Exhibit No.: 4.8.1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION, OR AN
EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION, UNDER SAID ACT OR SUCH LAWS.
FIRST
OPTION TO PURCHASE SHARES
OF THE COMMON STOCK OF
CRYOCON, INC.
a Colorado corporation
EFFECTIVE DATE: October 6, 2000
This certifies that BOURNS, INC., a company incorporated under the laws
of the state of California ("HOLDER"), or its transferees or assigns, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, is hereby granted an option to purchase from CRYOCON, INC., a
Colorado corporation ("COMPANY"), Thirty-Thousand (30,000) fully paid and
non-assessable shares of Company's common stock ("COMMON STOCK") at a price
equal to $1.00 per share ("EXERCISE PRICE") at any time within the "Exercise
Period" (as that term is defined in Section 1.1 hereof). This Option shall be
exercisable upon delivery of proper written notice to Company at its principal
place of business (or at such other location as Company may advise Holder in
writing), surrender of this Option properly endorsed, and, as applicable, upon
payment in cash or by check of the aggregate purchase price for the number of
shares for which this Option is being exercised.
This Option is being issued pursuant to that certain Loan Extension
Agreement, of even date herewith ("Loan Agreement"), by and between Company and
Holder, and is a material component of the consideration therefor. This Option
is the "Option" referred to in section 4(f) of the Loan Agreement.
This Option is subject to the following terms and conditions:
1. Option Exercise.
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1.1 Exercise Period. This Option may be exercised at the
option of Holder for all or any part of the shares of Common Stock (but not for
a fraction of a share) which may be purchased hereunder at any time during the
three (3) year period following the Effective Date ("EXERCISE PERIOD").
1.2 Amount of Stock. Except as otherwise provided in Section 3
hereof, the maximum number of shares of Common Stock eligible to be purchased by
Holder pursuant to this Option shall be 30,000 shares.
1.3 Procedure for Exercise. During the Exercise Period, Holder
may exercise its option with respect to all or any part of the number of Common
Stock by giving the Company written notice of intent to exercise. The notice of
exercise shall specify the number of Common Stock as to which the Option is to
be exercised and the date of exercise thereof, which date shall be at least five
days after the giving of such notice unless an earlier time shall have been
mutually agreed upon. In the event that Holder exercises the Option for less
than the full amount of Common Stock, the remainder of Common Stock which has
not been exercised shall remain subject to the Option during the Exercise
Period. Upon receipt of proper notice and the full Exercise Price in cash by
Company, a certificate for the shares of Common Stock so purchased, together
with any other securities or property to which Holder is entitled upon such
exercise, shall be delivered to Holder, or Holder's designee, by Company as soon
as reasonably is possible thereafter. The stock certificate so delivered shall
be in the denomination determined under this Option, and shall be registered in
the name designated by Holder.
2 Shares to Be Fully Paid; Reservation of Shares. Company covenants and
agrees that all shares of Common Stock which may be issued upon the exercise of
the rights represented by this Option will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all preemptive
rights of any shareholder. Company further covenants and agrees that, from the
Effective Date through the period within which the rights represented by this
Option may be exercised, Company will at all times have authorized and reserved,
for the purpose of issue or transfer upon exercise of the rights evidenced by
this Option, no less than a number of shares of authorized but unissued Common
Stock, or other securities, when and as required to provide for the exercise of
the rights represented by this Option. Company will take all reasonable action
as may be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that except as expressly set forth herein, Company
shall not be required to effect a registration under Federal or any state
securities laws with respect to such exercise. Company will not take any action
which would result in the total number of shares of Common Stock issuable after
such action upon exercise of all outstanding Options, together with all shares
of Common Stock then outstanding and all shares of Common Stock then issuable
upon exercise of all options and upon the conversion of all convertible
securities and other equity purchase rights then outstanding, to exceed the
total number of shares of Common Stock then authorized by Company's Articles of
Incorporation ("COMPANY CHARTER").
3. Adjustment. The terms of this Option shall be subject to adjustment
from time to time upon the occurrence of any or all of the following events:
3.1 Stock Splits and Dividends. If outstanding shares of
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of any preferred stock, then
the Exercise Price in effect immediately prior to such subdivision or at the
record date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Common Stock shall be combined
into a smaller number of shares, then the Exercise Price in effect immediately
prior to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately increased.
