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EXHIBIT 1
STOCK OPTION AGREEMENT
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June 8, 2000
Andrew F. Cauthen
Chief Executive Officer
AMERICAN MILLENNIUM CORPORATION, INC.
1010 Tenth Street
Suite 100
Golden, CO 80401
Re: Letter Agreement / Stock Purchase Options
Dear Mr. Cauthen:
The purpose of this letter is to set forth the agreement (hereinafter
referred to as this "Letter Agreement") among American Millennium Corporation,
Inc., a New Mexico corporation (hereinafter referred to as "the Company") and
Peter A. Jankowski, a resident of the State of Colorado, Patrick Galvin, Earl L.
Jennings, Jr., Charles E. McDowell, and Kurt E. Starnes, all residents of the
State of California, and Steven W. Phillips, Esq., a resident of the State of
Arizona (all six of which individuals hereinafter collectively referred to as
"Optionees") with respect to the acquisition of certain options to acquire
shares of the common capital stock of the Company by Optionees, as set forth
herein.
The Company and Optionees, upon execution of this Letter Agreement and in
exchange for $10.00 and other good and valuable consideration, each to the
other, in hand paid, the receipt and sufficiency of which is hereby acknowledged
by the Company and Optionees, do hereby agree as follows:
1. First Stock Option. Upon the terms and conditions of this section
1, the Company shall grant Optionees the right to purchase shares of the
Company's common stock (the "First Stock Option"). The First Stock Option shall
terminate and shall be of no force or effect unless the Optionees pay to the
Company a non-refundable option fee of One Hundred Thousand Dollars ($100,000)
(the "First Option Fee"), within thirty (30) days from the Effective Date
hereof. The First Option Fee shall be paid by bank wire or cashiered funds.
1.1 Upon the payment of the First Option Fee by the Optionees to
the Company within thirty (30) days from the Effective Date, the Company shall
grant Optionees the right to purchase One Million Shares (1,000,000) shares of
the common capital stock of the Company, as adjusted for all stock splits or
stock dividends from and after the date hereof, if any, (hereinafter referred to
as the "First Option Shares").
1.2 The First Stock Option shall be exercisable for a period of
one hundred eighty (180) days commencing on the date of the payment of the First
Option Fee.
1.3 The total purchase price for the First Option Shares shall
be, in the aggregate, One Million Dollars ($1,000,000.00) (the "First Exercise
Price"). The per share purchase price for the First Option Shares is One and
no/100 Dollars ($1.00). The First Option Fee shall be credited to the First
Exercise Price (i.e., upon Optionees purchase of the optioned shares, Nine
Hundred Thousand Dollars [$900,000.00] would be payable). The First Option
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Fee is non-refundable and if the First Stock Option is not exercised, the First
Option Fee shall be retained in full by the Company.
1.4 If all or any part of the First Option Shares are purchased
within ninety (90) days of the Effective Date hereof, each share purchased shall
entitle the purchaser(s) thereof to the simultaneous issuance by the Company of
warrants ("Warrants") to purchase one common share (i.e., a maximum total of an
additional One Million [1,000,000] common shares), as adjusted for all stock
splits or stock dividends from and after the date hereof, if any. The Warrants
shall be for a term of three years commencing on the Effective Date hereof and
shall be exercisable at a price of One and 25/100 Dollars ($1.25) per share if
exercised during the first Warrant year, Two and 25/100 Dollars ($2.25) per
share if exercised during the second Warrant year and Three and 25/100 Dollars
($3.25) per share if exercised during the third Warrant year. The Warrants shall
be in the form of and have such benefits and restrictions as set forth in
Exhibit "A" attached hereto.
1.5 The First Option Shares shall have certain restrictions as
further set forth herein.
2. Second Stock Option. Upon the terms and conditions of this
section 2, the Company shall grant Optionees the right to purchase shares of the
Company's common stock (the "Second Stock Option"). The Second Stock Option
shall terminate and shall be of no force or effect unless the Optionees pay to
the Company a non-refundable option fee of One Hundred Thousand Dollars
($100,000) (the "Second Option Fee") within ninety (90) days from the date of
the payment of the First Option Fee described in section 1 above. The Second
Option Fee shall be paid by bank wire or cashiered funds.
2.1 Upon the payment of the Second Option Fee by the Optionees to
the Company within ninety (90) days from the date of the payment of the First
Option Fee, the Company shall grant Optionees the right to purchase One Million
(1,000,000) shares of the common capital stock of the Company, as adjusted for
all stock splits or stock dividends from and after the date hereof, if any,
(hereinafter referred to as the "Second Option Shares").
2.2 The Second Stock Option shall be exercisable for a period of
one hundred eighty (180) days commencing on the date of the payment of the
Second Option Fee.
2.3 The total purchase price for the Second Option Shares shall
be, in the aggregate, One Million Dollars ($1,500,000) (the "Second Exercise
Price"). The per share purchase price for the Second Option Shares is One and
50/100 Dollars ($1.50). The Second Option Fee shall be credited to the Second
Exercise Price (i.e., upon Optionees purchase of the optioned shares, One
Million Four Hundred Thousand Dollars [$1,400,000] would be payable). The Second
Option Fee is non-refundable and if the Second Stock Option is not exercised,
the Second Option Fee shall be retained in full by the Company.
2.4 If all or any part of the Second Option Shares are purchased
within ninety (90) days of the payment of the Second Option Fee, each share
purchased shall entitle the purchaser(s) thereof to the simultaneous issuance by
the Company of warrants ("Warrants") to purchase one common share (i.e., a
maximum total of an additional One Million [1,000,000] common shares), as
adjusted for all stock splits or stock dividends from
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and after the date hereof, if any. The Warrants shall be for a term of three
years commencing on the date of the payment of the Second Option Fee and shall
be exercisable at a price of One and 75/100 Dollars ($1.75) per share if
exercised during the first Warrant year, Two and 75/100 Dollars ($2.75) per
share if exercised during the second Warrant year and Three and 75/100 Dollars
($3.75) per share if exercised during the third Warrant year. The Warrants shall
be in the form of and have such benefits and restrictions as set forth in
Exhibit "A" attached hereto.
