EXHIBIT 3.4
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DEBT CONVERSION AGREEMENT
THIS DEBT CONVERSION AGREEMENT ("Agreement"), dated as of December 20,
2000, is by and between CONVERGE GLOBAL, INC., a Utah Corporation ("Debtor"),
and ESSTEC, INC., a Nevada corporation ("Creditor") (collectively, the
"Parties").
W I T N E S S E T H
WHEREAS, Debtor owes Creditor for various debts incurred;
WHEREAS, Debtor owns shares of common stock of Creditor (the "Shares"); and
WHEREAS, Creditor is willing to accept Shares as payment of debts owing to
it from Debtor upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the promises and respective mutual
agreements herein contained, it is agreed by and between the Parties hereto as
follows:
ARTICLE 1
PAYMENT OF THE SHARES
1.1 Debts Owing. Debtor owes Creditor a total of $895,238. The
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current fair market value of the Shares is $3.50 as that is the price at which
the shares are currently being sold. Creditor hereby agrees to accept 255,872
Shares as payment in full of the $895,238 in debt being carried on Creditor's
books from Debtor. Upon execution of this Agreement (the "Closing"), subject to
the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, Debtor shall
transfer to Creditor the Shares.
1.2 Instruments of Conveyance and Transfer. As soon as practicable
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after the Closing, Debtor shall deliver a certificate or certificates
representing the Shares of to Creditor sufficient to transfer all right, title
and interest in the Shares to Creditor. As Creditor is the original issuer of
the Shares, upon transfer of the Shares from Debtor to Creditor, the Shares
shall be returned to treasury of Creditor and, thus, shall become authorized but
unissued Shares.
1.3 Consideration and Payment for the Shares. In consideration for the
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Shares, Creditor shall credit the total sum of $895,238 to Debtor as payment in
full of past debts owing to Creditor from Debtor.
ARTICLE 2
REPRESENTATIONS AND COVENANTS OF DEBTOR AND CREDITOR
2.1 Debtor hereby represents and warrants that:
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(a) Debtor shall transfer title, in and to the Shares to Creditor
free and clear of all liens, security interests, pledges, encumbrances, charges,
restrictions, demands and claims, of any kind and nature whatsoever, whether
direct or indirect or contingent.
(b) As soon as practicable after the Closing Date, Debtor shall
deliver to Creditor a certificate or certificates representing the Shares
subject to no liens, security interests, pledges, encumbrances, charges,
restrictions, demands or claims in any other party whatsoever, except as set
forth in the legend on the certificate, which legend shall provide as follows:
THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
IS AVAILABLE.
(c) Creditor acknowledges that the Shares will initially be "restricted
securities" (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144"), that the Shares will include
the foregoing restrictive legend, and, except as otherwise set forth in this
Agreement, that the Shares cannot be sold unless registered with the United
States Securities and Exchange Commission ("SEC") and qualified by appropriate
state securities regulators, or unless Creditor obtains written consent from
Debtor and otherwise complies with an exemption from such registration and
qualification (including, without limitation, compliance with Rule 144).
(d) Creditor acknowledges and agrees that Debtor makes no other
representations or warranties with respect to the Shares or the Debtor.
2.2 Creditor represents and warrants to Debtor as follows:
(a) Creditor has adequate means of providing for current needs and
contingencies, has no need for liquidity in the investment, and is able to bear
the economic risk of an investment in the Shares offered by Debtor of the size
contemplated. Creditor represents that Creditor is able to bear the economic
risk of the investment and at the present time could afford a complete loss of
such investment. Creditor has had a full opportunity to inspect the books and
records of the Debtor and to make any and all inquiries of Debtor officers and
directors regarding the Debtor and its business as Creditor has deemed
appropriate.
(b) Creditor is an "Accredited Investor" as defined in Regulation D of
the Securities Act of 1933 (the "Act") or Creditor, either alone or with
Creditor's professional advisers who are unaffiliated with, have no equity
interest in and are not compensated by Debtor or any affiliate or selling agent
of Debtor, directly or indirectly, has sufficient knowledge and experience in
financial and business matters that Creditor is capable of evaluating the merits
and risks of an investment in the Shares offered by Debtor and of making an
informed investment decision with respect thereto and has the capacity to
protect Creditor's own interests in connection with Creditor's proposed
investment in the Shares.
