hold the Securities indefinitely and it may not be possible for you to liquidate your investment in the Company; and you should not purchase any Securities unless you can afford a complete loss of your investment and bear the burden of such loss for an indefinite period of time. |
|
(4)
|
Registration
Rights.
|
|
(a)
|
At
any time after the date hereof, in the event that the Company shall
determine to proceed with the actual preparation and filing of a
registration statement under the 1933 Act in connection with the
proposed
initial public offer and sale of any of its Shares by it or by any
of its
security holders (other than a registration statement on Form X-0,
X-0 or
other successor or comparable forms), the Company, on one occasion
only,
will give written notice of its determination (the “Piggyback
Notice”)
to you at least forty-five (45) days prior to filing such registration
statement. Upon your written request within thirty (30) days after
the
giving of the Piggyback Notice, the Company will cause such Securities
to
be included in such registration statement, all to the extent required
to
permit the sale or other disposition by you of the Securities to
be so
registered; provided, that nothing herein shall prevent the Company
from,
at any time, abandoning or delaying any such Company initiated
registration. If any registration pursuant to this Section 4 shall
be
underwritten in whole or in part, the Company may require that the
Securities requested for inclusion pursuant to this Section 4 be
included
in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriter(s). In the event that
in the
good faith judgment of the managing
underwriter of such public offering the inclusion of all of the Securities
originally covered by a request for registration pursuant to this
Section
4 would materially and adversely affect the successful marketing
of the
securities offered by the Company through a managing underwriter,
the
number of Securities otherwise to be included in the underwritten
public
offering may be reduced as required by the managing
underwriter,
the securities so included to be apportioned pro rata among the selling
security holders according to the total amount of securities entitled
to
be included therein owned by each selling security holder or in such
other
proportions as shall mutually be agreed to by such selling security
holders.
|
| (b) | All fees, costs and expenses of and incidental to the registration of the Securities, shall be borne by the Company; provided, however, that you shall bear your share of the underwriting discount, if any, and commissions and transfer taxes, and any professional fees or costs of accounting, financial or legal advisors engaged by you. |
| (c) | You agree to execute any lock-up agreement signed by the Company’s executive officers in connection with the registration statement. |
|
(5)
|
Put.
If the registration statement relative to the Securities has not
been
declared effective within 12 months of the date of this letter agreement,
then you may, on 30 days’ notice to the Company, require the Company to
repurchase the Securities for a purchase price of
$75,000.
|
6. Miscellaneous.
| (a) | This letter agreement shall be binding upon and inure to the benefit of the parties hereto and their respective representatives, successors and assigns. |
|
(b)
|
No
provision of this letter agreement may be amended, modified, or waived,
except in writing and signed by the party against whom enforcement
is
sought.
|
|
(c)
|
This
letter agreement shall be governed by, and construed in accordance
with,
the law of the State of Nevada applicable to agreements made and
to be
performed wholly therein. Any proceeding with respect to the construction
or enforcement of this letter agreement shall be brought in a state
or
federal court located in the Xxxxxx City or Las Vegas,
Nevada.
|
This
letter agreement may be executed in counterparts.
Sincerely,
Phoenix
Aerospace, Inc.
By:
/s/
Zahir Teja_____________
Xxxxx
Xxxx, President
Read,
accepted and agreed to:
/s/
Xxxx X. Kudlis_______________
Xxxx
X.
Kudlis