2.5 The Second Option Shares shall have certain restrictions as
further set forth herein.
3. Third Stock Option. Upon the terms and conditions of this section
3, the Company shall grant Optionees the right to purchase shares of the
Company's common stock (the "Third Stock Option"). The Third Stock Option shall
terminate and shall be of no force or effect unless the Optionees pay to the
Company a non-refundable option fee of One Hundred Thousand Dollars ($100,000)
(the "Third Option Fee") within ninety (90) days from the date of the payment of
the Second Option Fee described in section 2 above. The Third Option Fee shall
be paid by bank wire or cashiered funds.
3.1 Upon the payment of the Third Option Fee by the Optionees to
the Company within ninety (90) days from the date of the payment of the Second
Option Fee, the Company shall grant Optionees the right to purchase One Million
(1,000,000) shares of the common capital stock of the Company, as adjusted for
all stock splits or stock dividends from and after the date hereof, if any,
(hereinafter referred to as the "Third Option Shares").
3.2 The Third Stock Option shall be exercisable for a period of
one hundred eighty (180) days commencing on the date of the payment of the Third
Option Fee.
3.3 The total purchase price for the Third Option Shares shall
be, in the aggregate, Two Million Dollars ($2,000,000) (the "Third Exercise
Price"). The per share purchase price for the Third Option Shares is Two and
no/100 Dollars ($2.00). The Third Option Fee shall be credited to the Third
Exercise Price (i.e., upon Optionees purchase of the optioned shares, One
Million Nine Hundred Thousand Dollars [$1,900,000] would be payable). The Third
Option Fee is non-refundable and if the Third Stock Option is not exercised, the
Third Option Fee shall be retained in full by the Company.
3.4 If all or any part of the Third Option Shares are purchased
within ninety (90) days of the payment of the Third Option Fee, each share
purchased shall entitle the purchaser(s) thereof to the simultaneous issuance by
the Company of warrants ("Warrants") to purchase one common share (i.e., a
maximum total of an additional One Million [1,000,000] common shares), as
adjusted for all stock splits or stock dividends from and after the date hereof,
if any. The Warrants shall be for a term of three years commencing on the date
of the payment of the Third Option Fee and shall be exercisable at a price of
Two and 25/100 Dollars ($2.25) per share if exercised during the first Warrant
year, Three and 25/100 Dollars ($3.25) per share if exercised during the second
Warrant year and Four and 25/100 Dollars ($4.25) per share if exercised during
the third Warrant year. The Warrants shall be in the form of and have such
benefits and restrictions as set forth in Exhibit "A" attached hereto.
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3.5 The Third Option Shares shall have certain restrictions as
further set forth herein.
4. Fourth Stock Option. Upon the terms and conditions of this
section 4, the Company shall grant Optionees the right to purchase shares of the
Company's common stock (the "Fourth Stock Option"). The Fourth Stock Option
shall terminate and shall be of no force or effect unless the Optionees pay to
the Company a non-refundable option fee of One Hundred Thousand Dollars
($100,000) (the "Fourth Option Fee") within ninety (90) days from the date of
the payment of the Third Option Fee described in section 3 above. The Fourth
Option Fee shall be paid by bank wire or cashiered funds.
4.1 Upon the payment of the Fourth Option Fee by the Optionees to
the Company within ninety (90) days from the date of the payment of the Third
Option Fee, the Company shall grant Optionees the right to purchase One Million
(1,000,000) shares of the common capital stock of the Company, as adjusted for
all stock splits or stock dividends from and after the date hereof, if any,
(hereinafter referred to as the "Fourth Option Shares").
4.2 The Fourth Stock Option shall be exercisable for a period of
one hundred eighty (180) days commencing on the date of the payment of the
Fourth Option Fee.
4.3 The total purchase price for the Fourth Option Shares shall
be, in the aggregate, Two Million Five Hundred Thousand Dollars ($2,500,000)
(the "Fourth Exercise Price"). The per share purchase price for the Fourth
Option Shares is Two and 50/100 Dollars ($2.50). The Fourth Option Fee shall be
credited to the Fourth Exercise Price (i.e., upon Optionees purchase of the
optioned shares, Two Million Five Hundred Thousand Dollars [$2,500,000] would be
payable). The Fourth Option Fee is non-refundable and if the Fourth Stock Option
is not exercised, the Fourth Option Fee shall be retained in full by the
Company.
4.4 If all or any part of the Fourth Option Shares are purchased
within ninety (90) days of the payment of the Fourth Option Fee, each share
purchased shall entitle the purchaser(s) thereof to the simultaneous issuance by
the Company of warrants ("Warrants") to purchase one common share (i.e., a
maximum total of an additional One Million (1,000,000) common shares), as
adjusted for all stock splits or stock dividends from and after the date hereof,
if any. The Warrants shall be for a term of three years commencing on the date
of the payment of the Fourth Option Fee and shall be exercisable at a price of
Three and 25/100 Dollars ($3.25) per share if exercised during the first Warrant
year, Four and 25/100 Dollars ($4.25) per share if exercised during the second
Warrant year and Five and 25/100 Dollars ($5.25) per share if exercised during
the third Warrant year. The Warrants shall be in the form of and have such
benefits and restrictions as set forth in Exhibit "A" attached hereto.
4.5 The Fourth Option Shares shall have certain restrictions as
further set forth herein.