3.2 Reclassification or Reorganization. In case there occurs
any reclassification or change of the outstanding securities of Company or of
any reorganization of Company (or any other corporation the stock or securities
of which are at the time receivable upon the exercise of this Option) or any
similar corporate reorganization on or after the date hereof, then and in each
such case Holder, upon the exercise hereof at any time after the consummation of
such reclassification, change, or reorganization shall be entitled to receive,
in lieu of the stock or other securities and property receivable upon the
exercise hereof prior to such consummation, the stock or other securities or
property to which Holder would have been entitled upon such consummation if
Holder had exercised this Option immediately prior thereto, all subject to
further adjustment pursuant to the provisions of this Section 3.
3.3 Adjustment Certificate. When any adjustment is required to
be made pursuant to Sections 3.1 and 3.2 hereof, Company shall promptly mail to
Holder a certificate setting forth: (i) the nature of the adjustment; and (ii) a
brief statement of the facts requiring such adjustment.
4. Right of First Refusal. In consideration of Company's concern that
an untimely sale of the shares could negatively impact the capital value of the
Company, Holder hereby grants to Company a right of first refusal to purchase
any shares which have been issued to Holder pursuant to this Option. Holder
shall give Company written notice of its intent to sell all or any part of the
shares issued hereunder. Company shall have until 5:00 p.m., Pacific standard
time, on the third (3) business day following receipt of such notice to give
Holder written notice of its intent to exercise its right of first refusal
hereunder. The price per share to be paid by Company to Holder shall be the
closing price of the Common Stock of Company on the OTC Bulletin Board or such
other primary exchange upon which the Common Stock is listed on the date of
Holder's receipt of Company's written notice of exercise. In the event that the
closing price on the date of exercise by Company is lower than the closing price
on the date that written notice was given by Holder, Holder shall have the right
to rescind the written notice of its intent to sell. The purchase of the shares
from Holder must be consummated within ten (10) days of Holder's receipt of
Company's written notice of exercise by delivery of the purchase price to Holder
in the form of a cashier's check or wire transfer to an account designated by
Holder. In the event that Holder intended to exercise this Option concurrently
with a sale of the shares to be issued thereunder and Company has exercised its
right of first refusal, Company shall pay to Holder the difference between the
option price of the shares and the purchase price as calculated in this
provision and this Option shall be deemed to have been exercised by Holder as to
that number of shares.
5. Taxes. The issuance of certificates for shares of Common Stock upon
the exercise of the Option shall be made without charge to Holder of the Option
for any issue tax in respect thereof; provided, however, that Holder shall be
solely responsible for the payment of any and all taxes upon the exercise of
this Option.
6. Closing of Books. Prior to the termination of the Option, Company
will at no time close its transfer books against the transfer of any Option or
of any shares of Common Stock issued or issuable upon the exercise of any Option
in any manner which interferes with the timely exercise of this Option.
7. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Option shall be construed as conferring upon Holder hereof the
right to vote or to consent or to receive notice as a shareholder of Company or
any other matters or any rights whatsoever as a shareholder of Company. No
dividends or interest shall be payable or accrued in respect of this Option or
the interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Option shall have been exercised. No provisions
hereof, in the absence of affirmative action by Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of Holder for the Exercise Price
or as a shareholder of Company, whether such liability is asserted by Company or
by its creditors.
8. Restrictions on Transfer. Holder acknowledges that this Option and
any Common Stock issued hereunder have NOT been registered under the Securities
Act of 1933, as amended ("SECURITIES ACT"), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Option or any
Common Stock issued upon its exercise in the absence of: (i) an effective
registration statement under the Act as to this Option or such Common Stock and
registration or qualification of this Option or such Common Stock under any
applicable Federal or state securities law then in effect; or (ii) an opinion of
counsel, satisfactory to Company, that such registration and qualification are
not required; provided, however, that Holder shall be able to transfer the
Option and the Common Stock to "affiliates" (as that term is defined under the
Securities Act). Each certificate or other instrument for Common Stock issued
upon the exercise of this Option shall bear a legend substantially to the
foregoing effect.