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(c) Creditor is acquiring the Shares solely for Creditor's own account
as principal, for investment purposes only and not with a view to the resale or
distribution thereof, in whole or in part, and no other person or entity has a
direct or indirect beneficial interest in such Shares.
(d) As Creditor is the original issuer of the Shares, upon transfer of
the Shares from Debtor to Creditor, the Shares shall be returned to treasury of
Creditor and, thus, shall become authorized but unissued shares of common stock
of Creditor.
ARTICLE 3
MISCELLANEOUS
3.1 Entire Agreement. This Agreement sets forth the entire agreement
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and understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof. No understanding, promise,
inducement, statement of intention, representation, warranty, covenant or
condition, written or oral, express or implied, whether by statute or otherwise,
has been made by any party hereto which is not embodied in this Agreement or the
written statements, certificates, or other documents delivered pursuant hereto
or in connection with the transactions contemplated hereby, and no party hereto
shall be bound by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant or condition not so set forth.
3.2 Notices. Any notice, request, instruction, or other document
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required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by facsimile, personal delivery, overnight delivery, or mailed by
registered or certified mail, postage prepaid, with return receipt requested, to
the following addresses:
To Debtor: Converge Global, Inc.
---------- 000 Xxxxxxxx Xxxx., Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, President
To Creditor: EssTec, Inc.
------------ 0000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, President
With Copy To: XXXX XXXXXXX XXXXXXXXX, LLP
-------------- 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
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The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by facsimile, personal delivery,
or overnight delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such delivery. If
notice is given by mail in accordance with the provisions of this Section, such
notice shall be conclusively deemed given seven days after deposit thereof in
the United States mail.
3.3 Waiver and Amendment. Any term, provision, covenant,
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representation, warranty or condition of this Agreement may be waived, but only
by a written instrument signed by the party entitled to the benefits thereof.
The failure or delay of any party at any time or times to require performance of
any provision hereof or to exercise its rights with respect to any provision
hereof shall in no manner operate as a waiver of or affect such party's right at
a later time to enforce the same. No waiver by any party of any condition, or
of the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of the breach of any other term, provision,
covenant, representation or warranty. No modification or amendment of this
Agreement shall be valid and binding unless it be in writing and signed by all
parties hereto.
3.4 Choice of Law. This Agreement and the rights of the parties
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hereunder shall be governed by and construed in accordance with the laws of the
State of California including all matters of construction, validity,
performance, and enforcement and without giving effect to the principles of
conflict of laws.
3.5 Jurisdiction. The parties submit to the jurisdiction of the Courts
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of the County of Orange, State of California or a Federal Court empaneled in the
State of California for the resolution of all legal disputes arising under the
terms of this Agreement, including, but not limited to, enforcement of any
arbitration award.
3.6 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
3.7 Attorneys' Fees. Except as otherwise provided herein, if a dispute
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should arise between the parties including, but not limited to arbitration, the
prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorneys' fees exclusive of such amount of attorneys' fees as shall be a
premium for result or for risk of loss under a contingency fee arrangement.
3.8 Taxes. Any income taxes required to be paid in connection with the
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payments due hereunder, shall be borne by the party required to make such
payment. Any withholding taxes in the nature of a tax on income shall be
deducted from payments due, and the party required to withhold such tax shall
furnish to the party receiving such payment all documentation necessary to prove
the proper amount to withhold of such taxes and to prove payment to the tax
authority of such required withholding.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the
date first written hereinabove.
DEBTOR
Converge Global, Inc.,
a Utah corporation
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By: Xxxxx Xxxxxx
Its: President
CREDITOR
EssTec, Inc.,
a Nevada corporation
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By: Xxxxx Xxxxx Xxxxxx
Its: Vice President - Operations, Secretary
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