5. Rule 144 Restrictions. The First Option Shares, the Second Option
Shares, the Third Option Shares, and the Fourth Option Shares (collectively the
"Option Shares") and shares purchased by the exercise of Warrants, if any, shall
be "restricted securities" as such term is defined in Rule 144 ("Rule 144")
promulgated under the Securities Act of 1933, as
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amended, ("The Securities Act") and the certificates representing such
securities shall bear a legend as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAW OF ANY STATE. NO TRANSFER OF THIS CERTIFICATE OR ANY
INTEREST HEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE LAWS OF SUCH STATES UNDER WHOSE LAWS A
TRANSFER OF SECURITIES WOULD BE SUBJECT TO A REGISTRATION REQUIREMENT,
UNLESS THE COMPANY AND ITS COUNSEL HAVE RECEIVED A SATISFACTORY OPINION
OF COUNSEL THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE
ACT OR THE SECURITIES LAWS OF SUCH STATES."
6. Registration Rights. The shares purchased by Optionees upon the
exercise of the Options or the exercise of Warrants shall have the registration
rights provided for in this section 6. Any and all shares purchased upon the
exercise of the Options or Warrants are hereafter referred to as the
"Registrable Stock" and the record owners of such Registrable Stock are
hereafter referred to as the "Holders".
6.1 Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act and the registration form
to be used may be used for the registration of any of the Registrable
Stock in connection with the resale thereof by the Holders (a "Piggyback
Registration"), the Company will (i) give no less than fifteen (15) days
prior written notice to all Holders of its intention to effect such a
registration (the "Registration Notice"), and (ii) include in such
registration all Registrable Stock issued prior to the date fifteen (15)
days following the date of the Registration Notice in accordance with
the priorities set forth in Sections 6.3 and 6.4 below. The obligations
of the Company to register a particular share of Registrable Stock shall
expire on the date which is two (2) years after such share of
Registrable Stock was issued to a Holder provided that the Company has
filed all reports required to be filed by it pursuant to the Securities
Act and the Securities Exchange Act of 1934, as amended, and has taken
such other action as any Holder may reasonably request, all to the
extent required to enable Holders to sell Registrable Stock pursuant to
Rule 144 adopted by the Securities and Exchange Commission ("SEC") (as
such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the SEC.
6.2 Piggyback Expenses. All expenses incident to the Company's
performance of or compliance with this Section 6, including, without
limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions relating to
Registrable Stock) and other persons or entities retained by the Company
in connection with any Piggyback Registration will be paid by the
Company. Holders shall pay for fees and
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disbursements of counsel retained by Holders (or any of them) and, if
the Piggyback Registration is an underwritten offering, shall pay all
underwriting discounts and commissions relating to the sale of
Registrable Stock.
6.3 Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company and the managing underwriters advise the Company in writing that
in their opinion the number of securities to be included in such
registration exceeds the number which can be sold in such offering, the
Company will include in such registration (i) first, the securities that
the Company proposes to sell and Registrable Stock prorata among the
Company and the Holders on the basis of the number of shares which the
Company proposes to register and the number of shares of Registrable
Stock issued to Holders prior to the date of the Registration Notice;
provided, however, that in no event will the Registrable Stock issued to
the Holders prior to the date of the Registration Notice exceed forty
percent (40%) of the securities being sought for underwritten primary
registration if the Company is unable to register all of the securities
for which the Company sought underwritten primary registration.
6.4 Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities and the managing underwriters advise
the Company in writing that in their opinion the number of securities to
be included in such registration exceeds the number which can be sold in
such offering, the Company will include in such registration (i) first,
the Registrable Stock of the Holders acquired pursuant to this Letter
Agreement prior to the date of the Registration Notice prorata among the
Holders, (ii) second, the securities requested to be included therein by
the other holders (other than the Holders) requesting such registration,
and (iii) third, the other securities requested to be included in such
registration, if any.
6.5 Mandatory Registration. If Holders purchase all of the First
Option Shares, the Company hereby agrees, notwithstanding any provision
herein to the contrary, to (i) file a registration statement relating to
all such First Option Shares purchased no later than ninety (90) days
after the date the last of said First Option Shares are purchased by the
Holders (the "Mandatory Registration") and (ii) register all additional
Second Option Shares, Third Option Shares and Fourth Option Shares and
shares purchased by the Holders by the exercise of Warrants, if any,
purchased prior to the date of the filing of said Mandatory
Registration.
6.6 Selection of Underwriters. The Holders shall have no right
to select or participate in the selection of any investment banker(s) or
manager(s) to administer any offering.
7. Holdback Agreements.
7.1 In connection with any underwritten Piggyback Registration,
each Holder agrees not to effect any public sale or distribution of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7)
days prior to and the ninety (90) day period beginning on
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the effective date of any such underwritten Piggyback Registration in
which any shares of Registrable Stock are included, unless the
underwriters managing the registered public offering otherwise agree and
such sale or distribution otherwise complies with Regulation *240.10b-6
of the Exchange Act; provided, however, that the Holders may elect, at
their option, to not have the underwriter sell the Registrable Stock the
Holders have registered and to otherwise determine the method and timing
of the sale of the securities so registered without regard to the
holdback provisions hereof.
7.2 It is expressly understood that the rights of any Optionee
hereunder are expressly subject to any agreements by and between said
Optionee and the Company concerning the transfer or sale of any Option
Shares and shares purchased by the exercise of Warrants, if any,
(including Sections 10 and 11 below), or any interest therein, whether
contained herein, in the Company's articles of incorporation on file
prior hereto or other constituent documents on file and specifically
disclosed to Optionees by the Company prior to the Effective Date
hereof, or otherwise on file and specifically disclosed to Optionees by
the Company prior to the Effective Date hereof.