9. Registration Rights.
-------------------
9.1 Piggyback Registration. If the Company proposes to file a
registration statement under the Act (a "Registration Statement") with respect
to an offering by the Company for its own account, or an offering for the
account of any stockholder of the Company or any group of such stockholders
holding shares of common stock of the Company (the "Common Shares"), then the
Company shall give written notice of such proposed filing to the Holder at least
thirty (30) days before the anticipated filing date of the registration
statement, and such notice shall describe the proposed registration and
distribution and offer the Holder the opportunity to register the number of
Common Shares it may request. Provided that the Company has received a written
request from Holder to register a specified number of the Common Shares at least
ten (10) days prior to filing of the registration statement, the Company shall
use its reasonable efforts to cause the managing underwriter or underwriters of
the proposed underwritten public offering (the "Company Underwriter") to permit
the Holder to include such Common Shares in such offering on the same terms and
conditions as the other securities included therein. If the Company Underwriter
delivers a written opinion to the Holder stating that the total number of Common
Shares which they, the Company and any other persons intend to include in such
offering (the "Total Shares") is sufficiently large so as to prevent a
successful offering of the Total Shares, then the number of Common Shares in
excess of the number to be registered for sale by the Company to be offered for
the account of Holder and such other persons or entities other than the Company
shall be reduced pro rata to the extent necessary to reduce the Total Shares to
the amount recommended by the Company Underwriter.
9.2 Registration Procedures
(a) The Company shall notify Holder of the
effectiveness of a Registration Statement and shall furnish to Holder such
number of copies of the Registration Statement (including any amendments,
supplements and exhibits), the prospectus contained therein (including each
preliminary prospectus), any documents incorporated by reference in the
Registration Statement and such other documents as Holder may reasonably request
in order to facilitate its sale of the Common Shares in the manner described in
the Registration Statement.
(b) The Company shall promptly notify Holder of, and
confirm in writing, any request by the SEC for amendments or supplements to the
Registration Statement or the prospectus related thereto or for additional
information. In addition, the Company shall promptly notify Holder of, and
confirm in writing, the filing of the Registration Statement, any prospectus
supplement related thereto or any post-effective amendment to the Registration
Statement and the effectiveness of any such Registration Statement or
post-effective amendment.
(c) The Company shall promptly notify Holder, at any
time when a prospectus relating to the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. In
such event, the Company shall promptly prepare and furnish to Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Common Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) The Company shall promptly notify Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement as soon as practicable.
9.3 Black-out Period Following the effectiveness of the
Registration Statement, the Holder agrees that it will not effect any sales of
the Common Shares pursuant to the Registration Statement or any such filings at
any time after it has received notice from the Company to suspend sales (i) as a
result of the occurrence or existence of any Suspension Event, or (ii) so that
the Company may correct or update the Registration Statement. The Holder may
recommence effecting sales of the Common Shares pursuant to the Registration
Statement or such filings following further notice to such effect from the
Company, which notice shall be given by the Company not later than five (5)
business days after the conclusion of any such Suspension Event or the date the
Company has corrected or updated the Registration Statement.
9.4 Indemnification by Company The Company agrees to indemnify
the Holder and its officers, directors, employees, agents, representatives and
affiliates, and each person or entity, if any, that controls Holder within the
meaning of the Securities Act, and each other person or entity, if any, subject
to liability because of his, her or its connection with Holder, and any
underwriter and any person who controls the underwriter within the meaning of
the Securities Act (an "Indemnitee") against any and all losses, claims,
damages, actions, liabilities, costs and expenses (including without limitation
reasonable attorneys' fees, expenses and disbursements documented in writing),
joint or several, arising out of or based upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement or any
prospectus contained therein, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as and to the extent that such statement or
omission arose out of or was based upon information regarding the Indemnitee or
its plan of distribution which was furnished to the Company in writing by the
Indemnitee for use therein, provided, further that the Company shall not be
liable to any person who participates as an underwriter in the offering or sale
of Common Shares or any other person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with information furnished to the Company in writing for use in connection with
the Registration Statement or the prospectus contained therein by such
Indemnitee or (ii) such Indemnitee's failure to send or give a copy of the final
prospectus furnished to it by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final prospectus. The obligations of the Company
under this Section 8.4 shall survive the completion of any offering of Common
Shares pursuant to a Registration Statement under this Agreement or otherwise
and shall survive the termination of this Agreement.
9.5 Expenses The Company shall bear all expenses incurred by
it in connection with any Registration Statement filed pursuant to this Section
9, except that the Holder shall be responsible for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of the Common Stock and
for all legal, accounting and other expenses incurred by the Holder in
connection with the Registration Statement.
