STOCK OPTION AGREEMENT
THIS AGREEMENT, effective this 12th day of November, 1998, is by and
between Biosynergy, Inc., an Illinois Corporation ("Grantor") and Xxxx X.
Suzuki ("Grantee").
WITNESSETH
1. Grant of Option. For valuable consideration, the receipt of which
is hereby acknowledged, Grantor hereby grants to Grantee the option ("Option")
to purchase all or a portion of 3,000,000 shares, as adjusted, of Grantor's
authorized but unissued no par common stock ("Shares") for the purchase price
of $.025 per Share, subject to the terms and conditions of this Agreement.
2. Exercise. The Option shall be exercisable after the effective
date of this Agreement and for a period of three years.
3. Exercise of Option. The Option may be exercised by Grantee
delivering notice to Grantor of Grantee's intent to exercise all or a portion
of the Option, in one or more transactions, with delivery of the purchase
price for the number of Shares purchased and a Stock Option Exercise Agreement
in form and substance as set forth in Exhibit A attached hereto. Grantor
shall, within a reasonable period of time after exercise of the Option,
deliver certificates evidencing the Shares purchased to Grantee.
4. Anti-Dilution Provision. In the event of a stock dividend, stock
split, merger or reclassification with respect to the Grantor's common stock
occurs during the one year period commencing on the effective date hereof, or
any extension thereof, the Option exercise price shall be proportionately
reduced or increased and the number of shares subject to the Option shall be
proportionately increased or decreased as appropriate to place the Grantee in
the same position as Grantee would have been if he had exercised the Option
immediately before the stock dividend, stock split, merger or
reclassification; provided, however, these adjustments shall not apply if the
adjustments will be less than $.001 per share.
5. Reservation of Shares. The Grantor shall reserve up to 3,000,000
shares of its authorized but unissued common stock for issuance and/or
delivery upon exercise of the Option. No fractional shares or script
representing fractional shares shall be issued upon exercise of the Option.
6. Violation of Law. The Option may not be exercised if its exercise
would violate any applicable state securities law, any registration under or
any requirements of the Securities Act of 1933, the Securities Exchange Act of
1934, the rules of an exchange on which the Shares are traded, any other law
of the State of Illinois, or any other federal law.
7. Unregistered Stock. Grantee acknowledges that the Shares are not
registered under the Securities Act of 1933, and that the Shares cannot be
transferred unless they are registered under the Act, or an exemption from
such registration is available and established to the satisfaction of the
Grantor and that any resale, transfer, or other distribution of the Shares may
only be made in conformity with Rule 144 of the Securities Act of 1933. The
Grantor may place a legend on the certificate or certificates evidencing the
Shares restricting the transfer of such Shares which may limit the ability of
Grantee to pledge, transfer or sell the Shares.
8. Invalidity of Transaction. In the event that the grant of the
Option or the transfer, sale or purchase of the Shares as provided herein
shall be determined to be invalid pursuant to any federal or state law, this
Agreement shall be null or void, and the parties hereto shall execute such
documents as may be necessary to reconvey the Shares, return to Grantee the
consideration for the Shares, and nullify this Agreement. In such event, the
parties shall incur the cost for such reconveyances as their interests may
appear.
9. Representations of Grantee. Grantee hereby represents and
warrants as follows: a) he can bear the economic risk of losing his entire
investment in Shares and can afford to hold the Shares for an indefinite
period of time; b) that he is an accredited investor as defined by the
Securities Act of 1933 and the regulations thereunder; c) he has received and
reviewed all documents, records and books pertaining to an investment in the
Shares which he deems necessary; d) he has had the opportunity to ask
questions of, and receive answers from, the officers and directors of the
Grantor concerning the terms of investment in the Shares and additional
information, to the extent it can be acquired without unreasonable effort or
expense, necessary to verify the accuracy of information provided by the
officers and directors of the Grantor; and e) that the Grantor has virtually
no profitable financial or operating history, and that Grantee understands the
Shares are a speculative investment which involves a high degree of risk of
loss by him of the entire investment in the Shares.
