EXHIBIT NO.: 4.1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(SELLER)
And
CRYOCON, INC.
A Utah Corporation
(BUYER)
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made as of December 10, 1999,
by Cryocon, a Utah Corporation ("Buyer") from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Seller"), the
owner of the assets (collectively the "Parties").
WHEREAS, Buyer desires to purchase and Seller desires to sell and
convey to Buyer assets known as the CRYO-ACCURIZING DIVISION and the TRI-LAX
PROCESS, upon the terms and subject to the conditions set forth herein: and
WHEREAS, Seller is the sole owner of the subject assets, and as such,
has a vested interest in the transactions referred to herein. Seller makes
certain representations and warranties and to accept certain obligations as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. At the Closing (as defined in Section 3),
Seller agrees to sell, convey, transfer, assign, and deliver to Buyer, and Buyer
agrees to purchase from Seller, for the purchase price hereinafter specified,
free and clear of all liens, security interests, charges and encumbrances
(except those set forth in paragraph 1.3 Assumption of Certain Liabilities), all
of the assets described in Exhibit A, attached hereto and incorporated herein
("Assets"). The Asset's purchased and described in Exhibit A, include all of the
Assets, among other assets, that Seller purchased or will purchase from 300
Below, Inc., pursuant to the Option to Purchase and Purchase Agreement; Re:
Cryo-Accurizing Division and the Tri-Lax Process executed on the 10th day of
November 1999 (attached hereto and incorporated herein as Exhibit B; "300 Below
Agreement"). The Seller will assign to Buyer all rights described in Exhibit B.
Buyer purchases the assets described in Exhibits A and B subject to the Seller's
rights and obligations set forth in Exhibit B.
1.2 Agreement Not to Compete. Seller shall not, at any time within the 5-year
period following the Closing Date, directly or indirectly engage in any
activities involving the development, marketing or licensing of the
CRYO-ACCURIZING DIVISION and the TRI-LAX PROCESS that is the same as, similar to
or competitive with the activities of Buyer. This provision shall be of no
further effect in the event of a breach by Buyer of its obligations under
Sections 2.1. (a), 2.1(b) and 2.1(c).
1.3 Assumption of Certain Liabilities. As of the Closing Date, Buyer shall
assume the obligation to pay any unpaid portion of the purchase price set forth
in Exhibit B, not already paid by Seller, and shall assume only those other
liabilities set forth in the schedule Assumed Liabilities, attached hereto and
incorporated herein ("Assumed Liabilities"), which schedule shall be updated as
of the Closing Date. Buyer shall not assume, incur, guarantee, or otherwise be
obligated with respect to any liability whatsoever of Seller other than as
stated in the Assumed Liabilities. With respect to any Assumed Liability, such
assumption by Buyer is for the benefit only of the Seller and shall not expand,
increase, broaden, or enlarge the rights or remedies of any other party, nor
create in any other party any right against Buyer that such party would not have
against Seller, if this Agreement had not been consummated.
1.4 Other Liabilities Not Assumed. Buyer shall not assume any liabilities of
Seller not stated in Paragraph 1.2 and that are not listed on the Schedule of
Assumed Liabilities. Without limiting the generality of the foregoing, and
except as otherwise provided on the Schedule of Assumed Liabilities, the Assumed
Liabilities will not include, and Buyer shall not assume under this Agreement,
any of the following Seller's obligations and liabilities:
(a) Any of Seller's costs, expense, or tax liability arising from the
sale of assets provided for by this Agreement;
(b) Any debt, obligation, or liability to any person or any entity
owned or controlled in whole or in part by Seller, under any agreement
not identified;
(c) Any of Seller's debt, obligation, or liability (or costs and
expenses in connection therewith) to the extent that such debt,
liability, or obligation is actually satisfied or paid on behalf of
Seller by an insurer or insurers under a policy issued to such Seller;
(d) Any of Seller's debt, obligation, or liability arising from any
violation by Seller or his agents of any statute (or rule or regulation
thereunder) or executive regulation of the United States or any State
or any political subdivision or agency thereof (or any statutes or rule
or regulation thereunder) or executive, administrative, or
quasi-judicial regulation of any foreign government;
(e) Any of Seller's debt, obligation, or liability whose existence
violates or is contrary to any of Seller's representation or warranty;
(f) Federal or state income tax or other tax liabilities known or
unknown, existing, or arising prior to the Closing, with the exception
of those listed on the on the Schedule of Assumed Liabilities;
(g) Any liability or obligation for or arising from any claim for any
tort, breach of any legal duty, breach or violation of a contract or
violation or breach of any law, statute, ordinance, rule, regulation,
injunction, or decree, or any liability or obligation for any product
liability or other claim connected in any manner with any products,
events, or activities sold, produced, or taking place prior to the
Closing.