10. Change in Control. In the event of a Change in Control, the rights
of Holder to purchase stock pursuant to this Option shall immediately accelerate
and this Option, at Holder's option, shall automatically be deemed to be
exercised in full pursuant to provisions of Section 1 hereof, without any
further action on behalf of Holder other than payment in full of the Unpaid
Obligation, immediately prior to the effective time of any such Change in
Control. For the purposes of this Agreement, a "Change in Control" shall mean:
(i) the sale, transfer or other disposition of all or substantially all of the
assets of Company; (ii) the merger or consolidation of Company with any other
person (other than a wholly-owned subsidiary of Company) unless Company's
shareholders of record immediately prior to such transaction will immediately
after such transaction hold at least fifty percent (50%) of the voting power of
Company; or (iii) the acquisition in one or more transactions of any voting
securities of Company by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act")), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of the then outstanding voting securities of
Company; provided, however, that the acquisition by Company or any corporation
or other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by Company, of
Beneficial Ownership of more than fifty percent (50%) of the then outstanding
voting securities of Company shall not constitute a Change in Control.
11. Rights and Obligations Survive Exercise of Option. The rights and
obligations of Company and Holder under this Option, and of the owner of shares
of Common Stock issued upon exercise of this Option, shall survive the exercise
of this Option.
12. Representations and Covenants of Holder. This Option has been
entered into by Company in reliance upon the following representations and
covenants of Holder:
12.1 Purchase Entirely for Own Account. The securities to be
acquired by Holder will be acquired for investment for Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same. Holder has not been formed
for the specific purpose of acquiring any of the securities.
12.2 Knowledge. Holder is aware of Company's business affairs
and financial condition and has acquired sufficient information about Company to
reach an informed and knowledgeable decision to acquire the securities.
12.3 Restricted Securities. Holder understands that the
securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of Holder's representations as expressed
herein. Holder understands that the securities are "restricted securities" under
applicable Federal and state securities laws and that, pursuant to these laws,
Holder must hold the securities indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is available.
Holder acknowledges that Company has no obligation to register or qualify the
securities for resale. Holder further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the securities, and on requirements relating to Company which
are outside of Holder's control, and which Company is under no obligation and
may not be able to satisfy.
12.4 Legends. Holder understands that the securities, and any
securities issued in respect thereof or exchange therefor, may bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR STATE SECURITIES LAWS AND SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM SUCH REGISTRATION
OR QUALIFICATION, UNDER SAID ACT OR SUCH LAWS.
13. Modification and Waiver. This Option and any provision hereof may
be changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Any notice, request, or other document required or
permitted to be given or delivered to Holder or Company shall be delivered or
shall be sent by an established overnight service provider (e.g., Federal
Express), or registered or certified mail, postage prepaid, to Holder at its
address on the books of the Company and to Company at its principal corporate
office.
15. Binding Effect on Successors. This Option shall be binding upon any
corporation succeeding Company by merger, consolidation or acquisition of all or
substantially all of Company's assets. All of the obligations of Company
relating to the Common Stock issuable upon the exercise of this Option shall
survive the exercise and termination of this Option. All of the covenants and
agreements of Company shall inure to the benefit of the permitted successors and
assigns of Holder.
16. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Option are inserted for convenience
only and do not constitute a part of this Option. This Option shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the STATE OF COLORADO, without giving effect to principles of
conflicts of laws.
17. Lost Option. Company represents and Warrants to Holder hereof that
upon receipt of evidence reasonably satisfactory to Company of the loss, theft,
destruction, or mutilation of this Option and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
Company, or in the case of any such mutilation upon surrender and cancellation
of such Option, Company, at its expense, will make and deliver a new Option, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Option.
18. Fractional Shares. No fractional shares shall be issued upon
exercise of this Option. Company shall, in lieu of issuing any fractional share,
pay Holder a sum in cash equal to the same fraction of the then current fair
market value of a full share of Common Stock.
[SIGNATURES FOLLOW ON NEXT PAGE]
IN WITNESS WHEREOF, Company has caused this Option to be duly executed
by its authorized officer.
("COMPANY")
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CRYOCON, INC.
a Colorado corporation
By: /s/
-----------------------------------
Name Robert W. Brunson
Its: President
By: /s/
-----------------------------------
Name: James M. Retallick
Its: VP, Corporate Counsel
ACKNOWLEDGMENT:
("HOLDER")
------
BOURNS, INC.
a California corporation
By: /s/
-----------------------------------
Name: Jim Booth
Its: President
Exhibit No.: 4.8.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION, OR AN
EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION, UNDER SAID ACT OR SUCH LAWS.
