EXHIBIT 10.1
DEBT CONVERSION AGREEMENT
This Debt Conversion Agreement (the "AGREEMENT") is made effective as
of 17 August 1995 by and between Xxxxxxx X. Xxxxxxx ("XXXXXXX") and ALPNET,
Inc., a Utah corporation ("ALPNET" or the "COMPANY").
R E C I T A L S:
A. ALPNET has heretofore issued in favor of Xxxxxxx a promissory note
in the principal amount of SFr300,000, dated 18 September 1992, a copy of which
note is attached hereto as Exhibit "A" (the "NOTE").
B. As of 17 August 1995, the entire principal balance of the Note
remains unpaid; accrued interest has been paid in full to and including 17
August 1995.
C. In conjunction with ALPNET issuing the Note in favor of Xxxxxxx,
ALPNET granted Xxxxxxx a security interest (the "SECURITY INTEREST") in certain
assets of ALPNET as more fully set forth on Exhibit A to Form UCC-1 Financing
Statement dated 18 September 1992, a copy of which UCC-1 is attached hereto as
Exhibit "B" (the "UCC-1").
D. The UCC-1 was filed with the state of Utah on 18 September 1992 as
UCC File #336426 and is scheduled to expire on 18 September 1997.
X. Xxxxxxx desires to (i) convert all of the principal balance of the
debt evidenced by the Note, in the amount of SFr300,000 into "ALPNET Preferred
Stock" (as herein defined) and (ii) terminate the Security Interest as evidenced
by the UCC-1, and ALPNET desires to issue to Xxxxxxx such ALPNET Preferred Stock
and have the Security Interest terminated, all on the terms and conditions as
herein set forth.
NOW, THEREFORE, for and in consideration of the mutual promises and
other consideration herein set forth, it is agreed by the parties as follows:
A G R E E M E N T:
1. CONVERSION OF NOTE TO EQUITY; TERMS OF CONVERSION.
a. CONVERSION PREFERRED SHARES; NUMBER; PRICE.
(1) Contemporaneously herewith, ALPNET shall deliver to Xxxxxxx
87,339 newly issued shares of ALPNET Preferred Stock, (the "CONVERSION PREFERRED
SHARES"). It is understood and agreed that the total number of Conversion
Preferred Shares has been determined by dividing the principal amount of the
Note converted to equity, SFr300,000 (U.S. $245,640), by the conversion per
share price of $0.3125, and by dividing that quotient by the conversion ratio of
9 to 1.
(2) Delivery of the Conversion Preferred Shares to Xxxxxxx shall
constitute payment in full satisfaction of the total amount due on the Note in
the amount of SFr300,000 (U.S. $245,640). Contemporaneously herewith, Xxxxxxx
shall surrender and deliver to ALPNET the original Note for cancellation.
(3) The term "ALPNET PREFERRED STOCK" for purposes of this
Agreement shall mean ALPNET $2.81 convertible, voting, non-cumulative 10%
preferred stock, series D, without par value, in the form attached hereto as
Exhibit "C."
(4) The term "ALPNET COMMON STOCK" for purposes of this
Agreement shall mean ALPNET common, voting, no par value stock.
b. ALPNET PREFERRED STOCK.
(1) ENTIRE ADJUSTMENTS. In case ALPNET shall at any time (i)
subdivide its outstanding shares of ALPNET Common Stock into a greater number of
shares or (ii) pay a dividend in shares of ALPNET Common Stock or make a
distribution in shares of ALPNET Common Stock, the conversion of Conversion
Preferred Shares into ALPNET Common Stock shall be proportionately increased,
and, conversely, in case the outstanding shares of the ALPNET Common Stock shall
be combined into a smaller number of shares, the conversion of the Conversion
Preferred Shares into ALPNET Common Stock shall be proportionately decreased.
