Exhibit 10.5
 

 
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.

CONVERSION AGREEMENT

THIS CONVERSION AGREEMENT, dated as of December 28, 2009 is made by and between
Title Starts Online, Inc., a Nevada corporation (“Company”), and Ziu Zhang
(“Investor”).

WHEREAS, the Investor loaned Advanced Mechanical Products, Inc., a wholly owned
subsidiary of the Company, $50,000 (the “Loan”) on November 30, 2009 in
accordance with the 6% Secured Promissory Note dated November 30, 2009 (the
“Note”), which is attached hereto as Exhibit A; and

WHEREAS, pursuant to the terms of the Note, the Company and the Investor wish to
convert the Loan into 10,638 shares of common 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.

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.
 
 
 
 
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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.

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.
 
 
 
 
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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 John Carris 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.

  TITLE STARTS ONLINE, INC.          
 
By:
/s/ Stephen Burns       Stephen Burns       Chief Executive Officer            
        INVESTOR:               /s/ Ziu Zhang        Ziu Zhang  

 
 
 
 
 
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