SECOND
OPTION TO PURCHASE SHARES
OF THE COMMON STOCK OF
CRYOCON, INC.
a Colorado corporation
EFFECTIVE DATE: December 15, 2000
This certifies that BOURNS, INC., a company incorporated under the laws
of the state of California ("HOLDER"), or its transferees or assigns, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, is hereby granted an option to purchase from CRYOCON, INC., a
Colorado corporation ("COMPANY"), Thirty-Thousand (30,000) fully paid and
non-assessable shares of Company's common stock ("COMMON STOCK") at a price
equal to $1.00 per share ("EXERCISE PRICE") at any time within the "Exercise
Period" (as that term is defined in Section 1.1 hereof). This Option shall be
exercisable upon delivery of proper written notice to Company at its principal
place of business (or at such other location as Company may advise Holder in
writing), surrender of this Option properly endorsed, and, as applicable, upon
payment in cash or by check of the aggregate purchase price for the number of
shares for which this Option is being exercised.
This Option is being issued pursuant to that certain Loan Extension
Agreement, of even date herewith ("Loan Agreement"), by and between Company and
Holder, and is a material component of the consideration therefor. This Option
is the "Option" referred to in section 4(f) of the Loan Agreement.
This Option is subject to the following terms and conditions:
1. Option Exercise.
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1.1 Exercise Period. This Option may be exercised at the
option of Holder for all or any part of the shares of Common Stock (but not for
a fraction of a share) which may be purchased hereunder at any time during the
three (3) year period following the Effective Date ("EXERCISE PERIOD").
1.2 Amount of Stock. Except as otherwise provided in Section 3
hereof, the maximum number of shares of Common Stock eligible to be purchased by
Holder pursuant to this Option shall be 30,000 shares.
1.3 Procedure for Exercise. During the Exercise Period, Holder
may exercise its option with respect to all or any part of the number of Common
Stock by giving the Company written notice of intent to exercise. The notice of
exercise shall specify the number of Common Stock as to which the Option is to
be exercised and the date of exercise thereof, which date shall be at least five
days after the giving of such notice unless an earlier time shall have been
mutually agreed upon. In the event that Holder exercises the Option for less
than the full amount of Common Stock, the remainder of Common Stock which has
not been exercised shall remain subject to the Option during the Exercise
Period. Upon receipt of proper notice and the full Exercise Price in cash by
Company, a certificate for the shares of Common Stock so purchased, together
with any other securities or property to which Holder is entitled upon such
exercise, shall be delivered to Holder, or Holder's designee, by Company as soon
as reasonably is possible thereafter. The stock certificate so delivered shall
be in the denomination determined under this Option, and shall be registered in
the name designated by Holder.
2 Shares to Be Fully Paid; Reservation of Shares. Company covenants and
agrees that all shares of Common Stock which may be issued upon the exercise of
the rights represented by this Option will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all preemptive
rights of any shareholder. Company further covenants and agrees that, from the
Effective Date through the period within which the rights represented by this
Option may be exercised, Company will at all times have authorized and reserved,
for the purpose of issue or transfer upon exercise of the rights evidenced by
this Option, no less than a number of shares of authorized but unissued Common
Stock, or other securities, when and as required to provide for the exercise of
the rights represented by this Option. Company will take all reasonable action
as may be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that except as expressly set forth herein, Company
shall not be required to effect a registration under Federal or any state
securities laws with respect to such exercise. Company will not take any action
which would result in the total number of shares of Common Stock issuable after
such action upon exercise of all outstanding Options, together with all shares
of Common Stock then outstanding and all shares of Common Stock then issuable
upon exercise of all options and upon the conversion of all convertible
securities and other equity purchase rights then outstanding, to exceed the
total number of shares of Common Stock then authorized by Company's Articles of
Incorporation ("COMPANY CHARTER").
3. Adjustment. The terms of this Option shall be subject to adjustment
from time to time upon the occurrence of any or all of the following events:
3.1 Stock Splits and Dividends. If outstanding shares of
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of any preferred stock, then
the Exercise Price in effect immediately prior to such subdivision or at the
record date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Common Stock shall be combined
into a smaller number of shares, then the Exercise Price in effect immediately
prior to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately increased.