1.5 Assignment of Certain Contracts. At the Closing, Buyer shall succeed to the
rights and privileges of Seller, and shall assume the express obligations of
Seller, performable after the Closing pursuant to the Seller's contracts, and
other agreements listed in Exhibit A. Without limiting the generality of the
foregoing, Buyer shall not assume and shall have no liability with respect to
any of the Seller's obligations, under any contract (a) other than a contract
assigned and listed as an asset in Exhibit A, (b) required to be performed by
Seller, under an assigned contract on or prior to the Closing, except to the
extent that such obligation is set forth as an Assumed Liability hereunder, or
(c) arising out of any breach of any breach of an assigned Contract on or before
the Closing.
1.6 Instruments of Conveyance, Assumption or Assignment. The sale, conveyance,
transfer, assignment, and delivery of the Assets and the assumption of the
Assumed Liabilities, as herein provided, shall be effected by bills of sale,
endorsements, assignments, deeds, drafts, checks, stock powers, or other
instruments in such reasonable and customary form as shall be requested Buyer,
and Seller shall at any time and from time to time after the Closing, upon
reasonable request execute, acknowledge, and deliver such additional bills of
sale, endorsements, assignments, deeds, drafts, checks, stock powers, or other
instruments and take such other actions as may be reasonably required to
effectuate the transactions contemplated by this Agreement and upon Seller's
failure to do so, at Seller's option, this Agreement shall, if allowed by
governing law, act in lieu thereof.
2. PURCHASE PRICE.
In consideration for the sale, conveyance, transfer, and delivery of
the Seller's Assets, and Agreement Not to Compete (set forth in paragraph 1.2),
and under the terms and subject to the conditions set forth in this Agreement,
Buyer shall pay Seller the Purchase Price, which shall be equal to the sum of
fair value of Seller's Assets plus the assumption of the Assumed Liabilities.
2.1 Payment of Purchase Price/Payment Procedure. As consideration, Buyer shall
tender to Seller the consideration set forth below:
A. 9,700,00 shares of Buyer's common stock ("Shares") evidenced
by a duly executed stock certificate to be delivered to Seller
at the Closing.
B. An amount equal to $50,000, payable in installment payments,
pursuant to the terms of the Subordinated Convertible
Debenture (attached hereto and incorporated herein as Exhibit
C.
C. Cash in the amount of $70,000.
3. CLOSING
3.1 Closing. The Closing of the sale and purchase will occur no later than
January 1, 2000 (hereinafter, the "Closing Dates"). The Closing shall be at the
offices of Cryocon Inc.
3.2 Documents to be delivered by Seller at Closing. At or before
Closing, Seller shall deliver Buyer such bills of sale, endorsements,
assignments, deeds drafts, checks stock powers or other instruments as shall be
effective to vest in Buyer good and marketable title to the Assets subject to no
liens, encumbrances, or rights in any other party whatsoever, other than the
Assumed Liabilities.
4. TAXES AND PREPAID ITEMS.
Except as otherwise provided herein, Buyer will pay all sales, use
franchise, and other taxes and charges, including, without limitation, ad
valorem taxes or other taxes which may become payable in connection with the
sale of the Assets pursuant to the terms of this Agreement, and any all other
taxes and charges accruing out of Sellers' use of the Assets prior to the
Closing Date.
5. REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer, the following:
5.1 Title and Share Ownership. The Seller's Assets conveyed, transfer and sold
to Buyer by Seller will be, at Closing, free and clear of all liens, security
interests, pledges, charges, claims, encumbrances and restrictions of any kind.
Seller is not a party to any agreement, which offers or grants to any person the
right to purchase or acquire any of the assets sold herein to Buyer. There are
no applicable laws or regulations that would, as a result of the sale of the
assets to Buyer, impair, restrict or delay Buyer's rights with respect to the
assets.
