OPTION AGREEMENT
THIS
OPTION AGREEMENT (this “Agreement”)
is
made as of January 17, 2005, by and between Xxxx Xxxxxxx (“Seller”)
and
Xxxx Xxxxxx (“Holder”).
A.
Seller
owns 4,000,000 shares of common stock of UKARMA CORPORATION, a Nevada
corporation (the “Company”).
B.
Seller
desires to xxxxx Xxxxxx an exclusive option to purchase up to 3,000,000 of
such
shares of Company common stock (the “Shares”)
from
Seller as described herein.
NOW,
THEREFORE, the undersigned, with the intention to be legally bound hereby,
in
consideration of the concurrent payment by Holder of Ten Dollars (the receipt
of
which is hereby acknowledged by Seller), and for other good and valuable
consideration, and the mutual promises herein, agree as follows:
1.
Grant
of
Option. Seller
hereby grants to Holder the exclusive right and option (the “Option”) to
purchase the Shares at a price of $0.20 per Share (subject to change as
described herein) (the “Exercise Price”)
2.
Option
Period.
The
Option shall be exercisable in whole or in part at anytime and from time to
time
from the date hereof (the “Effective Date”) up to and until 11:59 p.m. Pacific
Time on the January 17, 2011 (the “Expiration Date”). After the Expiration Date,
the Option shall (to the extent not exercised prior thereto) expire and be
of no
further force or effect.
3.
Manner
of Exercise. To exercise the Option, Holder shall notify Seller in writing
substantially in the form attached as Exhibit A (the “Option Notice”), and (1)
specify the number of Shares being purchased pursuant to such exercise and
(2)
include the Exercise Price for each of the Shares being purchased pursuant
to
such exercise (by check in good funds or by wire transfer to an account recently
designated by Seller). Within ten (10) days following delivery of the Option
Notice, Seller shall deliver to Holder (the “Stock Delivery”) (1) a Stock Power
separate from certificate executed by Seller evidencing the transfer of the
purchased Shares to Holder (in form and substance reasonably acceptable to
Holder) and (2) the stock certificate(s) representing the Shares. In the event
that Holder is buying less than all of the Shares owned by Seller pursuant
to
such exercise, then and in such event within ten (10) days following the Stock
Delivery, Holder shall deliver the Stock Power and stock certificates to the
Company, and cause the Company to immediately issue to Seller a new stock
certificate evidencing Seller’s remaining Shares in the Company.
4.
Adjustments
of Exercise Price and Number and Kind of Shares
(a)
Dividends,
Combinations etc.
In the
event that the Company shall at any time hereafter (a) pay a dividend in Common
Stock or securities convertible into Common Stock; (b) subdivide or split its
outstanding Common Stock; (c) combine its outstanding Common Stock into a
smaller number of shares; (d) spin-off to its shareholders a subsidiary or
operating-business unit; then (i) the number of shares covered by the Option
shall be adjusted so that the Holder thereafter may receive the number of shares
of Common Stock or the equivalent value it would have owned if it had exercised
the Option in full immediately prior to such action; and, the Exercise Price
shall be adjusted to reflect such proportionate increases or decreases in the
number of shares and (ii) any other reference in this Agreement to a specific
number of Shares and any reference to a price per Share, shall also be adjusted
in the same manner. The provisions of this Section 4(a) shall similarly apply
to
any successive dividends, splits, combinations and spinoffs.
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(b)
Other
Reclassification.
After
the Exercise Conditions have been satisfied, in case of any reclassification
of
the outstanding shares of Common Stock (other than a change covered by Section
4(a) hereof or a change which solely affects the par value of such shares)
or in
the case of any merger or consolidation or merger in which the Company is not
the continuing corporation and which results in any reclassification or capital
reorganization of the outstanding shares), the holder shall have the right
thereafter (until the Expiration Date) to receive upon the exercise hereof,
for
the same aggregate Exercise Price payable hereunder immediately prior to such
event, the kind and amount of shares of stock or other securities or property
receivable upon such reclassification, capital reorganization, merger or
consolidation, by a holder of the number of shares of Common Stock obtainable
upon the exercise of the Option in full immediately prior to such event; and
if
any reclassification also results in a change in shares covered by Section
4(a),
then such adjustment shall be made pursuant to both this Section 4(b) and
Section 4(a). The provisions of this Section 4(b) shall similarly apply to
any
successive reclassifications, capital reorganizations and mergers or
consolidations, sales or other transfers.
5. Transfer
of Option.
This
Option may be transferred by Holder at any time without Seller’s consent,
subject to compliance with applicable securities jaws. Upon any transfer, the
transferring Holder and the new Holder will jointly notify Seller and the
Company of such transfer.
6. Transfer
of Shares.
Seller
represents and warrants that he will not sell,
transfer, assign, gift, create a lien on or security interest in, or otherwise
dispose of, with or without consideration (collectively, “Transfer”)
any of
the Shares unless: (1) Holder gives his express prior written consent thereto
(which
consent may be withheld in Holder’s sole and absolute discretion); and (ii) if
Holder does consent to such Transfer, then the transferee must agree in writing
(in form and satisfactory to Holder) that the Shares are subject to this Option.