10. Restriction on Conveyances. During the term of this Agreement,
Grantor shall not issue, encumber, sell, transfer or otherwise convey the
Shares or any interest therein without the written consent of Grantee, which
may be withheld for any reason whatsoever.
11. Survival of Terms and Conditions. As mutually agreed by and
between the parties hereto, the terms and conditions herein contained shall
survive the exercise of the Option and shall extend to and be obligatory upon
the administrators, successors and assigns of the parties hereto.
12. Shareholder Approval. Notwithstanding anything herein to the
contrary, this Agreement is specifically subject to approval by the
Shareholders of the Grantor. The Grantor shall submit this Agreement to the
Shareholders of the Grantor for approval at the next meeting of such
Shareholders. In the event this Agreement is not approved by the Shareholders
as aforesaid, the Grantor shall repurchase from the Grantee all Shares
purchased by the Grantee by exercise of the Option within 30 days after the
Shareholders fail to approve this Agreement. The repurchase price for the
Shares shall be the purchase price paid by Grantee upon exercise of the Option
as set forth in Section 1 above, plus 10% of such purchase price for each year
(prorated for partial years) the Grantee was the owner of the Shares,
determined as of the date the Shareholders fail to approve this Agreement. In
this respect, Grantee agrees, warrants and covenants not to sell, transfer or
encumber the Shares purchased upon exercise of the Option until this Agreement
has been approved by the Shareholders, except upon the prior written consent
of the Grantor.
13. Notices. All notices herein required shall be in writing and
shall be served on the parties at the addresses last known to the party giving
notice. The mailing of a notice by registered or certified mail, return
receipt requested, shall be sufficient legal service of process.
14. Text to Control. The headings of sections are included solely
for convenience of reference. If any conflict between any heading and the
text of this Agreement exists, the text shall control.
15. Severability. Except as provided in Section 8, if any provision
of this Agreement is declared by any court of competent jurisdiction to be
invalid for any reason, such invalidity shall not affect the remaining
provisions. On the contrary, such remaining provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such
invalid provision had never been inserted in this Agreement.
16. Amendment. This Agreement may be amended, altered or revoked at
any time, in whole or in part, by filing with this Agreement a written
instrument setting forth such changes, signed by the parties hereto.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed on the day and year first written above.
BIOSYNERGY, INC.
/s/ XXXX X. SUZUKI /s/ 11/13/98 /s/ XXXX X. SUZUKI /s/ 11/13/98
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Xxxx X. Suzuki Date Xxxx X. Suzuki, President Date
ATTEST:
/s/ XXXXXX X. XXXXX /s/ 11/13/98
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Xxxxxx X. Xxxxx, Secretary Date
Exhibit A
STOCK OPTION EXERCISE AGREEMENT
Biosynergy, Inc.
0000 Xxxx Xxxxx Xxx.
Xxx Xxxxx Xxxxxxx, XX 00000
Gentlemen:
Pursuant to the Stock Option Agreement dated November 12, 1998 between
Biosynergy, Inc. (the "Company") and Xxxx X. Suzuki (the "Investor" or
"undersigned"), the Investor hereby exercises its option to
purchase shares of the Company's no par value common
stock ("Shares") at an option price of $.025 per share.