5.3 Liabilities. Seller does not have any debts, liabilities, or obligations of
any nature, whether accrued, absolute, contingent, or otherwise, and whether due
or to become due, that are not disclosed to the Buyer. Seller is not aware of
any pending, threatened or asserted claims, lawsuits or contingencies pending,
threatened or asserted claims, lawsuits or contingencies involving Seller.
Seller, has not committed any contravention of any legislation or regulations to
which it is subject and is not currently a party to any proceedings commenced by
any third party, nor any dispute of any kind between Seller and any third party,
and no such dispute will exist by the Closing of this Agreement.
5.7 Tax Returns. Within the times and in the manner prescribed by law, Seller
has filed all applicable tax returns required by law and has duly paid all
taxes, assessments, and penalties due and payable.
5.8 Authority to Perform Obligations. Seller has the right, power and authority
to enter into, and perform its obligations under this Agreement. This Agreement
has been duly executed by Seller and is a valid and binding obligation of
Seller. Neither the execution nor performance by Seller of this Agreement and of
the obligations hereunder will cause, constitute, or conflict with or result in
(a) a violation of any law or statute; (b) any breach or violation of any of the
provisions of or constitute a default under any license, indenture, mortgage,
charter, instrument, By-laws or Articles of Incorporation, or other agreements
or instrument to which Seller is a party, or by which each may be bound, nor
will any consents or authorizations of any party other than those hereto be
required; (c) an event that would cause Seller to be liable to any party; or (d)
an event that would result in the creation or imposition of any lien, charge, or
encumbrance on any asset of Seller except for the items described in this
Agreement.
5.9 Full Disclosure and Closing Documents. The representations and warranties
made by Seller, and the information set forth in all the Closing documents
furnished or to be furnished or to be furnished on behalf of Seller are complete
and accurate in all material respects and do not contain any untrue statements
of a material fact, nor omit any material facts, the omission of which would be
misleading. All Closing documents pertaining to Seller are valid and in
accordance with the laws of the State of Utah.
6. REMEDIES
6.1 Arbitration. Any controversy or claim arising out of, or relating to, this
Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Salt Lake City, Utah in accordance with the Rules of
the American Arbitration Association the existing, and judgment of the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy.
6.2 Indemnification. Seller agrees to indemnify Buyer against all actual losses,
damages and expenses caused by (i) any material breach of this Agreement or any
material misrepresentation by Seller contained herein or (ii) any misstatement
of a material fact or omission to state a material fact required to be stated
herein or necessary to make the statements herein not misleading.
7. MISCELLANEOUS
7.1 Captions and Headings. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this Agreement.
7.2 No Oral Change. This Agreement and any provision hereof, may not be waived,
changed, modified, or discharged orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
7.3 Non Waiver. Except as otherwise expressly provided herein, no waiver of any
covenant, condition, or provision of this Agreement shall be deemed to have been
made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants, or conditions of
this Agreement or the exercise any option herein contained shall not be
construed as a waiver or relinquishment for the future of any such provisions,
covenants, or conditions, (ii) the acceptance of performance of anything
required by this Agreement to be performed with knowledge of the breach or
failure of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver with respect to any other or
subsequent breach.
7.4 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
7.5 Counterparts. This Agreement may be executed in a number of counterparts,
each shall be deemed an original, but all counterparts together shall constitute
one Agreement.
7.6 Notices. All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
Seller: Buyer:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Cryocon, Inc.
2250 North 1500 W. ▇▇▇▇ ▇. ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7.7 Binding Effect. This Agreement shall inure to and be binding upon the heirs,
executors, personal representatives, successors and assigns of each of the
parties to this Agreement.
7.8 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall be true and
correct as of the Closing and shall survive the Closing of this Agreement.
7.9 Mutual Cooperation. The parties hereto shall cooperate with each other to
achieve the purpose of this Agreement, and shall execute such other and further
documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
7.10 Governing Law. This Agreement is governed by the laws of the State of Utah.
7.11 In the event any party shall bring an action or submit to arbitration to
enforce its rights under this Agreement, the prevailing party in any such
proceeding shall be entitled to recover its reasonable attorney's fees and cost
of the proceeding.
Seller
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Buyer:
Cryocon, Inc.
