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 520 Broadway,
Suite 350, Santa Monica, California 90401 (the "
Company "),
and Bill Glaser (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.
C.
Holder
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 h
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