3.2 Reclassification or Reorganization. In case there occurs
any reclassification or change of the outstanding securities of Company or of
any reorganization of Company (or any other corporation the stock or securities
of which are at the time receivable upon the exercise of this Option) or any
similar corporate reorganization on or after the date hereof, then and in each
such case Holder, upon the exercise hereof at any time after the consummation of
such reclassification, change, or reorganization shall be entitled to receive,
in lieu of the stock or other securities and property receivable upon the
exercise hereof prior to such consummation, the stock or other securities or
property to which Holder would have been entitled upon such consummation if
Holder had exercised this Option immediately prior thereto, all subject to
further adjustment pursuant to the provisions of this Section 3.
3.3 Adjustment Certificate. When any adjustment is required to
be made pursuant to Sections 3.1 and 3.2 hereof, Company shall promptly mail to
Holder a certificate setting forth: (i) the nature of the adjustment; and (ii) a
brief statement of the facts requiring such adjustment.
4. Right of First Refusal. In consideration of Company's concern that
an untimely sale of the shares could negatively impact the capital value of the
Company, Holder hereby grants to Company a right of first refusal to purchase
any shares which have been issued to Holder pursuant to this Option. Holder
shall give Company written notice of its intent to sell all or any part of the
shares issued hereunder. Company shall have until 5:00 p.m., Pacific standard
time, on the third (3) business day following receipt of such notice to give
Holder written notice of its intent to exercise its right of first refusal
hereunder. The price per share to be paid by Company to Holder shall be the
closing price of the Common Stock of Company on the OTC Bulletin Board or such
other primary exchange upon which the Common Stock is listed on the date of
Holder's receipt of Company's written notice of exercise. In the event that the
closing price on the date of exercise by Company is lower than the closing price
on the date that written notice was given by Holder, Holder shall have the right
to rescind the written notice of its intent to sell. The purchase of the shares
from Holder must be consummated within ten (10) days of Holder's receipt of
Company's written notice of exercise by delivery of the purchase price to Holder
in the form of a cashier's check or wire transfer to an account designated by
Holder. In the event that Holder intended to exercise this Option concurrently
with a sale of the shares to be issued thereunder and Company has exercised its
right of first refusal, Company shall pay to Holder the difference between the
option price of the shares and the purchase price as calculated in this
provision and this Option shall be deemed to have been exercised by Holder as to
that number of shares.
5. Taxes. The issuance of certificates for shares of Common Stock upon
the exercise of the Option shall be made without charge to Holder of the Option
for any issue tax in respect thereof; provided, however, that Holder shall be
solely responsible for the payment of any and all taxes upon the exercise of
this Option.
6. Closing of Books. Prior to the termination of the Option, Company
will at no time close its transfer books against the transfer of any Option or
of any shares of Common Stock issued or issuable upon the exercise of any Option
in any manner which interferes with the timely exercise of this Option.
7. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Option shall be construed as conferring upon Holder hereof the
right to vote or to consent or to receive notice as a shareholder of Company or
any other matters or any rights whatsoever as a shareholder of Company. No
dividends or interest shall be payable or accrued in respect of this Option or
the interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Option shall have been exercised. No provisions
hereof, in the absence of affirmative action by Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of Holder for the Exercise Price
or as a shareholder of Company, whether such liability is asserted by Company or
by its creditors.
8. Restrictions on Transfer. Holder acknowledges that this Option and
any Common Stock issued hereunder have NOT been registered under the Securities
Act of 1933, as amended ("SECURITIES ACT"), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Option or any
Common Stock issued upon its exercise in the absence of: (i) an effective
registration statement under the Act as to this Option or such Common Stock and
registration or qualification of this Option or such Common Stock under any
applicable Federal or state securities law then in effect; or (ii) an opinion of
counsel, satisfactory to Company, that such registration and qualification are
not required; provided, however, that Holder shall be able to transfer the
Option and the Common Stock to "affiliates" (as that term is defined under the
Securities Act). Each certificate or other instrument for Common Stock issued
upon the exercise of this Option shall bear a legend substantially to the
foregoing effect.