In case of any classification, reclassification, or other reorganization of the
capital stock of ALPNET, or in case of the consolidation or merger of ALPNET
with or into another corporation, or the conveyance to another corporation of
all or any major portion of the assets of ALPNET, then, as part of such
classification, reclassification, reorganization, consolidation, merger, or
conveyance, adequate provision shall be made whereby Xxxxxxx upon the conversion
of the Conversion Preferred Shares into ALPNET Common Stock shall be entitled to
receive on the same basis and conditions as holders of ALPNET Common Stock, the
stock, securities or other property which Xxxxxxx would have been entitled to
receive upon such classification, reclassification or other reorganization,
consolidation, merger or conveyance, if Xxxxxxx had converted the Conversion
Preferred Shares immediately prior to such classification, reclassification or
other reorganization, consolidation, merger or conveyance; and, in any such
case, appropriate provision shall be made with respect to the rights and
interests of Xxxxxxx to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the number of shares deliverable upon
the conversion of the Conversion Preferred Shares into ALPNET Common Stock)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or other property thereafter deliverable upon the
conversion of the Conversion Preferred Shares into ALPNET Common Stock; and, as
a condition of any such consolidation, merger, or conveyance, any corporation
which shall become successor to ALPNET by reason of such consolidation, merger
or conveyance shall expressly assume the obligation to deliver, upon the
conversion of the Conversion Preferred Shares into ALPNET Common Stock, such
shares of stock, securities or other consideration as Xxxxxxx shall be entitled
to receive pursuant to the provisions hereof. The foregoing provisions shall
similarly apply to successive classifications, reclassifications, or other
reorganizations and to successive consolidations, mergers, and conveyances of or
by any such successor.
c. RESTRICTIONS.
(1) The Conversion Preferred Shares shall bear a restrictive
legend (the "RESTRICTIVE LEGEND") that is substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY
NOT BE SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
(2) Xxxxxxx does hereby represent and warrant to ALPNET that all
shares and securities acquired or to be acquired by Xxxxxxx hereunder are being
acquired for investment purposes only, for his own account and not with a view
to resale or redistribution.
d. REGISTRATION.
(1) ALPNET does hereby agree to register with the United States
Securities and Exchange Commission (the "S.E.C.") and to qualify under any
applicable Blue Sky or other state securities laws, from time to time, the offer
and sale by Xxxxxxx of ALPNET Common Stock issued, from time to time, as a
result of the conversion of the Conversion Preferred Shares. Any registrations
and qualifications provided for herein shall be accomplished within 90 days
after ALPNET files its next annual Form 10-K report with the S.E.C. following
the conversion of the Conversion Preferred Shares into ALPNET Common Stock;
provided, however, that ALPNET shall not be required to register and/or qualify
fewer than 200,000 shares in any one registration and/or qualification.
(2) All expenses incurred in connection with any registration or
qualification pursuant to this Paragraph 1.d., including, without limitation,
all registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for ALPNET, and expenses of any special audits
incidental to or required by such registration, shall be borne by ALPNET.
(3) In the case of each registration and qualification effected
by ALPNET pursuant to this Paragraph 1.d., ALPNET will keep Xxxxxxx advised in
writing as to the initiation of each such registration and qualification and as
to the completion thereof. At its expense ALPNET will:
(a) Keep such registration and qualification effective for
a period of 120 days (or for successive 12-month periods, as necessary, for
preregistrations), or until the distribution described in the registration
statement relating thereto has been completed, whichever first occurs; and
(b) Furnish such number of prospectuses and other documents
incident thereto as Xxxxxxx from time to time may reasonably request.
(4) ALPNET will indemnify Xxxxxxx with respect to any
registration and qualification effected pursuant to this Paragraph 1.d. against
all claims, losses, damages, and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration or qualification, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
ALPNET of any rule or regulation promulgated under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or any state securities law applicable to
ALPNET and relating to action or inaction required of ALPNET in connection with
any such registration or qualification, and will reimburse Xxxxxxx for any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided that
ALPNET will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to ALPNET by an instrument
duly executed by Xxxxxxx specifically for use therein.
