XXXXXX X. XXXXXXX (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 Xxxxxx X. Xxxxxxx ("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 tenns 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:
I. 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 an& 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 l0th 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 2-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. 9,700,000 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. Said price has been determined as the
reduction in purchase price by 300 Below, Inc. of the Technology in exchange
for the release of claims Seller had against 300 Below, Inc. concerning his
financial interest in a foreign joint venture with other principals of300
Below, Inc. and a release of an option to purchase 5% of the stock in 300
Below, Inc. Said releases were necessary as terms of the Option to Purchase
and Purchase Agreement between Seller and 300 Below, Inc.
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 PREP All 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 x.xxxx 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
6.2 Indemnification. Seller agrees to indemnify Buyer against all actual
losses, damages and expenses caused by (i) any material breach of this
Agreement or any materia] 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
anyone 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:
Xxxxxx X. Xxxxxxx Cryocon, Inc.
0000 Xxxxx 000 Xxxx 2250 North 0000 Xxxx
Xxxxxxxxxxxx, Xxxx 00000 Xxxxx, Xxxx 00000
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
Xxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
Buyer
Cryocon, Inc.
By: /s/ Xxxxx M Ritallick
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) (lx6), 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 5,865,913 (file, legal and certificate)
M. Licenses granted to other parties to perform Cryo-Accurizing
N. Certificate and Winners file
0. 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/ Xxxxx X. Rettalick
Authorized Agent
Cryocon, Inc.
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
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 HA YE
BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER.
CRYOCON, INC.
(A Utah Corporation)
10% Convertible Promissory Debenture Due January 3, 2003 Registered Owner:
Xxxxxx Xxxxxxx 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 0000 Xxxxx 0000 Xxxx, Xxxxx, Xxxx 00000; and Xxxxxx Xxxxxxx, or his
assigns (the "Holder"), with an address at 0000 Xxxxx 000 Xxxx- Xxxxxxxxxxxx,
Xxxx 00000.
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 ifno 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 non assessable 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 non assessable.
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 lithe
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 Rel2resentation. 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 non assessable 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 ofHolders.
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 ofDefault or event which with notice 'or lapse
of time or both would become an Event ofDefault has occurred and is
continuing.
G. Successors. The Company shall not, whether in a single transaction or
through a series ofrelated transactions, consolidate or merge with or into, or
sell, lease, conveyor 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.
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.
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
Xxxxxx X Xxxxxxx Cryocon, Inc.
0000 Xxxxx 000 Xxxx 2250 North 0000 Xxxx
Xxxxxxxxxxxx, Xxxx 00000 Xxxxx, Xxxx 00000
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/Xxxxx X. Retallcik
Authorized Representative
THE HOLDER:
By: /s/Xxxxxx Xxxxxxx
Xxxxxx X.Xxxxxxx
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 $ ________________________
Accrued interest to be converted $ ________________________
Number of shares of Common Stock _________________________
Dated: __________________________________
________________________________________________
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:
Name ______________________________________
___________________________________________
___________________________________________
Address
Soc. Sec. or Tax I.D. No. ______________________
