Exhibit 10.2
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THE SECURITIES EVIDENCED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
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OPTION TO PURCHASE COMMON
STOCK
OF
GEM SOLUTIONS,
Inc .
Void after November 30,
2008
This
certifies that, for value received, Donald R. Innis
(“Holder”) is entitled, subject to the terms set forth
below, to purchase from GeM Solutions, Inc. , a Delaware
corporation (the “Company”), shares of the common
stock, $.001 par value per share, of the Company (“Common
Stock”), as constituted on the date hereof, with the Notice
of Exercise attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or as otherwise
provided in Section 3 hereof, at the Exercise Price then in effect.
The number, character and Exercise Price of the shares of Common
Stock issuable upon exercise hereof are subject to adjustment as
provided herein.
1.
Term of Option . This Option shall be exercisable, in whole
or in part, during the term commencing on the Option Issue Date and
ending at 5:00 p.m. EST on November 30, 2008 (the “Option
Expiration Date”) and shall be void thereafter.
2.
Number of Shares, Exercise Price and Vesting Provisions
.
2.1
Number of Shares . The number of shares of Common Stock
which may be purchased pursuant to this Option shall be 250,000
shares (the “Shares”), subject, however, to adjustment
pursuant to Section 11 hereof.
2.2
Exercise Price . The Exercise Price at which this Option, or
portion thereof, may be exercised shall be $0.25 per Share,
subject, however, to adjustment pursuant to Section 11
hereof.
3.
Exercise of Option .
3.1
Payment of Exercise Price . Subject to the terms hereof, the
purchase rights represented by this Option are exercisable by the
Holder in whole or in part, at any time, or from time to time, by
the surrender of this Option and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the
office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the Company)
accompanied by payment of the Exercise Price in full (i) in cash or
by bank or certified check for the Shares with respect to which
this Option is exercised; (ii) by delivery to the Company of shares
of the Company’s Common Stock having a Fair Market Value (as
defined below) equal to the aggregate Exercise Price of the Shares
being purchased which Holder is the record and beneficial owner of
and which have been held by the Holder for at least six (6) months;
provided , however , that such method of payment is
then permitted under applicable law; (iii) if the sale of the
Shares is covered by an effective registration statement, by
delivering to the Company a Notice of Exercise together with an
irrevocable direction to a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), to sell a sufficient portion of the Shares and deliver
the sales proceeds directly to the Company to pay the Exercise
Price; (iv) by set off against any amounts owed to the Holder by
the Company; (v) by reducing the number of shares of Common Stock
otherwise issuable under the Option to the Holder upon the exercise
of the Option by a number of shares of Common Stock having a Fair
Market Value (as defined below) equal to the aggregated exercise
price; provided , however , that such method of
payment is then permitted under applicable law; (vi) to the extent
permitted by applicable law, by: (A) delivery of a promissory note
of the Holder to the Company on terms determined by the Board of
Directors (the “Board”), or (B) payment of such other
lawful consideration as the Board may determine; or (vii) by any
combination of the procedures set forth in subsections (i), (ii),
(iii), (iv), (v), and (vi) of this Section 3.1.
3.2
Fair Market Value. If
previously owned shares of Common Stock are tendered as payment of
the Exercise Price, the value of such shares shall be the
“Fair Market Value” of such shares on the trading date
immediately preceding the date of exercise. For the purpose of this
Agreement, the “Fair Market Value” shall be:
(a)
If the Common Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System
(“ NASDAQ ”), the Fair Market Value on any given
date shall be the average of the highest bid and lowest asked
prices of the Common Stock as reported for such date or, if no bid
and asked prices were reported for such date, for the last day
preceding such date for which such prices were reported;
(b)
If the Common Stock is admitted to trading on a United States
securities exchange, the Fair Market Value on any date shall be the
closing price reported for the Common Stock on such exchange or
system for such date or, if no sales were reported for such date,
for the last day preceding such date for which a sale was
reported;
(c)
If the Common Stock is traded in the over-the-counter market and
not on any national securities exchange, the Fair Market Value
shall be the average of the mean between the last bid and ask
prices per share, as reported by the National Quotation Bureau,
Inc., or an equivalent generally accepted reporting service, or if
not so reported, the average of the closing bid and asked prices
for a share as furnished to the Company by any member of the
National Association of Securities Dealers, Inc., selected by the
Company for that purpose; or
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(d)
If the Fair Market Value of the Common Stock cannot be determined
on the basis previously set forth in this definition on the date
that the Fair Market Value is to be determined, the Board of
Directors of the Company shall in good faith determine the Fair
Market Value of the Common Stock on such date.
