EXHIBIT 10.7
THIS OPTION MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT IN
COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS.
OPTION TO PURCHASE COMMON STOCK
Silverthorne Production Company, a Colorado corporation that is hereinafter
sometimes called "Company", for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, irrevocably grants unto
__________________, hereinafter called "Option Holder", the right to purchase
__________ shares ("Stock") of the Company's $.001 par value common stock
("Common Stock") subject to the terms and conditions of this Option as follows:
1) Exercise Price. The purchase price ("Exercise Price") for Stock purchased
pursuant to this Option is $0.46 per share which shall be paid in full at
the time of exercise. The Exercise Price shall be paid in cash at the time
of exercise except that the Option Holder may exercise this Option by
surrendering the right to exercise this Option for, or by delivering to the
Company for cancellation, such number of shares of the Company's Common
Stock that has a fair market value equal to or greater than the Exercise
Price of the number of shares of Stock for which this Option is being
exercised. The fair market value of a share of Common Stock shall be the
last closing sale price prior to the date of exercise of a share of Common
Stock on whatever trading market the Common Stock is traded at the time of
exercise or, if no trading market exists, such value as is determined in
good faith by the Board of Directors ("Board") of the Company.
2) Term and Restrictions. This Option shall immediately vest and shall expire
five (5) years from the date hereof. This Option may not be sold,
transferred, assigned or hypothecated except in compliance with federal and
state securities laws.
3) Dilution or Other Adjustments.
a) Adjustments of Exercise Price for Stock Splits, Reverse Stock Splits
and Stock Dividends. If the outstanding shares of Common Stock shall
be subdivided (split) or combined (reverse split) , by
reclassification or otherwise, or if any dividend payable on the
Common Stock in shares of Common Stock shall occur at the time that
any portion of this Option remains unexercised in whole or in part,
the Exercise Price and the number of shares of Stock available for
purchase pursuant to the exercise of this Option immediately prior to
such subdivision, combination or dividend shall be proportionately
adjusted as follows:
i) If a net increase shall have been effected in the number of
outstanding shares of the Company's Common Stock, the number of
shares of Stock underlying this Option shall be proportionally
increased and the cash consideration payable per share of Stock
shall be proportionately reduced; and
ii) If a net reduction shall have been effected in the number of
outstanding shares of the Company's Common Stock, the shares of
Stock underlying this Option shall be proportionately reduced and
the cash consideration payable per share of Stock shall be
proportionately increased
b) Adjustment for Capital Reorganizations. If at any time there shall be
a capital reorganization or reclassification of the Company's Common
Stock or a merger or consolidation of the Company with or into another
corporation (other than a merger after which the Company is the
continuing corporation and which does not result in any change of
outstanding shares of Common Stock), or the sale or lease of all or
substantially all of the Company's properties and assets to any other
entity or person, then, as part of such reorganization,
reclassification, merger, consolidation, sale or lease, the Company,
as a condition precedent to such transactions, shall provide, or cause
effective provision to be made so, that the Option Holder shall
thereafter be entitled to receive on exercise of this Option during
the exercise period specified in the Option and upon payment of the
Exercise Price of this Option, as adjusted to the extent required
under (a) above, the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting
from such merger or consolidation, to which a holder of the Stock
deliverable on exercise of this Option would have been entitled on
such capital reorganization, reclassification, merger, consolidation
or sale if this Option had been exercised immediately before such
capital reorganization, reclassification, merger, consolidation, sale
or lease. In any such case, appropriate adjustment, as determined in
good faith by the Board, shall be made in the application of the
provisions of this Option with respect to the rights and interests of
the Option Holder after the reorganization, reclassification, merger,
consolidations, sale or lease to assure that the provisions of this
Option, including all adjustments to the Exercise Price of this Option
then in effect and the number of shares which may be purchased upon
exercise of this Option, but without any change in the aggregate
Exercise Price, shall be applicable after any such transactions as
near as reasonably they may be, in relation to any shares or other
securities or property deliverable after such event upon exercise of
this Option. If, as a result of an adjustment made pursuant to this
subsection (b), the Option Holder of this Option that is thereafter
exercised shall become entitled to receive shares of two or more
classes of capital stock of the Company or any other corporation or
entity, the board of directors (or other governing body if there be no
board of directors) thereof (whose determination shall be conclusive
and shall be described in a statement filed with the Company) shall
determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock. If any subsequent
adjustments to the Exercise Price are made pursuant to this Section 3,
such adjustments shall be made separately to the portion of the
Exercise Price so allocated to each of such classes of capital stock.
The foregoing provisions of this subsection (b) similarly apply to
successive reclassifications, consolidations, mergers, sales or
leases.
c) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 3, the Company, at its
expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Option Holder a
certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which adjustment or readjustment is based.