In connection with the issuance to the undersigned of Shares, the undersigned
hereby represent(s), understand(s) and acknowledge(s) that:
The Shares are not registered under the Securities Act of 1933, as amended
("1933 Act"), and that the sale to the undersigned is to be a private sale of
shares exempt under the applicable sections of the 1933 Act and/or applicable
rules and regulations promulgated thereunder; the undersigned is acquiring
such securities for investment for its own account, with no present intention
of dividing participation with others or selling or otherwise distributing
same; the Shares may be "Restricted Securities" as that term is defined in
Rule 144 as promulgated under the 1933 Act; if the Shares are restricted
securities they must be held indefinitely, unless they are registered under
the 1933 Act or an exception from such registration is available; the Shares
will contain substantially the following legend; "The securities represented
by this certificate may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Securities
Act of 1933 ("the Act"), or pursuant to an exemption from registration under
the Act, the availability of which is to be established to the satisfaction of
the issuer. The presentation of this stock certificate to the transfer agent
after (two years after purchase) shall be deemed a representation by the
record holder that he/she has been the beneficial owner of the securities for
at least two years and has not entered into any short sale, put or other
option transaction which would toll the holding period under Rule 144(d) and
therefore is free to sell the securities under Rule 144(k), provided however,
that the record holder is not an affiliate of the Company, which is to be
established to the satisfaction of the issuer"; the above legend on the
certificate will limit its value, including its value as collateral; the
Company will instruct its transfer agent of (or if none, designate on the
Company's records) such restrictions of the transfer of the Shares; the
undersigned is aware that only the Company can file a Registration Statement
or a Form 1-A notification under regulation A under the 1933 Act and that the
Company has no obligation to do so or to take steps necessary to make Rule
144 available to the undersigned; the undersigned is knowledgeable and
experienced in venture capital investments in general and, in particular, in
venture capital investments similar in nature to a purchase of the Shares of
the Company; the undersigned has such knowledge and experience in financial
and business matters and is capable of evaluating the merits and financial
and business matters and is capable of evaluating the merits and risks of an
investment in the Company; the undersigned has relied upon the advice of
counsel, accountants or other consultants as deemed necessary with regard to
the tax aspects, risks and other operations involved in the purchase of the
Shares; the undersigned has made, or caused to be made, such investigation of
the Company, its management, its financial condition and its operations
considered necessary and appropriate to enable it to make an informed
decision regarding the purchase of the Shares; the undersigned has
been presented with an opportunity to ask questions and receive answers from
directors and officers of the Company relating to the business and operations
of the Company and to obtain any additional information necessary to verify
the accuracy of the information made available to them; he has been given the
Company's latest Form 10K and/or Form 10Q; the undersigned is therefore
satisfied as to the present status and condition of such matters; the
undersigned has been presented with and understood the Company's business
plan, including, among other things, the nature and business of the Company
and its method of operation, financial reports, management and risk factors
associated with the Company's business; the undersigned can bare the economic
loss of any investment with regard to the Shares and can afford to hold the
Shares for an indefinite period of time; the undersigned has sufficient liquid
assets to make this investment and provide for his needs; the undersigned is
aware that the Shares constitute a speculative investment which involves a
high degree of risk of loss of any investment, and there can be no guarantee
of the amount of the funds available for distribution on liquidation or for
any other type of consideration flowing to the undersigned from the Company as
a result of owning the Shares, including dividends; the undersigned
understands that there is no guarantee of any dividends ever being paid, and
that the payment of dividends is within the discretion of the Board of
Directors of the Company; the undersigned understands that no promises have
been made concerning the subject of the transfer of Shares by the Company; and
the acknowledges that it understands the meaning and legal consequences of the
representations and warranties contained in this letter agreement, that the
Company and its directors, officers and agents are relying on the accuracy of
the representations not be permitted to purchase any of the Shares offered
hereby if any representation or warranty were known to be false. Accordingly,
the undersigned hereby agrees to indemnify and hold harmless the Company and
each of their directors, officers and agents from and against any and all
loss, damage or liability, including attorney's fees due to or arising out of
a breach of any representation or warranty of the undersigned contained in
this Agreement.
With such full understandings and acknowledgments, the undersigned does hereby
affirm the purchase of Shares, and delivers the purchase price of $ in
the form of advances to the company, with this Agreement. The undersigned
does further acknowledge the understanding of the terms and conditions of
this Agreement, and agrees to be bound thereby.
Sincerely,
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Signature Signature (Co-owner, if any)
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Print Name Print Name
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
Address Address (Residence)
--------------------------------- ---------------------------------
Social Security Number Social Security Number
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Telephone Telephone (Residence)
ACCEPTED THIS __________ DAY OF ________________, 199__.
BIOSYNERGY, INC. ATTEST:
By: _____________________________ ___________________________________
Xxxx X. Suzuki, President Xxxxxx X. Xxxxx, Secretary