By: /s/___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Authorized Representative for
Cryocon, Inc.
Exhibit A
list of Assets purchased
The following is a list of property, records, and items that are
contemplated and herein specifically agreed to as subject of this Purchase
Agreement.
A. Database (including 10,000 plus names)
B. Customer records and claims
C. Dealer Program (Agreements)
D. Literature (flyers, brochures, articles, information sheets, artwork,
etc.)
E. Banners & Signs (C-A and TRI-LAX) (1x6), all other signs
F. Promotional Materials (including hats, shirts, coupons, decals, etc.)
G. Tri-Lax Equipment (sonic and electromagnetic machines)
H. Cryo-Accurizing specific materials (socks, sonic solution, anti-rust
solution, etc.)
I. Advertising Schedule and Media Kits (including authority to change ads)
J. Shoot and Show schedules (SHOT show, etc)
K. Trademark, specifically Registration #1,969, 850, for the
Cryo-Accurizing Design/Logo and Pending Trademark Application for the
words Cryo-Accurizing (file, legal, and registration paperwork)
L. Patent, specifically patent number 5k,865,913 (file, legal and
certificate)
M. Licenses granted to other parties to perform Cryo-Accurizing
N. Certificate and Winners file
O. Advertising files
P. Display material (targets, posters, magazines, etc.)
Q. Lists of sponsored individuals, groups, teams, etc. and events
R. Lists of any parties or entities performing any testing of said
processes.
It is expressly acknowledged and agreed that if, during the transfer of
property, items that both parties agree should be subject to this transfer are
not included in this list, said items may be added in the spaces provided below
and become apart of the assets covered under this agreement.
Acknowledged and agreed to:
/s/_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Authorized Representative for
Cryocon, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit B
OPTION TO PURCHASE AND PURCHASE AGREEMENT
RE: CRYO-ACCURIZING DIVISION AND THE TRI-LAX PROCESS
Exhibit C
CONVERTIBLE DEBENTURE
THE SECURITIES REPRESENTED BY THIS CONVERTIBLE DEBENTURE WERE ORIGINALLY ISSUED
ON JANUARY 3, 2000 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAW. THE SALE OF THE
COMPANY'S SECURITIES IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED IN SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
REGULATION D, RULE 506. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
SUBORDINATED CONVERTIBLE DEBENTURE IS SUBJECT TO THE CONDITIONS SET FORTH IN THE
CONVERTIBLE DEBENTURE, DATED jANUARY 3, 2000, BETWEEN THE ISSUER AND THE
PURCHASER NAMED THEREIN. THE ISSUER RESERVES THE RIGHT TO REFUSE ANY TRANSFER OF
SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER.
CRYOCON, INC.
(A Utah Corporation)
10% Convertible Promissory Debenture Due January 3, 2003
Registered Owner: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Principal Amount: $50,000
Issue Date: January 3, 2000
CONVERTIBLE DEBENTURE (the "Debenture") dated as of January 3, 2000, by
and between Cryocon, Inc. (the "Company"), a Utah corporation with an address at
▇▇▇▇ ▇. ▇▇▇▇ ▇., ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his assigns (the
"Holder"), with an address at ▇▇▇▇ ▇. ▇▇▇▇ ▇., ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
This Debenture is issued pursuant to a Purchase Agreement, dated as of
December 10, 1999 (the "Purchase Agreement"), by and between Company and Holder.
The Purchase Agreement contains terms governing the sell of Assets to the
Company, and all provision of the Purchase Agreement is hereby incorporated
herein in full by reference. Except as otherwise indicated herein, capitalized
terms used in this Debenture have the same meanings set forth in the Purchase
Agreement.
The Company has duly authorized the execution and delivery of its 10%
Debenture due January 3, 2003 in the principal amount of $50,000. It is agreed
as follows:
1. Payment The Company, for value received, hereby promises to pay to
the order of the Holder the Principal Amount, set forth above, of this Debenture
on or before January 3, 2003 (the "Due Date"), and pay interest quarterly on
January 1, April 1, July 1, and October 1 of each year, at the rate of 10% per
annum, until the earlier of an Event of Default, as defined herein, or the due
date of the Debenture.
Interest on the Debentures will accrue from the most recent date to
which interest has been paid, or if no interest has been paid, from the Issue
Date of this Debenture. The Holder at its option may elect to receive payment of
interest in cash or in Common Stock at the Conversion Price, as defined below.
