AGREEMENT TO CONVERT DEBT
This Agreement to Convert Debt (the "Agreement") is made as of the 8th day
of November 2005 (the "Effective Date") by and between USDR, Inc. (referred to
herein as the "Holder") and US Global Nanospace, Inc., a Delaware corporation
(referred to herein as the "Company").
RECITALS
A. Pursuant to a promissory note originally dated May 13, 2005 (the
"Promissory Note"), the Company currently owes to the Holder, in principal and
accrued interest, the sum of $173,852.77 (the "Amount Owed").
B. According to the terms of the Promissory Note, the Amount Owed was due
and payable in full on August 13, 2005.
C. The Company wishes to pay the Amount Owed by issuing securities to the
Holder and the Holder has agreed to accept the Company's securities as full and
final payment of the Amount Owed, in accordance with the terms of this
Agreement.
Therefore, the Company and the Holder agree as follows:
AGREEMENT
1. Transfer of Securities and Cancellation of Debt.
(a) Securities to be Issued. The Holder agrees to accept, and the
Company agrees to issue and transfer to the Holder, 2,414,622 shares of
the Company's Common Stock, $0.001 par value, having a value of $0.072 per
share, which was the closing price of the Common Stock on the Effective
Date. The Common Stock issued in payment of the loans shall be referred to
in this Agreement as the "Shares".
(b) Documents. The certificates representing the Shares shall be
delivered to the Holder as soon as practicable. Upon receipt of the
Shares, the Company shall record the payment of the Promissory Note on its
books and records.
2. Representations by Company.
The Company hereby represents and warrants to the Holder as follows:
(i) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(ii) The Company has all requisite power and authority
(corporate or otherwise) to execute, deliver and perform this
Agreement and the transactions contemplated thereby, and the
execution, delivery and performance by the Company of this Agreement
has been duly authorized by all requisite action by the Company and
this Agreement, when executed and delivered by the Company,
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(iii) The execution, delivery and performance by the Company
of this Agreement have been duly authorized by all requisite
corporate action of the Company; and this Agreement has been duly
executed and delivered by the Company.
(iv) The Shares will be duly and validly issued, fully paid
and nonassessable, and free of any liens or encumbrances.
3. Representations by the Holder.
The Holder hereby represents and warrants to the Company as follows:
(i) The Holder has all requisite power and authority
(corporate or otherwise) to execute, deliver and perform this
Agreement and the transactions contemplated thereby, and the
execution, delivery and performance by the Holder of this Agreement
has been duly authorized by all requisite action by the Holder and
this Agreement, when executed and delivered by the Holder,
constitutes a valid and binding obligation of the Holder,
enforceable against the Holder in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(ii) The Holder has a pre-existing personal or business
relationship with the Company and its officers and directors.
(iii) The Holder is an "accredited investor", as that term is
defined in Rule 501 of Regulation D in that the Holder is a director
and officer of the Company.
(iv) The Holder has complied with all applicable investment
laws and regulations in force relating to the legality of an
investment in the Shares in the jurisdiction in which he is subject,
and the Holder has obtained any consent, approval or permission
required in that jurisdiction.
(v) The Holder understands and acknowledges that the Shares
have not been registered with the Securities and Exchange Commission
under Section 5 of the of the Securities Act or registered or
qualified with any applicable state or territorial securities
regulatory agency in reliance upon one or more exemptions afforded
from registration or qualification.
(vi) The Holder understands and acknowledges that the Shares
are deemed to be "restricted" securities under the Securities Act,
and may be re-sold only pursuant to exemptions provided by the
Securities Act. The Holder understands and acknowledges that the
Company is required to place a legend on each certificate stating
that the Shares have not been registered under the Securities Act.
(vii) The Holder understands and acknowledges that: (i) prior
to any sale, transfer, assignment, pledge, hypothecation or other
disposition of the Shares, he must either: (1) furnish the Company
with an opinion of counsel, in form and substance reasonably
satisfactory to the Company and to its legal counsel, to the effect
that such disposition is exempted from the registration and
prospectus delivery requirement under the Securities Act and the
securities laws of the jurisdiction in which the Holder resides, and
legal counsel for the Company shall have concurred in such opinion;
or (2) satisfy the Company that a registration statement on Form
SB-2 under the Securities Act (or any other form appropriate under
the Securities Act, or any form replacing any such form) with
respect to the securities proposed to be so disposed of shall then
be effective; and that such disposition shall have been
appropriately qualified or registered in accordance with the
applicable securities laws of the jurisdiction in which the Holder
resides.