8. Registration Procedures. Whenever Registrable Stock will be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Stock in accordance
with the intended method of disposition thereof, and pursuant thereto, the
Company will as expeditiously as possible:
8.1 Prepare and file with the SEC a registration statement filed
pursuant to the Securities Act on Form S-1, S-2, S-3, SB-1 or SB-2 or
any similar registration statement pursuant to which Registrable Stock
may be registered (a "Registration Statement") with respect to such
Registrable Stock and use its best efforts to cause such Registration
Statement to become effective (provided that, no less than ten (10) days
before filing a Registration Statement or prospectus or any amendments
or supplements thereto, the Company will furnish to the counsel or
counsels of Optionees copies of all such documents proposed to be
filed);
8.2 Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than two (2) years and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement;
8.3 Furnish to each Holder such number of copies of such
Registration Statement, each amendment and supplement thereto, the
prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents as such Holder may
reasonably request in order to facilitate the disposition of the
Registrable Stock owned by such Holder;
8.4 Use its best efforts to register or qualify such Registrable
Stock under such other securities or blue sky laws of such jurisdictions
as any Holder reasonably requests and do any and all other acts and
things which may be reasonably necessary
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or advisable to enable such Holder to consummate the disposition in such
jurisdictions of Registrable Stock owned by such Holder (provided that
the Company will not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction);
8.5 Notify each Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such Registration Statement contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such Holder, the Company will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of Registrable Stock such
prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading;
8.6 Cause all such Registrable Stock to be listed on each
securities exchange on which similar securities issued by the Company
are then listed, if any; and
8.7 Provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date of such Registration
Statement;
8.8 Make available for inspection during normal business hours
by any Holder, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney, accountant or other
agent retained by any such Optionee or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested
by any such Optionee, underwriter, attorney, accountant or agent in
connection with such Registration Statement.
9. Indemnification.
9.1 The Company agrees to indemnify, to the extent permitted by
law, each Holder against all losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of material
fact contained in any Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated
therein, except insofar as the same are caused by or contained in any
information furnished to the Company by Optionees (or any of them)
expressly for use therein or which Optionees (or any of them) failed to
provide after being so requested or by any Optionee's failure to deliver
a copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Optionee with a
sufficient number of copies of the same or which is otherwise
attributable of the negligence or willful misconduct of any Optionee.
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9.2 In connection with any Registration Statement in which any
Optionee is participating, each such Optionee will furnish to the
Company in writing, within fifteen (15) days after written request
therefor, such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
prospectus and, to the extent permitted by law, will indemnify the
Company, its directors and officers, each person or entity who controls
the Company (within the meaning of the Securities Act), against any
losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained or
required to be contained in the Registration Statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or
omission is contained or required to be contained in any information or
affidavit so furnished or required to be so furnished in writing by such
Optionee.
9.3 Any person or entity entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification, and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect
to such claim, permit such indemnifying party to assume the defense of
such claim, with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified
party without the indemnifying party's consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
9.4 The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or
controlling person or entity of such indemnified party and will survive
the transfer of securities. The Company and Optionees also agree to make
such provisions, as are reasonably requested by any indemnified party,
for contribution to such party in the event the Company's or any
Optionee's indemnification, as the case may be, is unavailable for any
reason.
10. Purchased Option Shares Possibly Subject to 120 Day Lock-Up
Restrictions. Each person acquiring shares, options or warrants ("Securities")
of the Company under this agreement or under any Warrant Agreement delivered in
connection herewith, shall, if requested by an underwriter of a primary offering
of the Company's securities, agree that he will not sell or otherwise transfer
or dispose of his shares of the Company's common stock during the period
beginning seven days prior to and ending 120 days following the effective date
of a registration statement of the Company filed under the Securities Act of
1933, as amended. The restrictions agreed to herein shall be binding upon any
assignee of person acquiring Securities hereunder or under any Warrant Agreement
referred to herein.
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11. Optionees Sharing of Letter Agreement Rights. Optionees shall
determine, as may be agreed among them in their sole discretion, the method or
manner in which the rights and obligations conferred in this Letter Agreement
shall be shared between them (unless otherwise expressly set forth herein).
Optionees shall comply with all SEC requirements relating to the filing of
reports with respect to their ownership of the Options, Warrants or the Shares
under any and all applicable securities laws.
12. Optionees Investor Suitability. Optionees hereunder must be
accredited within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act both as of the Effective Date hereof and at the date of each
payment of an Option Fee. Any individual not so accredited shall be excluded
from participating in Optionees rights hereunder, however, in such event there
shall be no diminution of the rights conferred in this Letter Agreement.
Optionees hereby represent that they (i) have reviewed the Company's financial
information to their full satisfaction, including all portions deemed relevant
by Optionees of the Company's public filings with the SEC, (ii) have had access
to all information necessary for them to make an informed decision with respect
to this Letter Agreement, (iii) were not solicited by the Company or any
representative of the Company in connection with this Letter Agreement, and (iv)
are capable of bearing the risks of loss of any investment in the Company as
provided this Letter Agreement.
13. Effective Date. This Letter Agreement shall not be valid until
the date that the last of all of the Optionees [or in the event of death or
incapacity of one or more Optionees, their respective heir(s), or personal
representative(s), or other successor(s)], has affixed his or their signature
hereto, which date shall be for all purposes the "Effective Date" of this Letter
Agreement. If the Effective Date does not occur prior to the expiration of
fifteen (15) days from the date this Letter Agreement shall first be executed by
Optionor, then in such event, this Letter Agreement shall be null and void in
all respects and of no further force or effect.
14. Term. This Letter Agreement shall remain in effect from and after
the Effective Date until the expiration of any remaining unexercised stock
purchase rights conferred hereunder.
15. Entire Agreement; Definitive Agreement. This Letter Agreement and
exhibits constitutes the whole and entire agreement among the Company and
Optionees with respect to the matters set forth herein and this Letter Agreement
shall not be modified or amended in any respect except by a written instrument
executed by the Company and Optionees.
16. Benefit. This Letter Agreement is binding upon and inures to the
benefit of the Company and Optionees and their respective heirs, personal
representatives, successors and assigns; provided, however, the options granted
hereunder shall not be transferable by Optionees to any person or entity without
the consent of the Company in its sole discretion. Notwithstanding the
aforementioned restriction on tranferability, Optionees shall have the right
without the consent of the Company to assign the options granted hereunder in
any lawful manner in connection with any lawful financing(s) of any one or more
of the Optionees whereby the resulting assignment is for purposes of use by the
assignee as collateral security for sums advanced to any one or more of the
Optionees connected or in any way incident to Option Payments or stock purchases
to be lawfully made hereunder.