The Debenture may not be prepaid, except with the prior written consent of
Holder.
2. Debentures-Transfer, Exchange When Debentures are presented to the Company
with a request to register a transfer of such Debentures or to exchange such
Debentures for an equal principal amount of Debentures of other denominations,
the Company shall register such transfer or exchange without cost to the Holder.
3. Redemption
(a) Redemption. If at any time after the Issue Date of this Debenture an Event
of Default occurs, the Company shall redeem, at the option of the Holder of this
Debenture, the outstanding principal amount of this Debenture at the Redemption
Price. The "Redemption Price" is the total unpaid principal amount, plus accrued
and unpaid interest thereon, at the Redemption Date.
(b) Notice of Redemption. The Holder may submit written notice of redemption,
pursuant to paragraph (a) above, to the Company not less than ten (10) days
prior to the date specified in the notice on which such redemption is to be made
(the "Redemption Date"). In the case less than all of the aggregate principal
amount of this Debenture is redeemed, a new Debenture representing the aggregate
principal amount of the unredeemed, Debenture shall be issued to the Holder
thereof without cost to such Holder within two (2) business days after surrender
of this Debenture.
(c) Redemption Payments. For each Debenture or portion thereof which is to be
redeemed hereunder, the Company shall be obligated on the applicable Redemption
Date to pay to the Holder thereof (upon surrender by such Holder at the
Company's principal office of the Debenture) the Redemption Price in cash or in
immediately available funs. If Company does not make the payment when due,
interest will accrue on all outstanding Debentures from and after the Redemption
Date at the Default Rate, the Conversion Price calculated pursuant to Section 4
in connection with any subsequent conversion of this Debenture will be reduced
to $0.014 per share, and this Debenture shall be immediately convertible
notwithstanding any other restrictions on conversion.
(d) Interest After Redemption Date. If the Redemption Price of such Debenture is
paid in full to the Holder of such Debenture on the Redemption Date, this
Debenture shall not be entitled to any interest accruing after such date and on
such date, all rights of the holder of the Debenture shall cease, and such
Debenture shall no longer be deemed to be issued and outstanding.
4. Conversion. Subject to and upon compliance with the provisions of the
Debentures, at the option of the Holder thereof, the Debentures or any portion
thereof and any accrued and unpaid interest thereon may be converted into fully
paid and nonassessable shares (calculated as to the nearest number of whole
shares) of the Company's Common Stock at the Conversion Price as defined herein
(the "Conversion Shares"). The "Conversion Price" is $0.028 per share. The total
number of shares of Common Stock into which Debenture may be converted will be
determined by dividing the unpaid principal amount, plus accrued and unpaid
interest thereon by the Conversion Price. No fractional shares will be issued
upon conversion. The Conversion right expires when all of the Debentures have
been paid in full, including accrued interest and costs of collection.
In the case of any Debenture which is surrendered for conversion,
accrued and unpaid interest will be payable on such Debenture with respect to
the period ending on conversion date. The Holder at his option may elect to
receive payment of interest in cash or in Common Stock at the Conversion Price.
Upon the occurrence of an Event of Default, all of the Debentures shall
be immediately convertible notwithstanding any timing restrictions imposed
herein.
A. Exercise of Conversion Right. To exercise the conversion right, the
Holder of the Debenture shall surrender to the Company such Debentures, duly
endorsed, accompanied by written Notice of Conversion to the Company in the form
provided in this Debenture that the Holder elects to convert such Debenture, or
if less than the entire principal amount thereof is to be converted, the
specified portion.
Debentures shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Debentures for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Debentures as Holders shall cease, and the person or persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock as and
after such time.
Within two days after the conversion date, the Company, without cost to
the Holder, shall issue and deliver to Holder the converted Debenture or the
person, specified by such Holder, a certificate for the number of full shares of
Common Stock issuable upon conversion registered in the name of such Holder or
such other person as shall have been specified by such Holder and all accrued
and unpaid interest on the converted Debenture or portion there upon which the
Holder does not elect to receive payment in Common Stock.
Upon Conversion of this Debenture, the Company shall take all such
actions as are necessary in order to insure that the Common Stock issuable with
respect to such conversion shall be validly issued, fully paid and
nonassessable.