The Company shall, upon the written request, at any time, of the
Option Holder, furnish or cause to be furnished to the Option Holder a
like certificate setting forth:
i) such adjustments or readjustments;
ii) the Exercise Price of this Option at the time in effect; and
iii) the number of shares of Stock and the amount, if any, of other
property that at the time would be received upon the exercise of
this Option.
d) Notices of Record Date. If (i) the Company establishes a record date
to determine the holders of any class of securities for the purpose of
determining who is entitled to receive any dividend or other
distribution, (ii) the Company shall offer to the holders of Common
Stock for subscription or purchase by them of any shares of stock of
any class or any other rights, or (iii) any capital reorganization of
the Company, reclassification of the capital stock of the Company,
consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company or dissolution, liquidation or
winding up of the Company ("Certain Events") shall be effected, the
Company shall mail to the Option Holder at least ten (10) days prior
to the date specified for the taking of (A) record or (B) the proposed
action, a notice specifying the proposed action to be taken and
stating the date (1) of record for any such dividend or distribution
or (2) when any such Certain Events are to be consummated and the
date, if any, to be fixed as to when the holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon the completion of any
such Certain Events.
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4) Manner of Exercise. This Option may be exercised in whole or in part at any
time and from time to time upon surrender by the Option Holder of this
Option and by the delivery of written notice to any officer or director of
the Company other than the Option Holder together with payment in full for
the number of shares of Stock purchased pursuant to such exercise. If this
Option is exercised in part, it shall be exercised for 1,000 shares of
Stock, or multiples thereof. The notice (i) shall state the election to
exercise this Option, (ii) shall state the number of shares of Stock in
respect of which this Option is being exercised, (iii) shall contain such
representations and agreements concerning the Option Holder's investment
intent with respect to such shares of Stock being purchased pursuant to the
exercise of this Option as shall be satisfactory to the Company's counsel,
and (iv) shall be signed by the Option Holder. The shares of Stock so
purchased shall be deemed to be issued by the close of business on the date
on which this Option is exercised even though the stock certificate or
certificates evidencing such shares of Stock in the name of the Option
Holder may not be issued for a reasonable time after the date of such
exercise. The Option Holder shall not have the right to dividends or other
rights of a shareholder with respect to the Stock subject to this Option
until the Option Holder has given written notice of exercise of the Option
Holder's Option and paid in full for such Stock.
5) Representations of Option Holder. The Option Holder, by the acceptance
hereof, represents and acknowledges that because of the Option Holder's
relationship with the Company, the Option Holder has available full
information concerning the Company's affairs. Further, unless the Stock is
covered by a currently effective Registration Statement filed under the
Securities Act of 1933, the Option Holder agrees that before the Option
Holder purchases any Stock pursuant to this Option, the Option Holder will
represent to the Company in writing that such Stock is being purchased for
purposes other than of distribution, that the Stock will constitute
restricted securities as defined in Rule 144 promulgated pursuant to the
Securities Act of 1933, as amended, and the Option Holder agrees that the
stock certificate evidencing such Stock may be stamped with a legend
substantially as follows:
"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 Company."
6) Reservation of Common Stock, Payment of Fees and Registration Rights. The
Company shall at all times during the duration of this Option reserve and
keep available such number of shares of its Common Stock as will be
sufficient to issue the number of shares of Stock required to be issued
upon the exercise of this Option, shall pay all original issue and transfer
taxes with respect to the issue and transfer of Stock pursuant hereto and
shall pay all of the fees and expenses necessarily incurred in connection
with the exercise hereof. The Company agrees to file a registration
statement and use its best efforts to cause such registration statement to
be declared effective, registering the Stock underlying this Option for
resale and agrees to keep such registration statement current during the
term of this Option.
7) Amendments. This Option may not be amended, altered, or discontinued except
to the extent necessary to make the adjustments as provided in Section 3
hereof, which would impair the rights of the Option Holder under this
Option unless the Option Holder consents in writing to such amendment,
alteration or discontinuation.
8) Loss of Option. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Option, and upon surrender for cancellation of this Option if it is
mutilated, the Company shall make and deliver a new Option containing the
same terms and conditions as set forth in and dated as of such cancellation
in lieu of, this Option, provided, however, that the Company shall receive
such indemnity or security as the Board of Directors shall deem reasonably
satisfactory to it in the case of the loss, theft, or destruction of this
Option and the Option Holder shall have reimbursed the Company for all
reasonable expenses incidental to such loss, theft, destruction or
mutilation in effecting the issuance of such new Option.
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9) Binding Nature. This Option shall be binding upon any successors or assigns
of the Company.
10) Governing Law. This Option shall be construed in accordance with and
governed by the laws of the state of Colorado.
11) Withholding Tax. To the extent that the exercise of this Option results in
compensation income to the Option Holder for federal or state income tax
purposes, the Option Holder shall deliver to the Company at the time of
such exercise such amount of money or shares of Common Stock as the Company
may require to meet its obligations under applicable laws or regulations,
and, if the Option Holder fails to do so, the Company is authorized to
withhold from any cash or stock remuneration then or thereafter payable to
Option Holder any tax required to be withheld as a result of such
compensation income. The Company is further authorized in its discretion to
satisfy such withholding requirement out of any cash or Stock distributable
to Option Holder upon such exercise.
Dated: August 25, 1999
SILVERTHORNE PRODUCTION COMPANY,
a Colorado Corporation
By:
-------------------------
Jim L. Boswell, President
TRIAD INVESTMENTS, LLC
Agreed to:
--------------------------
Bertrand T. Ungar, Manager
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