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17. Severability. If any provision or term of this Letter Agreement
shall be held or determined to be unenforceable, the balance of this Letter
Agreement shall nevertheless continue in full force and effect, unaffected by
such holding or determination. In addition, in any such event, the parties agree
that it is their intention and agreement that any such provision or term which
is held or determined to be unenforceable as written, shall nonetheless be
enforced and binding to the fullest extent permitted by law as though such
provision or term had been written in such a manner to such an extent as to be
enforceable under the circumstances.
18. Law Governing. This Letter Agreement shall be governed and
interpreted under the laws of the State of California.
19. Further Assurances. Each party agrees that he or it will,
whenever and as often as he or it shall be required by any other party, execute,
acknowledge and deliver such further instruments and documents as may be
necessary in order to complete the agreements herein provided and to do any and
all other acts and to acknowledge, execute and deliver any and all other
documents which may be requested in order to reasonably carry out the intent and
purposes of this Letter Agreement.
20. Construction of Letter Agreement. The parties hereto agree that
this Letter Agreement shall not be construed against any party hereto by reason
of the party or parties responsible for its preparation. The parties mutually
agree that each has had full access to the advice of legal counsel and that this
Letter Agreement represents the culmination of negotiations between the Company
and Optionees and their representatives. Any previous correspondence amongst the
parties hereto and all such negotiations are superseded hereby in all respects
are of no further force and effect.
21. Notices. All notices hereunder shall be given in writing and
shall be sent by overnight courier, sent by facsimile transmission (with the
original forwarded in accordance with this Section) or sent by certified mail,
postage prepaid and return receipt requested. Notice shall be considered
received by the addressee two (2) days after deposit in the United States Mail
(by certified mail, postage prepaid and return receipt requested), or by
facsimile transmission, or by overnight courier. The parties hereto may change
the address at which they wish to receive notices by providing notice of the new
address to the other parties hereto. Unless either party receives notice of a
change of address in the manner provided in this Section, notices shall be
addressed at the last known address of the party to whom notice is sent.
22. Grace Period. Notwithstanding any provision to the contrary in
this Agreement, all Optionees' performance dates and time periods set forth
hereunder (by which dates and time periods the Optionees performance is
required) shall be extended by a grace period equal to thirty (30) days ("Grace
Period"), said Grace Period commencing in each and every instance with the date
said performance shall be required under this Agreement.
23. Mandatory Registration. Notwithstanding any provision to the
contrary in this Agreement or in Section 6, paragraph 6.5 thereof, the
provisions for Registrable Stock to be registered by way of a "Mandatory
Registration" shall be applicable on each and every
11
<PAGE> 13
occasion that the Optionees purchase, in the aggregate, One Million Five Hundred
Thousand Dollars ($1,500,000.00) or more of shares upon the exercise of Options
or the exercise of Warrants (i.e., this covenant of the Company to provide
multiple Mandatory Registrations for the Optionees is made by the Company as an
incentive for the Optionees to purchase shares that cumulatively aggregate
purchase amounts of $1,500,000 or more).
24. Notwithstanding any provision to the contrary in this Agreement,
if the respective $100,000 Option Fees applicable to each of the First Stock
Option, Second Stock Option, the Third Stock Option and the Fourth Stock Option
required under this Agreement have been paid to the Company, the Optionees shall
thereafter have the right to exercise (i) their respective share purchase rights
in increments of all or any part of each of said Options, and/or (ii) their
respective share purchase rights in increments of all or any part of the
previously issued Warrants.
If the foregoing is consistent with our mutual understandings and
is therefore acceptable to you, kindly execute and return multiple originals of
this Letter Agreement, one for each of the signatories hereto to the offices at
405 W. Franklin Street, Rockwell Building, Tucson, AZ 85701.
Sincerely,
OPTIONEES:
<TABLE>
<S> <C>
/s/ PATRICK GALVIN /s/ PETER A. JANKOWSKI
------------------------------------ ------------------------
Patrick Galvin Peter A. Jankowski
Date: June 8, 2000 Date: June 8, 2000
---------------------------- -------------------
/s/ EARL L. JENNINGS, JR. /s/ CHARLES E. MCDOWELL
------------------------------------ -------------------------
Earl L. Jennings, Jr. Charles E. McDowell
Date: June 8, 2000 Date: June 8, 2000
---------------------------- -------------------
/s/ KURT E. STARNES
------------------------------------ ---------------------
Steven W. Phillips, Esq. Kurt E. Starnes
Date: Date: June 8, 2000
---------------------------- -------------------
AGREED & ACCEPTED:
AMERICAN MILLENNIUM CORPORATION, INC.
By: /s/ ANDREW F. CAUTHEN
---------------------------------
Chief Executive Officer
Date: June 8, 2000
-------------------
</TABLE>
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<PAGE> 14
occasion that the Optionees purchase, in the aggregate, One Million Five Hundred
Thousand Dollars ($1,500,000.00) or more of shares upon the exercise of Options
or the exercise of Warrants (i.e., this covenant of the Company to provide
multiple Mandatory Registrations for the Optionees is made by the Company as an
incentive for the Optionees to purchase shares that cumulatively aggregate
purchase amounts of $1,500,000 or more).
24. Notwithstanding any provision to the contrary in this Agreement,
if the respective $100,000 Option Fees applicable to each of the First Stock
Option, Second Stock Option, the Third Stock Option and the Fourth Stock Option
required under this Agreement have been paid to the Company, the Optionees shall
thereafter have the right to exercise (i) their respective share purchase rights
in increments of all or any part of each of said Options, and/or (ii) their
respective share purchase rights in increments of all or any part of the
previously issued Warrants.