The Shares shall bear a restrictive legend acknowledging such foregoing
restrictions, substantially in the following form:
‘“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE. PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE
SHARES ARE SUBJECT TO A PURCHASE OPTION DATED JANUARY 17, 2001. FROM SUCH DATE
TO JANUARY 17, 2011, THE SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, GIFTED,
PLEDGED OR HYPOTHECATED (COLLECTIVELY, “TRANSFERRED”) EXCEPT WITH THE PRIOR
WRITTEN CONSENT OF XXXX XXXXXX (OR HIS SUCCESSOR OPTION HOLDER); AND IF CONSENT
IS GRANTED THE TRANSFEREE MUST ACKNOWLEDGE IN WRITING THAT THE SHARES ARE
SUBJECT TO THE PURCHASE OPTION. THE COMPANY WILL NOT RECOGNIZE OR EFFECT ANY
TRANSFER OF ANY OF THE SHARES ON ITS BOOKS AND RECORDS EXCEPT IN COMPLIANCE
WITH
THE FOREGOING. A COPY
OF
THE OPTION AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY’S
HEADQUARTERS.”
2
7.
Company
Acknowledgement.
The
Company acknowledges Section 6 hereof, and agrees that it will not recognize
or
give effect on its book and records to any attempted Transfer of any the Shares
unless: (1) Holder (or his successor) has consented in writing to the Transfer
and (2) the transferee acknowledges in writing (in form and substance
satisfactory to Holder) that the Shares are subject to the terms of this Option
Agreement. Any such share certificate issued to a transferee shall bear the
restrictive legend set forth in Section 6 above.
8.
Notices.
All
notices, requests, consents arid other communications required hereunder shall
be in writing and by first class mail or by registered or certified mail,
postage prepaid, return receipt requested, and (other than in connection with
the exercise of the Option) shall be deemed to have been duly made when received
or, if sent registered or certified mail, postage prepaid, return receipt
requested, on the third day following deposit in the mails: if addressed to
Holder, to 000 Xxxxxxxx, 0xx
Xxxxx,
Xxx Xxxx, XX 00000 (or such other address as he may designate in writing from
time to time); and if addressed to Seller, to 0000 Xxxxxx Xxxxx, 0 Xxxxx, Xxx
Xxxxxxx, XX 00000 (or such other address as he may designate in writing from
time to time).
9.
Entire
Agreement; Amendment.
This
Agreement (including the Exhibits attached hereto) contains the entire agreement
between Seller and Holder with respect to the Shares; there are no other terms,
covenants, obligations or representations, oral or written, of any kind
whatsoever related to the subject matter of this transaction (and without
limiting the foregoing, this Agreement supercedes that certain Warrant dated
as
of even date herewith executed by Holder and Seller, which Warrant is void
and
of no effect). This Agreement may be amended only by a written instrument
executed by the party against whom the amendment is being enforced.
10.
Governing Law.
The
substantive laws of the State of New York will govern the validity, construction
and enforcement of this Agreement. The parties consent to the venue and
jurisdiction of any federal court located in New York for any action brought
to
enforce the terms of this Agreement. The parties irrevocably and unconditionally
submit to the jurisdiction (both subject matter and personal) of any such court
and irrevocably and unconditionally waive: (a) any objection any party might
now
or hereafter have to the venue in any such court; and (b) any claim that any
action or proceeding brought in any such court has been brought in an
inconvenient forum.
11.
Construction.
Any rule
of law or judicial opinion to the effect that any ambiguities are to be resolved
against the drafting party will not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
[signature
page follows]
3
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have
caused this Agreement to be signed the day and year first above
written.
_______________________________
Xxxx Xxxxxxx
_______________________________
Xxxx
Xxxxxx
Sections
6 & 7 Agreed to:
UKARMA
CORPORATION
By: ________________________________
Xxxx
Xxxxxx, CEO
4
EXHIBIT
A
NOTICE
OF
EXERCISE
(To
be signed only upon exercise of the Option Agreement)
Dated: _________
To:
XXXX
XXXXXXX:
I
hereby
exercise that certain Option Agreement dated January 17, 2001 (the “Option”) and
elect to purchase _____________ shares [FILL-IN
NUMBER OF SHARES BEING PURCHASED]
of
Common Stock of uKarma Corporation (the “Company”) from you pursuant to the
terms of the Option. The undersigned tenders herewith payment of the exercise
price of $_____________ pursuant to the terms of the Option.
The
undersigned hereby represents and warrants to, and agrees with you as follows:
1.
I am
acquiring the shares for my own account, for investment purposes only.
2.
I
understand that an investment in the shares involves a high degree of risk,
and
I have the financial ability to bear the economic risk of this investment in
the
shares, including a complete loss of such investment. I have adequate means
for
providing for my current financial needs and have no need for liquidity with
respect to this investment.
3.
I have
such knowledge and experience in financial and business matters that I am
capable of evaluating the merits and risks of an investment in the shares and
in
protecting my own interests in connection with this transaction.
4.
I
understand that the shares have not been registered under the Securities Act
of
1933, as amended (the “Securities Act”) or under any state securities laws. I am
familiar with the provisions of the Securities Act and Rule 144 thereunder
and
understand that the restrictions on transfer on the shares may result in my
being required to hold the snares for an indefinite period of time.
5.
I
agree not to sell, transfer, assign, gift, create a security interest in, or
otherwise dispose of, with or without consideration (collectively, “Transfer”)
any of the shares except pursuant to an effective registration statement under
the Securities Act or an exemption
from
registration.
6.
I am
an “accredited” investor as defined under Rule 501 of Regulation D under
the
Securities Act.
7.
I
understand that shares will bear the following legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE
NOT
BEEN REGISTERED
UNDER THE SECURITIES ACT
OF
1933
(THE “ACT’) OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS
AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.”
Name: _______________________________
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Name: ___________________________
