CONVERSION AGREEMENT
This
CONVERSION AGREEMENT
(the "Agreement") is
dated as of June 8, 2009 by and between uKarma Corporation, a Nevada
corporation, with headquarters located at 000 X. Xxxxx Xx., Xxxxx 000, Xxxxxxx
Xxxxx, 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. The
Company issued to Holder several Promissory Notes for varying principal amounts
bearing an interest rate of seven percent (7%) per annum and due on the one (1)
year anniversary of the respective issue dates (“Notes”), which Notes has a
balance of $202,734.72 including interest (“Balance”), as of the date
hereof.
B. The
Company also has accrued deferred compensation to the Holder totaling
$144,230.70 as of the date hereof.
X. Xxxxxx
wishes to convert all of the Notes and the total deferred compensation 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 and the
deferred compensation eliminated.
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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
the closing bid price of Company’s publicly traded stock as of the date hereof
($0.02).
(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 the
cumulative deferred compensation and shall issue to the Holder that number of
shares (17,348,271 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 X.
Xxxxx Xx., Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
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:
UKARMA CORPORATION
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By:
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/s/ Xxxx Xxxxxx | |
| Xxxx Xxxxxx | |||
| CEO | |||
| Company Name | |||
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By:
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/s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx | |||
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Director
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HOLDER:
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By:
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/s/ Xxxx Xxxxxx | |
SCHEDULE
1
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Note Balance
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Interest
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Deferred Compensation
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$174,985.28
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$27,749.44
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$38,461.52
through 12/31/08
$57,692.28
through 03/31/09
$48,076.90
through 06/08/09
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