The Company shall not close its books against the transfer of Common
Stock issued or issuable upon conversion of this Debenture in any manner that
interferes with the timely conversion of this Debenture. The Company shall
assist and cooperate with any Holder of this Debenture required to make any
governmental filings or obtain any governmental approval prior to or in
connection with the conversion of this Debenture (including, without limitation,
making any filings required to be made by the Company).
The conversion rights of any Debenture subject to redemption hereunder
shall terminate on the Redemption Date for such Debenture unless the Company has
failed to pay to Holder thereof the Redemption Price of such Debenture or
portion thereof.
B. Consolidation of Company. In the case of any consolidation or merger
of the Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving corporation and which does not
result in any reclassification or change of outstanding shares of the class
issuable upon conversion of the Debentures), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, the Holder of each Debenture, then outstanding
shall have the right to exercise such Debenture for the purchase of the kind and
amount of shares of Common Stock and other securities and property receivable
upon such consolidation, merger, sale, or transfer by a holder of the number of
shares of Common Stock which would have been issuable if the conversion of the
Debentures had occurred immediately prior to such consolidation, merger, sale or
transfer.
5. Registration Rights. The Company, at its sole cost and expense, covenants to
immediately register or qualify or cause to be registered or qualified by one or
more registrations or qualifications under applicable federal and state
securities laws the sale and resale by the Holder of all the Conversion Shares
and all of the additional shares of Common Stock issued or issuable to the
Holder pursuant to this Debenture, if any, (the "Registrable Securities"), and
to maintain such registrations or qualifications effective for all periods
during which any portion of any Debenture may be converted. The Company
covenants to use its best efforts to cause such registrations or qualifications
to become effective as soon after filing as possible and to remain effective for
all periods during which any portion of any Debenture may be converted. The
Company covenants to prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registrations or
qualification and the prospectus used in connection therewith as may be
necessary to keep such registrations or qualifications effective and to comply
with the provisions of the Securities Act of 1933, as amended, respect to the
disposition of all securities covered by such registration or qualification in
accordance with the intended methods of disposition by the Holder thereof set
forth in such registration or qualification.
6. Piggyback Registration. If Company, at any time or times proposes or is
required to register any of its Common Stock or other equity securities for
public sale for cash under the Securities Act (other than on Forms S-4 or S-8 or
successor forms thereto or any form on which the Registrable Securities are not
eligible to be registered), and any applicable state securities law, it will at
each such time or times give written notice to the Holder of its intention to do
so. Upon the written request of Holder given within fifteen (15) days after
receipt of any such notice, Company shall use its best efforts to cause the
registration of Holder's conversion shares pursuant to the Securities Act and
any applicable state securities laws; provided, that if the Piggyback
Registration involves a public offering and the underwriters thereof advise
Company in writing that in their opinion the Conversion Shares proposed to be
registered in such Piggyback Registration should be offered for sale so as not
to materially and adversely affect the price or salability of the stock being
registered by Company, then the Holders proposing to include conversion shares
in the registration statement, other than pursuant to the exercise of demand
rights or piggyback rights, shall reduce on a pro rata basis the number of
Conversion Shares to be included in the registration statement.
7. Holder's Investment Representation. Holder understands that the purchase and
sale of the subject Debentures have not been registered under the Securities Act
or applicable state securities laws on the basis that the purchase and sale of
the Dentures are exempt from such registration under the Securities Act and
Securities Laws based in part upon the representations made herein. Holder,
thereby, represents that he does not intend to resell or otherwise dispose of
the shares being purchased and sold hereby. Holder, further represents that he
is acquiring the Debentures for investment purposes only and for his own
account, not on behalf of others, and not with a view to resell or otherwise to
distribute the purchased shares, and the Holder will not sell or otherwise
distribute the purchased shares without registration under the Securities Act
and applicable Securities Laws or pursuant to applicable exceptions therefrom.
The Holder represents that he will not attempt to sell or otherwise
distribute his Debentures, except in compliance with the anti-fraud,
registration and any of the material provisions of the Securities Act and
applicable Securities Law.
A legend will be placed on the certificate evidencing the Debenture to
the effect that such shares have not been registered under the Securities Act or
applicable Securities Laws and that the Purchased Shares may not be resold
unless they are registered under the Securities Act and Securities Laws or
pursuant to applicable exemptions therefrom.