(viii) The Holder is entering into this transaction for the
Holder's own account, own risk and own beneficial interest, is not
acting as an agent, representative, intermediary, nominee or in a
similar capacity for any other person or entity, nominee account or
beneficial owner, whether a natural person or entity (each such
natural person or entity, an "Underlying Beneficial Owner") and no
Underlying Beneficial Owner will have a beneficial or economic
interest in the Shares (whether directly or indirectly, including
without limitation, through any option, swap, forward or any other
hedging or derivative transaction) and does not have the intention
or obligation to sell, pledge, distribute, assign or transfer all or
a portion of the Shares to any Underlying Beneficial Owner or any
other person.
(ix) The Holder hereby represents and warrants that the
proposed investment in the Company does not directly or indirectly
contravene United States federal, state, local or international laws
or regulations applicable to the Holder, including anti-money
laundering laws (a "Prohibited Investment").
(x) Federal regulations and Executive Orders administered by
the U.S. Treasury Department's Office of Foreign Assets Control
("OFAC") prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign
countries, territories, entities and individuals. The lists of OFAC
prohibited countries, territories, persons and entities can be found
on the OFAC website at . The Holder hereby
represents and warrants that the Holder is not a country, territory,
person or entity named on an OFAC list, nor is the Holder a natural
person or entity with whom dealings are prohibited under any OFAC
regulations.
(xi) The Holder represents and warrants that neither the
Holder nor any Underlying Beneficial Owner is a senior foreign
political figure, or any immediate family member or close associate
of a senior foreign political figure within the meaning of, and
applicable guidance issued by the Department of the Treasury
concerning, the U.S. Bank Secrecy Act (31 U.S.C. ss.5311 et seq.),
as amended, and any regulations promulgated thereunder.
(xii) The Holder agrees promptly to notify the Company should
the Holder become aware of any change in the information set forth
in subparagraphs (viii) through (xi).
(xiii) The Holder agrees to indemnify and hold harmless the
Company, its affiliates, their respective directors, officers,
shareholders, employees, agents and representatives from and against
any and all losses, liabilities, damages, penalties, costs, fees and
expenses (including legal fees and disbursements) which may result,
directly or indirectly, from the Holder's misrepresentations or
misstatements contained herein or breaches hereof relating to
paragraphs (viii) through (xi).
(xiv) The Holder understands and agrees that, notwithstanding
anything to the contrary contained in any document (including any
side letters or similar agreements), if, following the Holder's
investment in the Company, it is discovered that the investment is
or has become a Prohibited Investment, such investment may
immediately be redeemed by the Company or otherwise be subject to
the remedies required by law, and the Holder shall have no claim
against the Company for any form of damages as a result of such
forced redemption or other action.
(xv) Upon the written request from the Company, the Holder
agrees to provide all information to the Company to enable the
Company to comply with all applicable anti-money laundering
statutes, rules, regulations and policies, including any policies
applicable to a portfolio investment held or proposed to be held by
the Company. The Holder understands and agrees that the Company may
release confidential information about the Holder and any Underlying
Beneficial Owner(s) to any person if the release of such information
is necessary to comply with applicable statutes, rules, regulations
and policies.
4. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the same
shall be in writing and signed by the Company and the Holder.
(b) Notices. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder shall be in writing and
delivered personally, by facsimile or sent by a nationally recognized
overnight courier service, addressed to the Company at 0000 Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxx 00000, facsimile number (000) 000-0000, Attn: Secretary
or such other address or facsimile number as the Company may specify for
such purposes by notice to the Holder delivered in accordance with this
Section. Any and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to the Holder at an address and facsimile number
to be provided by Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section
prior to 5:30 p.m. (Central time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section later than
5:30 p.m. (Central time) on any date and earlier than 11:59 p.m. (Central
time) on such date, (iii) the second Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to
be given.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties. Neither the Holder nor the Company may assign its
rights or obligations hereunder without the prior written consent of the
other.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of
the party executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile signature were
the original thereof.
(e) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement to
Convert Debt as of the date first written above.
US GLOBAL NANOSPACE, INC.
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, President
USDR, INC.
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, President