If the foregoing is consistent with our mutual understandings and
is therefore acceptable to you, kindly execute and return multiple originals of
this Letter Agreement, one for each of the signatories hereto to the offices at
405 W. Franklin Street, Rockwell Building, Tucson, AZ 85701.
Sincerely,
OPTIONEES:
<TABLE>
<S> <C>
/s/ PETER A. JANKOWSKI
------------------------------------ ------------------------
Patrick Galvin Peter A. Jankowski
Date: Date: June 8, 2000
---------------------------- -------------------
------------------------------------ -------------------------
Earl L. Jennings, Jr. Charles E. McDowell
Date: Date:
---------------------------- -------------------
/s/ STEVEN W. PHILLIPS
------------------------------------ ---------------------
Steven W. Phillips, Esq. Kurt E. Starnes
Date: June 7, 2000 Date:
---------------------------- -------------------
AGREED & ACCEPTED:
AMERICAN MILLENNIUM CORPORATION, INC.
By: /s/ ANDREW F. CAUTHEN
---------------------------------
Chief Executive Officer
Date: June 8, 2000
-------------------
</TABLE>
12
<PAGE> 15
EXHIBIT "A"
WARRANT AGREEMENT
AGREEMENT, dated as of the ____ day of July, 1999, by and AMERICAN
MILLENNIUM CORPORATION, INC. ("Company"),
________________________________________ (STOCK TRANSFER COMPANY), as Warrant
Agent (the "Warrant Agent") and Peter A. Jankowski, a resident of the State of
Colorado, Patrick Galvin, Earl L. Jennings, Jr., Charles E. McDowell, and Kurt
E. Starnes, all residents of the State of California, and Steven W. Phillips,
Esq., a resident of the State of Arizona (all six of which individuals
hereinafter collectively referred to as "Optionees").
WITNESSETH
WHEREAS, in connection with a possible private placement pursuant to the
Letter Agreement dated June 8, 2000, incorporated herein by reference, with the
Optionees of shares of Common Stock of the Company ("Common Stock") and Warrants
to purchase Common Stock (the "Warrants"), the Company will issue up to Four
Million (4,000,000) Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions.
As used herein, the following terms shall have the following meanings,
unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class, whether
now or hereafter authorized, which has the right to participate in the
distribution of earnings and assets of the Company without limit as to amount or
percentage, which at the date hereof consists of Sixty Million (60,000,000)
shares authorized as Common Stock.
(b) "Corporate Office" shall mean the office of the Warrant Agent (or
its successor) at which at any particular time its principal business shall be
administered, which office is located at the date hereof at __________________,
____________, ____________________.
(c) "Exercise Date" shall mean, as to any Warrant, the date on which the
Warrant Agent shall have received both (a) the Warrant Certificate representing
such Warrant, with the exercise form thereon duly executed by the Registered
Holder thereof or his attorney duly authorized in writing, and (b) payment in
cash, or by official bank or certified check made
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<PAGE> 16
payable to the Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(d) "Purchase Price" shall mean the purchase price per share to be paid
upon exercise of each Warrant in accordance with the terms of the Letter
Agreement dated June 8, 2000 between the Company and the Optionees.
(e) "Registered Holder" shall mean as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
warrant shall be registered on that date on the books maintained by the Warrant
Agent pursuant to Section 6.
(g) "Transfer Agents" shall mean (Stock Transfer Company), as the
Company's transfer agent, or its authorized successor, as such.
(f) "Warrant Expiration Date" shall mean 5:00 P.M. (New York time) on
________, _____ (i.e., three years from the Warrant issue date); provided that
if such date shall in the State of New York be a holiday or a day on which banks
are authorized or required to close, then 5:00 P.M. (New York time) on the next
following day which in the State of New York is not a holiday or a day on which
banks are authorized or required to close. Upon notice to all warrant holders
the Company shall have the right to extend the warrant expiration date.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of Common
Stock upon the exercise thereof, in accordance with the terms hereof.
(b) Upon execution of this Agreement, Warrant Certificates representing
Four Million (4,000,000) Warrants shall be executed by the Company and delivered
to the Warrant Agent. Upon written order of the Company signed by its President
or Chairman or a Vice President and by its Treasurer or an Assistant Treasurer,
the Warrant Certificates shall be countersigned, issued and delivered by the
Warrant Agent.
(c) From time to time, up to the Warrant Expiration Date, the Transfer
Agent shall countersign and deliver stock certificates in required whole number
denominations representing up to an aggregate of Four Million (4,000,000) shares
of Common Stock, upon the exercise of Warrants in accordance with this Agreement
and the Letter Agreement dated June 8, 2000 between the Company and the
Optionees.
(d) From time to time, up to the Warrant Expiration Date, the Warrant
Agent shall countersign and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued hereunder, (ii)
those issued on or after the Initial Warrant Exercise Date, upon the exercise of
fewer than all Warrants represented by any Warrant Certificate, to evidence any
unexercised Warrants held by the exercising Registered Holder, (iii) those
issued upon any transfer or exchange pursuant to Section 6; and (iv) those
issued in replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7.
15
<PAGE> 17
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the forms annexed
hereto as Exhibit A (the provisions of which are hereby incorporated herein) and
may have such letters, numbers or other marks of identification or designation
and such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange, or to conform to usage or to the requirements of this
Agreement. The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in registered form.
Warrant Certificates shall be numbered serially with the letters WA.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President and by its Treasurer
or an Assistant Treasurer, by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of the Company's
seal. Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be an officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates may nevertheless be countersigned by
the Warrant Agent, issued and delivered with the same force and effect as though
the person who signed such Warrant Certificates had not ceased to be an officer
of the Company or to hold such office. After countersignature by the Warrant
Agent, Warrant Certificates shall be delivered by the Warrant Agent to the
Registered Holder without further action by the Company, except as otherwise
provided by Section 4 hereof.
