Exhibit 10.1
AGREEMENT TO CONVERT DEBT
This
Agreement to Convert
Debt (the "Agreement")
is made as of the
11th
day of May 2005 (the "Effective Date") by and between USDR Aerospace, Ltd.
(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 April 18, 2003
and
subsequently amended on June 30, 2004 and again on December 30, 2004 (the
"Promissory Note"), the Company currently owes to the
Holder, in principal and
accrued interest, the sum of $112,868.59
(the "Amount Owed").
B.
According
to the terms of the
Promissory Note, the
Amount Owed was
due and payable in full on February 28,
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, 1,763,572 shares of the
Company's Common Stock, $0.001 par value, having a value of $0.064 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) Exchange of Documents. The certificates representing the Shares
shall be delivered to the Holder as soon as
practicable.
Upon receipt of
the
Shares, (i) the Holder will mark the
Promissory Note as "Paid" and will transfer
the Promissory Note to the Company, and (ii) 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
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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.
<PAGE>
(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) sati