9. Registration Rights.
-------------------
9.1 Piggyback Registration. If the Company proposes to file a
registration statement under the Act (a "Registration Statement") with respect
to an offering by the Company for its own account, or an offering for the
account of any stockholder of the Company or any group of such stockholders
holding shares of common stock of the Company (the "Common Shares"), then the
Company shall give written notice of such proposed filing to the Holder at least
thirty (30) days before the anticipated filing date of the registration
statement, and such notice shall describe the proposed registration and
distribution and offer the Holder the opportunity to register the number of
Common Shares it may request. Provided that the Company has received a written
request from Holder to register a specified number of the Common Shares at least
ten (10) days prior to filing of the registration statement, the Company shall
use its reasonable efforts to cause the managing underwriter or underwriters of
the proposed underwritten public offering (the "Company Underwriter") to permit
the Holder to include such Common Shares in such offering on the same terms and
conditions as the other securities included therein. If the Company Underwriter
delivers a written opinion to the Holder stating that the total number of Common
Shares which they, the Company and any other persons intend to include in such
offering (the "Total Shares") is sufficiently large so as to prevent a
successful offering of the Total Shares, then the number of Common Shares in
excess of the number to be registered for sale by the Company to be offered for
the account of Holder and such other persons or entities other than the Company
shall be reduced pro rata to the extent necessary to reduce the Total Shares to
the amount recommended by the Company Underwriter.
9.2 Registration Procedures
(a) The Company shall notify Holder of the
effectiveness of a Registration Statement and shall furnish to Holder such
number of copies of the Registration Statement (including any amendments,
supplements and exhibits), the prospectus contained therein (including each
preliminary prospectus), any documents incorporated by reference in the
Registration Statement and such other documents as Holder may reasonably request
in order to facilitate its sale of the Common Shares in the manner described in
the Registration Statement.
(b) The Company shall promptly notify Holder of, and
confirm in writing, any request by the SEC for amendments or supplements to the
Registration Statement or the prospectus related thereto or for additional
information. In addition, the Company shall promptly notify Holder of, and
confirm in writing, the filing of the Registration Statement, any prospectus
supplement related thereto or any post-effective amendment to the Registration
Statement and the effectiveness of any such Registration Statement or
post-effective amendment.
(c) The Company shall promptly notify Holder, at any
time when a prospectus relating to the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. In
such event, the Company shall promptly prepare and furnish to Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Common Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) The Company shall promptly notify Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement as soon as practicable.
9.3 Black-out Period Following the effectiveness of the
Registration Statement, the Holder agrees that it will not effect any sales of
the Common Shares pursuant to the Registration Statement or any such filings at
any time after it has received notice from the Company to suspend sales (i) as a
result of the occurrence or existence of any Suspension Event, or (ii) so that
the Company may correct or update the Registration Statement. The Holder may
recommence effecting sales of the Common Shares pursuant to the Registration
Statement or such filings following further notice to such effect from the
Company, which notice shall be given by the Company not later than five (5)
business days after the conclusion of any such Suspension Event or the date the
Company has corrected or updated the Registration Statement.
9.4 Indemnification by Company The Company agrees to indemnify
the Holder and its officers, directors, employees, agents, representatives and
affiliates, and each person or entity, if any, that controls Holder within the
meaning of the Securities Act, and each other person or entity, if any, subject
to liability because of his, her or its connection with Holder, and any
underwriter and any person who controls the underwriter within the meaning of
the Securities Act (an "Indemnitee") against any and all losses, claims,
damages, actions, liabilities, costs and expenses (including without limitation
reasonable attorneys' fees, expenses and disbursements documented in writing),
joint or several, arising out of or based upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement or any
prospectus contained therein, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as and to the extent that such statement or
omission arose out of or was based upon information regarding the Indemnitee or
its plan of distribution which was furnished to the Company in writing by the
Indemnitee for use therein, provided, further that the Company shall not be
liable to any person who participates as an underwriter in the offering or sale
of Common Shares or any other person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with information furnished to the Company in writing for use in connection with
the Registration Statement or the prospectus contained therein by such
Indemnitee or (ii) such Indemnitee's failure to send or give a copy of the final
prospectus furnished to it by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final prospectus. The obligations of the Company
under this Section 8.4 shall survive the completion of any offering of Common
Shares pursuant to a Registration Statement under this Agreement or otherwise
and shall survive the termination of this Agreement.
9.5 Expenses The Company shall bear all expenses incurred by
it in connection with any Registration Statement filed pursuant to this Section
9, except that the Holder shall be responsible for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of the Common Stock and
for all legal, accounting and other expenses incurred by the Holder in
connection with the Registration Statement.