If
the tender of previously owned shares would result in an issuance
of a whole number of Shares and a fractional Share of Common Stock,
the value of such fractional share shall be paid to the Company in
cash or by check by the Holder.
3.3
Exercise Date; Delivery of Certificates. This Option shall
be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided
above, and Holder shall be treated for all purposes as the holder
of record of such Shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event
within ten (10) days thereafter, the Company at its expense shall
issue and deliver to the Holder a certificate or certificates for
the number of Shares issuable upon such exercise. In the event that
this Option is exercised in part, the Company at its expense will
execute and deliver a new Option of like tenor exercisable for the
number of shares for which this Option may then be
exercised.
4.
No Fractional Shares or Scrip . No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Option. In lieu of any fractional share to which
the Holder would otherwise be entitled, the Company shall make a
cash payment equal to the Exercise Price multiplied by such
fraction.
5.
Replacement of Option . On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Option and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the case
of mutilation, on surrender and cancellation of this Option, the
Company at its expense shall execute and deliver, in lieu of this
Option, a new Option of like tenor and amount.
6.
Rights of Stockholder . Except as otherwise contemplated
herein, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Option
shall have been exercised as provided herein.
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7.
Transfer of Option .
7.1.
Non-Transferability . This Option shall not be assigned,
transferred, pledged or hypothecated in any way, nor subject to
execution, attachment or similar process, otherwise than by will or
by the laws of descent and distribution. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of an execution,
attachment, or similar process upon the Option, shall be null and
void and without effect.
7.2.
Compliance with Securities Laws; Restrictions on Transfers.
In addition to restrictions on transfer of this Option and Shares
set forth in Section 7.1 above.
(a)
The Holder of this Option, by acceptance hereof, acknowledges that
this Option and the Shares to be issued upon exercise hereof are
being acquired solely for the Holder’s own account and not as
a nominee for any other party, and for investment (unless such
shares are subject to resale pursuant to an effective prospectus),
and that the Holder will not offer, sell or otherwise dispose of
any Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable
federal and state securities laws. Upon exercise of this Option,
the Holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the Shares of Common
Stock so purchased are being acquired solely for the Holder’s
own account and not as a nominee for any other party, for
investment (unless such shares are subject to resale pursuant to an
effective prospectus), and not with a view toward distribution or
resale.
(b)
Neither this Option nor any share of Common Stock issued upon
exercise of this Option may be offered for sale or sold, or
otherwise transferred or sold in any transaction which would
constitute a sale thereof within the meaning of the 1933 Act,
unless (i) such security has been registered for sale under the
1933 Act and registered or qualified under applicable state
securities laws relating to the offer and sale of securities; or
(ii) exemptions from the registration requirements of the 1933 Act
and the registration or qualification requirements of all such
state securities laws are available and the Company shall have
received an opinion of counsel that the proposed sale or other
disposition of such securities may be effected without registration
under the 1933 Act and would not result in any violation of any
applicable state securities laws relating to the registration or
qualification of securities for sale, such counsel and such opinion
to be satisfactory to the Company. The Holder of this Option, by
acceptance hereof, acknowledges that the Company has no obligation
to file a registration statement with the Securities and Exchange
Commission or any state securities commission to register the
issuance of the Shares upon exercise hereof or the sale or transfer
of the Shares after issuance.
(c)
All Shares issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in
addition to any legend required by state securities
laws).
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THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED
OF WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO AN EXEMPTION THEREFROM.
(d)
Holder recognizes that investing in the Option and the Shares
involves a high degree of risk, and Holder is in a financial
position to hold the Option and the Shares indefinitely and is able
to bear the economic risk and withstand a complete loss of its
investment in the Option and the Shares. The Holder is a
sophisticated investor and is capable of evaluating the merits and
risks of investing in the Company. The Holder has had an
opportunity to discuss the Company’s business, management and
financial affairs with the Company’s management, has been
given full and complete access to information concerning the
Company, and has utilized such access to its satisfaction for the
purpose of obtaining information or verifying information and has
had the opportunity to inspect the Company’s operation.
Holder has had the opportunity to ask questions of, and receive
answers from the management of the Company (and any person acting
on its behalf) concerning the Option and the Shares and the
agreements and transactions contemplated hereby, and to obtain any
additional information as Holder may have requested in making its
investment decision.
(e)
Holder acknowledges and represents: (i) that he has been afforded
the opportunity to review and is familiar with the business
prospects and finances of the Company and has based his decision to
invest solely on the information contained therein and has not been
furnished with any other literature, prospectus or other
information except as included in such reports; (ii) Holder is
acquiring the Options and Shares for investment purposes only and
not with a view toward distribution; (iii) he understands that no
federal or state agency has approved or disapprove
