CONVERSION AGREEMENT
This
CONVERSION
AGREEMENT
(the
"Agreement")
is
dated as of August 14, 2007 by and between uKarma Corporation, a Nevada
corporation, with headquarters located at 000 Xxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000 (the "Company"),
and
Xxxx Xxxxxx (the "Holder").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Notes (as defined below).
WHEREAS:
A. On
or
about November 10, 2006, the Company issued to Holder a Promissory Note for
the
principal amount of One Hundred Thousand Dollars ($100,000) bearing an interest
rate of seven percent (7%) per annum and due on the six (6) month anniversary
of
the issue date (“November 2006 Note”), which November 2006 Note has a balance of
$103,835.62, including interest (“November 2006 Balance”), as of the date
hereof.
B. On
or
about January 26, 2007, the Company issued to Holder a Promissory Note for
the
principal amount of One Hundred Thousand Dollars ($100,000) bearing an interest
rate of seven percent (7%) per annum and due on the six (6) month anniversary
of
the issue date (“January 2007 Note” and together with the November 2006 Note,
the “Notes”), which January 2007 Note has a balance of $105,312.33, including
interest (“January 2007 Balance”), as of the date hereof.
X. Xxxxxx
wishes to convert all of the Notes into shares of the Company’s common stock,
par value $0.001 (“Common Stock”) pursuant to the terms hereof.
NOW,
THEREFORE,
the
Company and the Holder hereby agree as follows:
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(1)
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TERMINATION.
Upon receipt of the securities set forth in Section 2 below, the
Company
and Holder hereby agree that each of the Notes shall be terminated.
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(2)
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CONVERSION;
ISSUANCE OF SHARES.
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(a) Conversion
Price.
The
Notes shall convert into shares of Common Stock at $0.25 per share.
(b) Number
of Shares.
In
consideration of the termination set forth in Section 1 above, the Company
shall
convert the Balance of each Note and shall issue to the Holder that number
of
shares (836,592 shares) of Common Stock as set forth in Schedule
1
attached
hereto (“Conversion Shares”).
(c) Legend.
The
Holder understands that until such time as the resale of the Conversion Shares
have been registered under the Securities Act of 1933, as amended, the stock
certificates representing the Conversion Shares, except as set forth below,
shall bear any legend as required by the "blue sky" laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the securities upon which
it is
stamped, if, unless otherwise required by state securities laws, (i) such
securities are registered for resale under the 1933 Act, (ii) in connection
with
a sale, assignment or other transfer, such holder provides the Company with
an
opinion of counsel, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act, or (iii) such holder provides
the Company with reasonable assurance that the Securities can be sold, assigned
or transferred pursuant to Rule 144 or Rule 144A.
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(3)
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COMPANY
REPRESENTATIONS, WARRANTIES AND COVENANTS.
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(a)
Authorization;
Enforcement; Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and to issue the Conversion Shares in
accordance with the terms hereof. When duly executed and delivered by the
Company, this Agreement shall constitute the legal, valid, and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and remedies.
(b)
Issuance
of Securities.
The
issuance of the Conversion Shares are duly authorized and are free from all
taxes, liens, and charges with respect to the issue hereof.
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(4)
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MISCELLANEOUS.
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(a) Governing
Law.
All
questions concerning the construction, validity, enforcement, and interpretation
of this Agreement shall be governed by the internal laws of the State of
California, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of California.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement; Amendments.
This
Agreement shall supersede all other prior oral or written agreements among
Holder, the Company, their affiliates, and persons acting on their behalf with
respect to the matters discussed herein and therein, and this Agreement, and
the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and Holder, and any amendment to this Agreement made in conformity
with
the provisions of this Section 4(e) shall be binding on Holder and the Company.
No provision hereof may be waived other than by an instrument in writing signed
by the party against whom enforcement is sought.
(f) Notices.
Any
notices, consents, waivers, or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one business day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
If
to the
Company:
uKarma
Corporation
000
Xxxxxxxx, Xxxxx 000
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxx
Xxxxxx
Telephone: (000)
000-0000
If
to
Holder, to its address and facsimile number set forth below the Holder’s
signature on the signature page to this Agreement, or to such other address
and/or facsimile number as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number, and an image of the first page of such
transmission, or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile, or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Notes.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(i) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments, and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement.
(j) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
[Signature
Page Follows]
IN
WITNESS WHEREOF,
the
Holder and the Company have caused their respective signature to this Agreement
to be duly executed as of the date first written above.
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COMPANY:
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UKARMA
CORPORATION
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| By: | /s/ Xxxx Xxxxxx | |
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Xxxx Xxxxxx |
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CEO
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HOLDER:
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| By: | /s/ Xxxx Xxxxxx | |
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Xxxx
Xxxxxx
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000
Xxxxxxxx, Xxxxx 000
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
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SCHEDULE
1
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Note
Date
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Note
Balance
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Conversion
Shares
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November
10, 2006
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$
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105,312.33
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421,249
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January
26, 2007
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$
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103,835.62
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415,343
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Total:
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836,592
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