AGREEMENT TO CONVERT DEBT
This Agreement to Convert Debt (the "Agreement") is made as of the 3rd
day of August 2004 by and between XXXXX XXXXXX (referred to herein as the
"Holder") and US GLOBAL NANOSPACE, INC., a Delaware corporation (referred to
herein as the "Company").
RECITALS
A. The Holder has loaned $47,283.50 to the Company, as evidenced by
that certain promissory note dated January 8, 2004 (the "Note")
executed by the Company in favor of the Holder. The Company and the
Holder agree that, as of the date of this Agreement, the total
amount of principal and accrued interest owed pursuant to the Note
is $49,991.10 (the "Amount Owed").
B. The Company wishes to pay the Amount Owed by issuing shares of
its Common Stock, $0.001 par value, to the Holder and the Holder has
agreed to accept shares of the Company's Common Stock as full and
final payment of the Amount Owed, in accordance with the terms of
this Agreement. In addition to the Amount Owed, the Holder has
agreed to accept shares of the Company's Common Stock in full and
final payment of expenses incurred through August 3, 2004 totaling
$2,000.00 for which the Holder is entitled to be reimbursed (the
"Expenses").
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, shares
of the Company's Common Stock. The number of shares of Common
Stock to be issued shall be determined by dividing the total
of the Amount Owed and the Expenses by the closing price of
the Common Stock on the trading date immediately prior to the
date of this Agreement. The Common Stock issued in payment of
the Amount Owed and as reimbursement for the Expenses shall be
referred to in this Agreement as the "Shares".
(b) Exchange of Documents. The certificate representing the
Shares shall be delivered to the Holder as soon as
practicable. Upon transfer of the Shares to the Holder, both
the Note and the Expenses will be paid in full and the Company
shall have no further obligation to the Holder either under
the Note or for reimbursement of the Expenses.
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 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 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 the Holder is subject, and the Holder has obtained any
consent, approval or permission required in that jurisdiction.
(iv) 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.
(v) 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.
(vi) The Holder understands and acknowledges that:
(i) prior to any sale, transfer, assignment, pledge,
hypothecation or other disposition of the Shares, she 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.
(vii) 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.
(viii) 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").
(ix) 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 {xxx.xxxxx.xxx/xxxx}. 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.
(x) 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.
(xi) The Holder agrees promptly to notify the Company
should the Holder become aware of any change in the
information set forth in subparagraphs (vii) through (x).
(xii) 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 (vii) through (x).
(xiii) 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.
(xiv) 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 X. Xxxxxx Xx., #0000, Xxxxxx Xxxx, Xxxxxx,
facsimile number (000) 000-0000, Attn: Controller 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 her or 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, Chief Executive Officer
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
0000 XX 000
Xxxxxxxx, XX 00000