SECTION 4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the date of its issuance, but not after
the Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities deliverable upon
such exercise shall be treated for all purposes as the holder of those
securities upon the exercise of the Warrant as of the close of business on the
Exercise Date. As soon as practicable on or after the Exercise Date the Warrant
Agent shall deposit the proceeds received from the exercise of a Warrant and
shall notify the Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five days after the date of such notice from
the Warrant Agent, the Warrant Agent, on behalf of the Company, shall cause to
be issued and delivered by the Transfer Agent, to the person or persons entitled
to receive the same, a certificate or certificates for the securities
deliverable upon such exercise (plus a certificate for any remaining unexercised
Warrants of the Registered Holder), unless prior to the date of issuance of such
certificates the Company shall instruct the Warrant Agent to refrain from
causing such issuance of certificates pending clearance of checks received in
payment of the Purchase Price pursuant to such Warrants. Notwithstanding the
foregoing, in the case of payment made in the form of a check drawn on an
account of such investment
16
<PAGE> 18
banks and brokerage houses as the Company shall approve in writing to the
Warrant Agent, certificates shall immediately be issued without prior notice to
the Company or any delay. Upon the exercise of any Warrant and clearance of the
funds received, the Warrant Agent shall promptly remit the payment received for
the Warrant (the "Warrant Proceeds") to the Company or as the Company may direct
in writing.
SECTION 5. Reservation of Shares: Listing: Payment of Taxes: etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, (other than those which the Company shall promptly pay or
discharge).
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with, or approval
of, any governmental authority under any federal securities law before such
securities may be validly issued or delivered upon such exercise, then the
Company will in good faith and as expeditiously as reasonably possible, endeavor
to secure such registration or approval. The Company will use reasonable efforts
to obtain appropriate approvals or registrations under state "blue sky"
securities laws. With respect to any such securities, however, Warrants may not
be exercised by, or shares of Common Stock issued to, any Registered Holder in
any state in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance, or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to requisition
the Company's Transfer Agent from time to time for certificates representing
shares of Common Stock issuable upon exercise of the Warrants, and the Company
will authorize the Transfer Agent to comply with all such proper requisitions.
The Company will file with the Warrant Agent a statement setting forth the name
and address of the Transfer Agent of the Company for shares of Common Stock
issuable upon exercise of the Warrants.
SECTION 6. Rule 144 Restrictions: Exchange: Registration of Transfer.
(a) The Warrants shall be "restricted securities" as such term is
defined in Rule 144 ("Rule 144") promulgated under the Securities Act of 1933,
as amended, ("The Securities Act") and the certificates representing such
securities shall bear a legend as follows:
17
<PAGE> 19
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT'"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. NO TRANSFER OF THIS CERTIFICATE OR ANY
INTEREST HEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE LAWS OF SUCH STATES UNDER WHOSE LAWS A
TRANSFER OF SECURITIES WOULD BE SUBJECT TO A REGISTRATION REQUIREMENT,
UNLESS THE COMPANY AND ITS COUNSEL HAVE RECEIVED A SATISFACTORY OPINION
OF COUNSEL THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE
ACT OR THE SECURITIES LAWS OF SUCH STATES."
(b) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants of the same class or may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office, and upon satisfaction
of the terms and provisions hereof, the Company shall execute and the Warrant
Agent shall countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(c) The Warrant Agent shall keep at its office books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with its regular practice.
Upon due presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute and the Warrant Agent shall issue and
deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants.
(d) With respect to all Warrant Certificates presented for registration
or transfer, or for exchange or exercise, the subscription form on the reverse
thereof shall be duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the Company
and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.
(e) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates. In addition, the
Company may require payment by such holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith.
(f) All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly canceled by the Warrant
Agent and thereafter retained by the Warrant Agent until termination of this
Agreement or resignation as Warrant Agent, or, with the prior written consent of
the owner (i.e., Registered Holder) of said Warrant Certificates, disposed of or
destroyed, at the direction of the Company.
(g) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the
18
<PAGE> 20
absolute owner thereof and of each Warrant represented thereby (notwithstanding
any notations of ownership or writing thereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary. The Warrants, which are
being offered with shares of Common Stock, will be immediately detachable from
the Common Stock and transferable separately therefrom.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired by a bona
fide purchaser) countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal aggregate number
of Warrants. Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Fractional Warrants and Fractional Shares. The Company shall
not be required to issue fractions of shares, upon exercise of the Warrants or
otherwise, or to distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(a) If the Common Stock is listed on a National Securities Exchange or
admitted to unlisted trading privileges on such exchange or listed for trading
on the NASDAQ Quotation System, the current value shall be the last reported
sale price of the Common Stock on such exchange on the last business day prior
to the date of exercise of this Warrant or if no such sale is made on such day,
the average of the closing bid and asked prices for such day on such exchange;
or
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value shall
be an amount determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.
SECTION 9. Warrant Holders Not Deemed Stockholders. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of Warrants, 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, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation,
19
<PAGE> 21
merger or conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such Holder shall have exercised
such Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
SECTION 10. Registered Holders Exercise Rights. All rights of action
with respect to this Agreement are vested in the respective Registered Holders
of the Warrants, and any Registered Holder of a Warrant, without consent of the
Warrant Agent or of the holder of any other Warrant, may, in his own behalf and
for his own benefit, enforce against the Company his right to exercise his
Warrants for the purchase of shares of Common Stock in the manner provided in
the Warrant Certificate and this Agreement.
SECTION 11. Agreement of Warrant Holders. Every holder of a Warrant, by
his acceptance thereof, consents and agrees with the Company, the Warrant Agent
and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Warrant Agent
and the Company in their sole discretion, together with payment of any
applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the person in
whose name the warrant Certificate is registered as the holder and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise expressly provided
herein.
SECTION 12. Cancellation of Warrant Certificates. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be delivered to the Warrant
Agent and canceled by it and retired. The Warrant Agent shall also cancel the
Warrant Certificate or Warrant Certificates following exercise of any or all of
the Warrants represented thereby or delivered to it for transfer, split-up,
combination or exchange.