Xxxxxxx will indemnify ALPNET, each of its directors and officers who sign such
registration statement, and each person who controls ALPNET within the meaning
of the Securities Act, with respect to any registration and qualification
effected pursuant to this Paragraph 1.d., against all claims, losses, damages,
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any such
registration or qualification or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse ALPNET, and such other directors, officers or
other persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but only to the extent, that
such untrue statement or omission is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to ALPNET by an instrument duly
executed by Xxxxxxx specifically for use therein.
Each party entitled to indemnification under this Paragraph 1.d.(4) (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying party of
its obligations under this paragraph. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(5) Xxxxxxx shall furnish to ALPNET such written information
relating to him and the distribution proposed by him as ALPNET may request in
writing and as shall be required in connection with any registration or
qualification referred to in this Paragraph 1.d.
e. RESERVATION OF SHARES. There have been reserved, and ALPNET shall
at all times keep reserved, out of its authorized and unissued ALPNET Common
Stock a number of shares of ALPNET Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the conversion of the issued
and outstanding ALPNET Preferred Stock. The transfer agent for the ALPNET
Common Stock (the "TRANSFER AGENT") and every subsequent transfer agent for any
shares of ALPNET's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be requisite for such
purpose. ALPNET will keep a copy of this Agreement on file with the Transfer
Agent and with every subsequent transfer agent for any shares of ALPNET's
capital stock issuable upon the conversion of the Conversion Preferred Shares
into ALPNET Common Stock.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
represents and warrants to Xxxxxxx that on and as of the date hereof:
a. DUE INCORPORATION AND STANDING. The Company is duly incorporated
and validly existing in good standing under the laws of the state of Utah, with
full corporate power to own its properties and conduct its business as currently
conducted. The Company is not qualified, nor to its knowledge is it required
under applicable local law to be qualified, to do business in any other
jurisdiction.
b. AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the transactions contemplated hereby have been duly and
validly authorized by the board of directors of the Company, and the Company has
taken all other necessary corporate action to authorize and approve this
Agreement and the consummation of the transactions contemplated hereby.
c. RESTRICTED SECURITIES. The securities issued or to be issued
under this Agreement will be issued as restricted securities in a private
offering pursuant to an exemption from registration therefor under the
Securities Act.
d. MATERIAL CONTRACTS. The Company is not in violation of any
material provision of any material contract or agreement to which the Company is
a party, by which it is bound or to which its property is subject (collectively
the "MATERIAL CONTRACTS").
e. ABSENCE OF CONFLICT. The execution and delivery of this Agreement
by the Company and the consummation of the transactions contemplated hereby do
not conflict with or breach any provision of the articles of incorporation or
bylaws of the Company or of any Material Contract, and the Company does not know
of any breach of its articles of incorporation.
f. LITIGATION. There are no existing or pending, and the Company
does not know of any threatened, material claims of any kind or any actions,
suits, proceedings or investigations against (i) the Company, (ii) any director,
officer, agent or employee of the Company, in his or her business capacity as
such, or (iii) the business or properties of the Company.
g. AUTHORIZED CAPITAL. The Company is authorized to issue 40,000,000
shares of ALPNET Common Stock, of which 15,562,223 shares are issued and
outstanding. The Company is authorized to issue 2,000,000 shares of preferred
stock (in different series, as authorized by the Company's board of directors,
from time to time), of which 459,411 shares of Series B Preferred Stock and
584,257 shares of Series C Preferred Stock are presently issued and outstanding.
The Company currently has no warrants issued or outstanding. The Company has
reserved 1,200,000 shares of Common Stock for issuance under employee stock
option plans, of which approximately 690,000 shares are presently subject to
outstanding options which have not been exercised. There are no other shares of
the Company's capital stock issued and outstanding except as set forth above,
nor are there outstanding (i) any other securities convertible into or
exchangeable for any of the Company's capital stock or (ii) any other rights to
purchase or subscribe for capital stock, or securities convertible into or
exchangeable for capital stock, of the Company.
3. MISCELLANEOUS PROVISIONS.
a. NOTICES. Notice required by this Agreement shall be given in
writing sent by U.S. Mail, Federal Express (or equivalent courier service) or
facsimile telecopy addressed as follows (or to such other address subsequently
provided in writing by such party):
Xxxxxxx: Ashurstwoodhouse Hammerwood Rd.
