CONVERSION AGREEMENT
Exhibit 10.4
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 December 28, 2009 is made by and between
Title Starts Online, Inc., a Nevada corporation (“Company”), and Han Solutions
II, LLC (“Investor”).
WHEREAS,
the Investor loaned Advanced Mechanical Products, Inc., a wholly owned
subsidiary of the Company, an aggregate of $315,000 (the “Loan”) on October 28,
2009, November 6, 2009, November 25, 2009, December 7, 2009 and December 21,
2009 in accordance with the form of 6% Secured Promissory Note (the
“Notes”), which are attached hereto as Exhibit A;
and
WHEREAS,
pursuant to the terms of the Notes, the Company and the Investor wish to convert
the Loan into 7,875 shares of Series A Preferred Stock, par value $0.001 per share
(“Shares”) of the Company; and
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge the parties agree as follows:
1. Conversion. The
Company and Investor hereby agree that Loan shall convert into the Shares upon
execution of this Conversion Agreement.
2. Delivery. Within ten
(10) business days of the date of this Conversion Agreement, the Company shall
deliver the Shares represented by a stock certificate to
Investor.
3. Further Assurances.
In connection with the issuance of the Shares, the Investor, 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 Investor represents, warrants and covenants
to the Company as follows:
a. No Registration.
Investor understands that the Shares have not been, and will not be, registered
under the Securities Act of 1933, as amended (the “Securities Act”) and are
being issued 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
Investor’s representations as expressed herein or otherwise made pursuant
hereto.
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b. Investment Intent.
Investor is acquiring the Shares for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in connection with,
any distribution thereof, and Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. Investor
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 Shares.
c. Investment
Experience. Investor has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company and acknowledges that Investor can protect its own interests.
Investor has such knowledge and experience in financial and business matters so
that Investor is capable of evaluating the merits and risks of its investment in
the Company and is aware that the Company has not generated revenue, is a
development stage company and may never be profitable.
d. Speculative Nature of
Investment. Investor 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. Investor can bear the
economic risk of Investor’s investment and is able, without impairing Investor’s
financial condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss of Investor’s investment.
e. Accredited Investor.
The Investor 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. Investor
acknowledges that the Shares must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Investor 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, that the Shares must be
held for a period of one year following the filing of the Super 8K containing
Form 10 information as the Company has historically been considered a shell as
such term is defined under Rule 144. Investor 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 Shares. Investor 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. Investor 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 Investor necessary for the authorization, execution, delivery and
performance of this Conversion Agreement, and the performance of all of the
Investor’s obligations herein, has been taken.
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ii. This Conversion Agreement, when
executed and delivered by the Investor, will constitute valid and legally
binding obligations of the Investor, 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 Investor in connection with the execution and delivery of this
Conversion Agreement by the Investor or the performance of the Investor’s
obligations hereunder.
j. Brokers or Finders.
Investor has not engaged any brokers, finders or agents, and the Company, except
for an agreement entered with Xxxx Xxxxxx Investments LLC has not, and will not,
incur, directly or indirectly, as a result of any action taken by the Investor,
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.
Investor 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
Investor relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. The
Investor 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. Investor
understands and agrees that the certificates evidencing the 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.”
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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.
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By:
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/s/ Xxxxxxx Xxxxx | |
| Xxxxxxx Xxxxx | |||
| Chief Executive Officer | |||
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INVESTOR:
HAN
SOLUTIONS II, LLC
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By:
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/s/ Xxxxxxx Xxxxxx | |
| Name: Xxxxxxx Xxxxxx | |||
| Title: Manager | |||
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