8. Representations, Warranties and Covenants. The Company hereby represents,
warrants and covenants as follows:
A. Reservation of Common Stock. The Company shall at all times reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Stock or out of the Common Stock held in treasury, the full
number of shares of Common Stock as shall from time to time be issuable upon the
conversion of all issued and outstanding Debentures.
B. Covenant as to Common Stock. The Company covenants that all shares
of Common Stock which may be issued upon conversion of Debentures, including
interest, additional shares of Common Stock and penalties, will upon issue be
fully paid and nonassessable and the Company will pay all taxes, liens and
charges that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Debentures pursuant hereto.
C. Payment of Debentures. The Company shall pay the principal of, and
interest on, the Debentures on the dates and in the manner provided herein and
in the Debentures.
D. Continued Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation and will refrain from taking any action that would cause its
existence as a corporation to cease, including without limitation any action
that would result in the liquidation, winding up or dissolution of the Company.
E. Further Assurances. From time to time the Company will make, execute
and deliver to the Holder, or cause to be made, executed and delivered to the
Holder, any and all such further and other instruments and assurances as may be
reasonably necessary or proper to carry out the intention of, or to facilitate
the performance of, the terms of this Debenture or to secure the rights and
remedies hereunder of Holders.
F. Restricted Payments. The Company shall not declare and pay any
dividends on its capital stock or redeem, acquire or otherwise retire for value
any securities issued by it (other than the Debentures) unless, at the time of
the taking of such action, no Event of Default or event which with notice or
lapse of time or both would become an Event of Default has occurred and is
continuing.
G. Successors. The Company shall not, whether in a single transaction
or through a series of related transactions, consolidate or merge with or into,
or sell, lease, convey or otherwise dispose of all or substantially all of its
assets to, any person unless such person agrees in writing to assume all
obligations of the Company under the Debentures.
H. Authorization. The Company has full authority to make and perform
its obligations under the Debentures, and the Debentures when executed and
delivered by the Company were or will be the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.
I. Litigation. There is no claim, litigation or governmental
proceedings against the Company now pending or, to the knowledge of the Company,
threatened, which is substantial in amount or which, if adversely determined
would have a material adverse effect on the financial condition of the Company
or the ability of the Company to perform its obligations under the Debentures.
9. Defaults and Remedies.
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A. Events of Default. An "Event of Default" shall occur if:
(i) The Company defaults in the payment of principal or
interest on any Debenture when the same becomes due or
payable, whether at maturity or upon acceleration or
redemption or otherwise;
(ii) The Company fails to perform or observe any material
provision contained in this Debenture, the Purchase Agreement
or related documents.
(iii) Any representation or warranty contained in the Purchase
Agreement or required to be furnished to any holder of
Debentures pursuant to the Purchase Agreement, or any
information contained in writing required to be furnished by
the Company to any holder of the Debentures, is false or
misleading in any material respect on the date made or
furnished;
(iv) The Company pursuant to or within the meaning of any
Bankruptcy Law becomes a party to any bankruptcy or insolvency
proceedings and such proceeding is not dismissed within thirty
(30) days; and
(v) Any material provision of the Purchase Agreement, the
Debentures or any related document shall at any time for any
reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any party
thereto, or a proceeding shall be commenced by the Company
seeking to establish the invalidity or enforceability thereof,
or the Company shall deny in writing that it has any liability
or obligation purported to be created under the Purchase
Agreement or any related document;
B. Notice of Company's Default. Holder shall give written notice to
Company of any Event of Default, which notice shall specify: (a) the nature of
the act, omission, or deficiency giving rise to the Event of Default, (b) the
action required to cure the default, if an action to cure is possible, and (c) a
date, which shall not be less than 30 calendar days from the mailing of the
notice, by which such action to cure must be taken, if any action to cure is
possible.