10. Change in Control. In the event of a Change in Control, the rights
of Holder to purchase stock pursuant to this Option shall immediately accelerate
and this Option, at Holder's option, shall automatically be deemed to be
exercised in full pursuant to provisions of Section 1 hereof, without any
further action on behalf of Holder other than payment in full of the Unpaid
Obligation, immediately prior to the effective time of any such Change in
Control. For the purposes of this Agreement, a "Change in Control" shall mean:
(i) the sale, transfer or other disposition of all or substantially all of the
assets of Company; (ii) the merger or consolidation of Company with any other
person (other than a wholly-owned subsidiary of Company) unless Company's
shareholders of record immediately prior to such transaction will immediately
after such transaction hold at least fifty percent (50%) of the voting power of
Company; or (iii) the acquisition in one or more transactions of any voting
securities of Company by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act")), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of the then outstanding voting securities of
Company; provided, however, that the acquisition by Company or any corporation
or other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by Company, of
Beneficial Ownership of more than fifty percent (50%) of the then outstanding
voting securities of Company shall not constitute a Change in Control.
11. Rights and Obligations Survive Exercise of Option. The rights and
obligations of Company and Holder under this Option, and of the owner of shares
of Common Stock issued upon exercise of this Option, shall survive the exercise
of this Option.
12. Representations and Covenants of Holder. This Option has been
entered into by Company in reliance upon the following representations and
covenants of Holder:
12.1 Purchase Entirely for Own Account. The securities to be
acquired by Holder will be acquired for investment for Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same. Holder has not been formed
for the specific purpose of acquiring any of the securities.
12.2 Knowledge. Holder is aware of Company's business affairs
and financial condition and has acquired sufficient information about Company to
reach an informed and knowledgeable decision to acquire the securities.
12.3 Restricted Securities. Holder understands that the
securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of Holder's representations as expressed
herein. Holder understands that the securities are "restricted securities" under
applicable Federal and state securities laws and that, pursuant to these laws,
Holder must hold the securities indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is available.
Holder acknowledges that Company has no obligation to register or qualify the
securities for resale. Holder further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the securities, and on requirements relating to Company which
are outside of Holder's control, and which Company is under no obligation and
may not be able to satisfy.
12.4 Legends. Holder understands that the securities, and any
securities issued in respect thereof or exchange therefor, may bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR STATE SECURITIES LAWS AND SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM SUCH REGISTRATION
OR QUALIFICATION, UNDER SAID ACT OR SUCH LAWS.
13. Modification and Waiver. This Option and any provision hereof may
be changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Any notice, request, or other document required or
permitted to be given or delivered to Holder or Company shall be delivered or
shall be sent by an established overnight service provider (e.g., Federal
Express), or registered or certified mail, postage prepaid, to Holder at its
address on the books of the Company and to Company at its principal corporate
office.
15. Binding Effect on Successors. This Option shall be binding upon any
corporation succeeding Company by merger, consolidation or acquisition of all or
substantially all of Company's assets. All of the obligations of Company
relating to the Common Stock issuable upon the exercise of this Option shall
survive the exercise and termination of this Option. All of the covenants and
agreements of Company shall inure to the benefit of the permitted successors and
assigns of Holder.
16. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Option are inserted for convenience
only and do not constitute a part of this Option. This Option shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the STATE OF COLORADO, without giving effect to principles of
conflicts of laws.
17. Lost Option. Company represents and Warrants to Holder hereof that
upon receipt of evidence reasonably satisfactory to Company of the loss, theft,
destruction, or mutilation of this Option and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
Company, or in the case of any such mutilation upon surrender and cancellation
of such Option, Company, at its expense, will make and deliver a new Option, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Option.
18. Fractional Shares. No fractional shares shall be issued upon
exercise of this Option. Company shall, in lieu of issuing any fractional share,
pay Holder a sum in cash equal to the same fraction of the then current fair
market value of a full share of Common Stock.
[SIGNATURES FOLLOW ON NEXT PAGE]
IN WITNESS WHEREOF, Company has caused this Option to be duly executed
by its authorized officer.
("COMPANY")
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CRYOCON, INC.
a Colorado corporation
By: /s/
-----------------------------------
Name Robert W. Brunson
Its: President
By: /s/
-----------------------------------
Name: James M. Retallick
Its: VP, Corporate Counsel
ACKNOWLEDGMENT:
("HOLDER")
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BOURNS, INC.
a California corporation
By: /s/
-----------------------------------
Name: Jim Booth
Its: President