CONVERSION AGREEMENT
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THIS
CONVERSION AGREEMENT, dated as of August 17, 2010 is made by and between
Wellstar International, Inc., a Nevada corporation (“Company”), and Xxx
XxXxxxxx, a Vice President and Director of the Company
(“Employee”).
WHEREAS,
the Company owes Employee wages in arrears for a total of $407,000 (the
“Wages”); and
WHEREAS,
the Company and the Employee wish to convert One Hundred Fifty Thousand Dollars
($150,000) of the Wages (the “Conversion Wages”) into Series C Preferred Stock,
par value $0.001 per share (“Preferred Stock”),
of the Company;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge the parties agree as follows:
1. Conversion Wages. The
Company and Employee hereby agree that Conversion Wages shall convert into
150,000 shares of Preferred Stock (“Conversion Shares”) to
Employee.
2. Closing. At the
Closing, the Company shall deliver the Conversion Shares to
Employee.
3. Further Assurances.
In connection with the Conversion Wages, the Employee, by entering into this
Conversion Agreement, agrees to execute all agreements and other documents as
reasonably requested by the Company.
4. Investor Representations and
Warranties and Covenants. The Employee represents, warrants and covenants
to the Company as follows:
a. No Registration. Such
Employee understands that the Conversion Shares have not been, and will not be,
registered under the Securities Act of 1933, as amended (the “Securities Act”) by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Employee’s
representations as expressed herein or otherwise made pursuant
hereto.
b. Investment Intent.
Such Employee is acquiring the Conversion Shares for investment for his own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof, and such Employee has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Such Employee further represents that it will not violate the
Securities Act and does not have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant participation
to such person or entity or to any third person or entity with respect to the
Conversion Shares.
c. Investment
Experience. Such Employee has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company and acknowledges that such Employee can protect its own
interests. Such Employee has such knowledge and experience in financial and
business matters so that such Employee is capable of evaluating the merits and
risks of its investment in the Company.
d. Speculative Nature of
Investment. Such Employee understands and acknowledges that the Company
has a limited financial and operating history and that an investment in the
Company is highly speculative and involves substantial risks. Such Employee can
bear the economic risk of such Employee’s investment and is able, without
impairing such Employee’s financial condition, to hold the Conversion Shares for
an indefinite period of time and to suffer a complete loss of such Employee’s
investment.
e. Accredited Investor.
The Employee is an “accredited investor’ within the meaning of Regulation D,
Rule 50 1(a), promulgated by the Securities and Exchange Commission under the
Securities Act and shall submit to the Company such further assurances of such
status as may be reasonably requested by the Company.
f. Rule 144. Such
Employee acknowledges that the Conversion Shares must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Such Employee is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of shares
subject to the satisfaction of certain conditions, including among other things,
the existence of a public market for the shares, the availability of certain
current public information about the Company, the resale occurring not less than
one year after a party has purchased and paid for the security to be sold, the
sale being effected through a “broker’s transaction” or in transactions directly
with a “market maker” and the number of shares being sold during any three-month
period not exceeding specified limitations. Such Employee acknowledges that, in
the event all of the requirements of Rule 144 are not met, registration under
the Securities Act or an exemption from registration will be required for any
disposition of the Conversion Shares such Employee understands that, although
Rule 144 is not exclusive, the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell restricted securities received in a
private offering other than in a registered offering or pursuant to Rule 144
will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales and that such persons and the
brokers who participate in the transactions do so at their own
risk.
g. Authorization.
i.
Employee has all requisite power and authority to execute and deliver this
Conversion Agreement, and to carry out and perform its obligations under the
terms hereof. All action on the part of the Employee necessary for the
authorization, execution, delivery and performance of this Conversion Agreement,
and the performance of all of the Employee’s obligations herein, has been
taken.
ii. This Conversion Agreement, when
executed and delivered by the Employee, will constitute valid and legally
binding obligations of the Employee, enforceable in accordance with its terms
except: (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies or by general principles of equity.
iii. No
consent, approval, authorization, order, filing, registration or qualification
of or with any court, governmental authority or third person is required to be
obtained by the Employee in connection with the execution and delivery of this
Conversion Agreement by the Employee or the performance of the Employee’s
obligations hereunder.
j. Brokers or Finders.
Such Employee has not engaged any brokers, finders or agents, and the Company
has not, and will not, incur, directly or indirectly, as a result of any action
taken by the Employee, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Conversion Agreement
and the transactions related hereto.
k. Tax Advisors. Such
Employee has reviewed with its own tax advisors the U.S. federal, state, local
and foreign tax consequences of this investment and the transactions
contemplated by this Conversion Agreement. With respect to such matters, such
Employee relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. The
Employee understands that it (and not the Company) shall be responsible for its
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Conversion Agreement.
l. Legends. Such
Employee understands and agrees that the certificates evidencing the Conversion
Shares and Interest Shares shall bear a legend in substantially the form as
follows (in addition to any legend required by any other applicable agreement or
under applicable state securities laws):
“THE
SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES
ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY
STATE, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL
REGISTERED UNDER SUCH ACT AND/OR
APPLICABLE
STATE SECURITIES LAWS, OR UNLESS THE
COMPANY
HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER
EVIDENCE, REASONABLY SATISFACTORY TO
THE
COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION
IS NOT REQUIRED.”
IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers thereonto duly authorized as of the day and year first above
written.
| WELLSTAR INTERNATIONAL, INC. | |||
|
|
By:
|
/s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx | |||
| Chief Executive Officer | |||
| EMPLOYEE: | |||
| /s/ Xxx XxXxxxxx | |||
| Xxx XxXxxxxx | |||
| Address: | |||