C. Lender's Remedies. Upon the happening of an Event of Default, after
notice to Company of the Event of Default, as set forth above, and, if an action
to cure is specified in the notice, Company's failure to cure the deficiency
with the time specified in the notice, Holder may, in addition to other rights
and remedies permitted by law, proceed with any and all of the following
remedies in any order or combination Holder may choose in its sole discretion:
(i) Terminate this Agreement, in which case the Holder may
declare the entire principal amount of the Debenture
outstanding and all accrued interest immediately due and
payable and demand, at the Holder's election, that the Company
redeem the Debentures in accordance with paragraph 3, convert
the Debenture pursuant to paragraph 4, or demand immediate
full payment of the principal amount outstanding and all
accrued interest under the Debenture; or
(ii) Bring an action for equitable relief (1) seeking the
specific performance by Company of the terms and conditions of
the Debenture, Purchase Agreement, or related documents,
and/or enjoining, abating, or preventing any violation of said
terms and conditions, and./or (3) seeking declaratory relief.
D. Enforcement. The Company shall reimburse or pay, on demand, to or on
behalf of the Holder the costs and expenses, including reasonable fees and
expenses of counsel(s) to the Holder, incurred by the Holder in connection with
the enforcement, whether with or without suit, of this Debenture, the Purchase
Agreement and any of the related documents.
10. Miscellaneous.
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10.1 Governing Law. This Debenture shall be governed by and construed
in accordance with the substantive laws of the State of Utah. Any action or
proceeding brought by either party against the other arising out of or related
to this Agreement shall be brought exclusively in a state or federal court in
Salt Lake City, Utah.
10.2 Waivers; Cumulative Remedies. Any waiver, consent or the like must
be in writing. Any waiver by either party of any breach of this Agreement by the
other party shall not constitute a waiver of any other or subsequent breach of
this Agreement. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.
10.3 Notices. All notices and other communications hereunder shall be
in writing and shall be effective upon receipt by facsimile with a confirming
copy sent by first-class mail, postage prepaid, or five (5) days after deposit
in the U.S. postal system by certified or registered mail, return receipt
requested, postage prepaid to the addresses first set forth below such other
address as a party may designate for itself by providing notice hereunder:
Holder Company
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Cryocon, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇. ▇▇▇▇ ▇. ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
10.4 Attorneys' Fees. In any action brought to construe or enforce this
Debenture, the prevailing party shall receive in addition to any other remedy to
which it may be entitled, compensation for all costs incurred in pursuing such
action, including, but not limited to, reasonable attorneys' and expert
witnesses' fees and costs.
10.5 Severability. In case any provision of this Debenture is held to
be invalid or unenforceable, such provision shall be deemed amended to the
extent required to make it valid and enforceable and such amended provision and
the remaining provisions of this Debenture will remain in full force and effect.
10.6 Title and Headings. The titles and headings contained in this
Debenture are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Debenture.
10.7 Successor and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.
10.8 Rights of Third Parties. Nothing contained in this Debenture,
express or implied, shall be deemed to confer any rights or remedies upon, or
obligate any of the parties hereto, to any person or entity.
10.9 Entire Agreement; Amendment. This Debenture, and the other
documents delivered pursuant hereto constitute the full, complete and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersedes and revokes all other previous
discussions, understanding and agreements, whether oral or written, between the
parties with regard to the subject matter hereof. Any term of this Debenture may
be amended and the observance of any term of this Debenture may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the affected party.
IN WITNESS WHEREOF, the Company has caused this Debenture to be
executed by its duly authorized officer or agent as of the day and year first
above written.
CRYOCON, INC.
BY: /s/
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Authorized Representative
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Print Name
THE HOLDER:
BY: /s/
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NOTICE OF CONVERSION
To: Cryocon, Inc.
The undersigned registered owner of this Debenture hereby exercises the
option to convert this Debenture, or the portion hereof designated below, and
the accrued interest thereon designated below into shares of Common Stock in
accordance with the terms of the Debenture, and directs that the shares issuable
and deliverable upon the conversion, together a new Debenture representing any
unconverted principal amount hereof, be issued and delivered the registered
owner hereof, unless a different name has been provided below.
Principal Amount to be converted $ 50,000.00
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Accrued interest to be converted $ 6,070.65
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Number of shares of Common Stock 2,002,523
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Dated: December 28, 2000
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/s/
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Signature: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Complete the following for registration of shares of Common Stock, if they are
to be delivered, or Debentures, if they are to be issued, other than to and in
the name of the registered owner:
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Name
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Address
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Soc. Sec. or Tax I.D. No.
Schedule Of Assumed Liabilities
Schedule of Assigned Contracts