Ashurstwood
Sussex, U.K. RH193RX
Fax No. 000-00-00-000-0000
ALPNET: 0000 Xxxxx 000 Xxxx, #000
Xxxx Xxxx Xxxx, XX 00000-0000
Fax No. (000) 000-0000
b. ASSIGNMENT. Except as herein provided, this Agreement may not be
assigned by either party without the written consent of the other party first
had and obtained.
c. ENTIRE AGREEMENT. The parties acknowledge that this Agreement and
the instruments referred to herein contain their entire understanding with
respect to the specific matters referred to herein and supersede all prior
understandings, correspondence, memoranda, representations, negotiations,
letters of intent or other prior agreements with respect thereto and that this
Agreement may not be amended or modified except by a written instrument signed
by all parties affected thereby.
d. APPLICABLE LAW. It is understood and agreed that the laws of the
state of Utah shall apply to all aspects of this transaction which may relate to
the issuance, purchase, sale or transfer of securities. As to all other aspects
of this transaction, the substantive laws of the United Kingdom (or at the sole
option of Xxxxxxx, the laws of the state of Utah) shall govern the construction
and interpretation of this Agreement and the rights and remedies of the parties.
In that regard, the parties expressly submit themselves to the jurisdiction of
Utah state courts and/or the United States District Court for the District of
Utah, Central Division (if Xxxxxxx elects Utah law), in any action or proceeding
arising out of this Agreement.
e. WAIVER. No waiver of any breach or default by any party to this
Agreement shall be considered to be a waiver of any other breach or default.
f. SEVERABILITY. Whenever possible, each provision of this Agreement
and every related document shall be interpreted in such manner as to be valid
under applicable law; however, if any provision of any of the foregoing is
invalid or prohibited under applicable law, then such provision shall be
ineffective to the extent of such invalidity or prohibition without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
g. COUNTERPARTS. For the convenience of the parties, this Agreement
may be executed in counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument. The counterparts are in all respects identical, and each of the
counterparts shall be deemed to be complete in itself so that any one may be
introduced in evidence or used for any other purpose without the production of
the other counterparts. This Agreement shall be effective when one or more of
such counterparts has been executed by each party and delivered. If a party
receives a facsimile transmission of this Agreement from another party, which
transmission bears the signature of the other party, then it shall be deemed
that (a) the Agreement that is sent by facsimile transmission conforms to the
original, (b) the original Agreement bears a genuine signature of the other
party, and (c) the Agreement has been delivered by the other party. In such
event, the other party shall send an original of the Agreement to the receiving
party by regular mail.
h. AUTHORIZATION. Each individual executing this Agreement does
thereby represent and warrant to any other individual so signing (and to each
other entity for which another individual is signing) that the individual has
been duly authorized to deliver this Agreement in the capacity and for the
entity that is set forth where he signs.
i. COSTS AND ATTORNEYS' FEES. In the event that either party shall
be required to engage legal counsel to enforce the provisions of this Agreement,
the prevailing party shall be entitled to recover all cost and expenses,
including reasonable attorneys' fees, whether suit be instituted or not.
IN WITNESS WHEREOF, the parties have signed this Agreement effective as of
the day and year first set forth above.
\s\ Xxxxxxx X. Xxxxxxx
XXXXXXX X.XXXXXXX
ALPNET, INC.
By: \s\ Xxxxxx X. Seal
XXXXXX X. SEAL
President
ATTEST:
\s\ D. Xxxxx Xxxxxx
D. XXXXX XXXXXX
Secretary
Schedule of Exhibits
to
Debt Conversion Agreement
Referred to in
Exhibit Description Paragraph
Exhibit A SFr300,000 Promissory Note, A
dated 18 September 1992
Exhibit B UCC-1 Financing Statement, C
dated 18 September 1992
Exhibit C Form of ALPNET Preferred Stock
Certificate 1(a)(3)