SECTION 13. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its duties
shall be determined solely by the provisions hereof. The Warrant Agent shall
not, by issuing and delivering Warrant Certificates or by any other act
hereunder be deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants represented thereby or
of any securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustments, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for
20
<PAGE> 22
any recital or statement of facts contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement except for
its own negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Clerk, or Assistant
Clerk, (unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments, costs
and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or willful
misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or willful misconduct), after giving 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
Warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its stockholders,
of not less than $10,000,000 or a stock transfer company. After acceptance in
writing of such appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent
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and shall forthwith cause a copy of such notice to be mailed to the Registered
Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 14. Optionees Sharing of Warrants. Optionees shall determine, as
may be agreed among them in their sole discretion, the method or manner in which
the rights and obligations conferred in this Warrant Agreement shall be shared
between them (unless otherwise expressly set forth herein).
SECTION 15. Modification of Agreement. Subject to the provisions of
Section 4, the Warrant Agent and the Company may by supplemental agreement make
any changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii) that they may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders of Warrant Certificates
representing not less than 50% of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed or are made in compliance with applicable law.
SECTION 16. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at 1010 Tenth Street, Suite 100, Golden, CO 80401,
Attention: Andrew F. Cauthen, or at such other address as may have been
furnished to the Warrant Agent in writing by the Company; if to the Warrant
Agent, at its Corporate Office; and if to Optionees, 405 W. Franklin Street,
Rockwell Building, Tucson, AZ 85701.
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SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
reference to principles of conflict of laws.
SECTION 18. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
SECTION 19. Termination. This Agreement shall terminate at the close of
business on the Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it and the provisions of Section 13
hereof shall survive such termination.
SECTION 20. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
AMERICAN MILLENNIUM CORPORATION, INC.
By:
------------------------------------
Chief Executive Officer
(STOCK TRANSFER COMPANY)
------------------------------------
By:
------------------------------------
Authorized Officer
OPTIONEES:
-------------------------------- ----------------------------------
Patrick Galvin Peter A. Jankowski
Date: Date:
------------------------ ----------------------------
-------------------------------- ----------------------------------
Earl L. Jennings, Jr. Charles E. McDowell
Date: Date:
------------------------ -----------------------------
-------------------------------- ----------------------------------
Steven W. Phillips, Esq. Kurt E. Starnes
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<PAGE> 25
Date: Date:
------------------------ ------------------------
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<PAGE> 26
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT'"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE
MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
THE LAWS OF SUCH STATES UNDER WHOSE LAWS A TRANSFER OF SECURITIES WOULD BE
SUBJECT TO A REGISTRATION REQUIREMENT, UNLESS THE COMPANY AND ITS COUNSEL HAVE
RECEIVED A SATISFACTORY OPINION OF COUNSEL THAT SUCH TRANSFER DOES NOT REQUIRE
REGISTRATION UNDER THE ACT OR THE SECURITIES LAWS OF SUCH STATES.
NO. WA ________ _____________ Warrants
VOID AFTER __________ ___, ______
(Month) (Day) (Year)
WARRANT CERTIFICATE FOR
PURCHASE OF COMMON STOCK OF
AMERICAN MILLENNIUM CORPORATION, INC.
This certifies that FOR VALUE RECEIVED, or registered assigns (the "Registered
Holder") is the owner of the number of Warrants ("Warrants") specified above.
Each Warrant represented hereby initially entitles the Registered Holder to
purchase, subject to the terms and conditions set forth in this Warrant
Certificate and the Warrant Agreement (as hereinafter defined), one fully paid
and nonassessable share of Common Stock, no par value, of AMERICAN MILLENNIUM
CORPORATION, INC., a New Mexico corporation (the "Company") at any time between
_____________________, 2000, and the Expiration Date (as hereinafter defined),
upon the presentation and surrender of this Warrant Certificate with the
Subscription Form attached hereto duly executed, at the corporate office of
___________________(Stock Transfer Company) as Warrant Agent, or its successor
(the "Warrant Agent"), accompanied by payment of ____________ and ___/100
Dollars ($_.__) (the "Purchase Price") in lawful money of the United States of
America in cash or by official bank or certified check made payable to AMERICAN
MILLENNIUM CORPORATION, INC.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated July ___, 1999
by and among the Company and the Warrant Agent.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
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The term "Expiration Date" shall mean 5:00 P.M. (New York time) on
_____________, ____ (i.e., three years from the Warrant issue date). If such
date shall in the State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York
time) the next following day which in the State of New York is not a holiday or
a day on which banks are authorized to close.
The Company has covenanted and agreed, under certain specified
conditions, that it will file a registration statement and will use its best
efforts to cause the same to become effective and to keep such registration
statement current for a specified period of time. The Warrant(s) represented
hereby shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment with any tax or other governmental
charge imposed in connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate or Warrant
Certificates representing an equal aggregate number of Warrants will be issued
to the transferee in exchange therefor, subject to the limitations provided in
the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of California.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile, by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:
AMERICAN MILLENNIUM CORPORATION, INC.
By:
------------------------------------
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Chief Executive Officer
Countersigned:
(STOCK TRANSFER COMPANY),
------------------------------------
As Warrant Agent
By:
---------------------------------
Authorized Officer
27
<PAGE> 29
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
____________________ Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(Please print or type name and address)
and be delivered to
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(Please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the within Warrant was
solicited by a member of the National Association of Securities Dealers, Inc. If
not solicited by an NASD member, please write "unsolicited" in the space below.
------------------------------------
(Name of NASD Member if other than
__________)
Dated: X
---------------------------------- ----------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Taxpayer Identification Number
------------------------------------
28
<PAGE> 30
Signature Guaranteed
------------------------------------
29
<PAGE> 31
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, __________________________________________________ hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(Please print or type name and address)
______________________ of the Warrants represented by this Warrant Certificate,
and hereby irrevocably constitutes and appoints________________________________
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated: X
---------------------- --------------------------------
Signature Guaranteed
----------------------------------
THE SIGNATURE TO THE ASSIGNMENT OF THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
BOSTON STOCK EXCHANGE.
30
