<PAGE>
As filed with the Securities and Exchange Commission on March 8, 1999
Registration Nos. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
(Exact name of Registrant as specified in its charter)
Nevada 13-3130236
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
444 Madison Avenue
New York, New York 10022
(212) 688-3333
(Address and telephone number of
registrant's principal executive offices)
DR. GEORGE N. FARIS
Chief Executive Officer
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
444 Madison Avenue, Suite 3203
New York, New York 10022
Telephone: (212) 688-3333
Telecopier: (212) 688-6657
(Name, address and
telephone number of agent for service)
Copies to:
CHARLES SNOW, ESQ.
SNOW BECKER KRAUSS P.C.
605 Third Avenue
New York, New York 10158-0125
Telephone: (212) 687-3860
Fax: (212) 949-7052
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Proposed Maximum
Class Aggregate Proposed Amount of
of Securities Amount to be Offering Price Maximum Registration
to be Registered Registered Per Security(1) Offering Price (1)Fee
- ---------------- ---------- --------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock, 6,750,978 (2) $1.00 (3) $6,750,978 $1,876.77(1)
$.08 par value
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933.
(2) Represents shares to be sold by the selling securityholders named herein,
including
o up to 4,505,000 shares that have been or may be acquired upon conversion
of the Registrant's 14% convertible notes due April 21, 2000, or in
payment of accrued interest on the convertible notes
o 1,795,978 shares that may be acquired upon exercise of outstanding
warrants
o 125,000 shares acquired for consulting services
o 325,000 shares that may be acquired upon exercise of outstanding options
Also includes an indeterminate number of shares that the selling
securityholders may acquire as a result of a stock split, stock dividend
or similar transaction involving the common stock pursuant to the
antidilution provisions of the convertible notes and options.
(3) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(g)(3) based upon the closing price of the common
stock on the Nasdaq National Market on March 5, 1999.
-----------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
EXPLANATORY NOTE
The prospectus included in this Registration Statement relates to the
resale by the selling securityholders of:
1. An aggregate of 6,750,978 shares of common stock subject to this
Registration Statement.
2. An aggregate of 10,527,752 shares of common stock subject to the
Registrant's Registration Statement on Form S-3 (Registration No. 333-52859),
declared effective on May 27, 1998, including
o 7,509,202 shares that the selling securityholders
have acquired or may acquire upon conversion of the
Registrant's 14% convertible notes due April 21, 2000
or in payment of accrued interest thereon, of which
approximately 5,000 shares remain available
o 3,018,550 shares that the selling securityholders may
acquire upon exercise of warrants, all of which
remain available.
-ii-
<PAGE>
PRELIMINARY PROSPECTUS DATED MARCH 8, 1999, SUBJECT TO COMPLETION.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
Common Stock
The selling securityholders named in this prospectus are offering and selling
shares of common stock of American International Petroleum Corporation,
including
o up to 3,312,547 shares that they have acquired or may acquire upon
conversion of our 14% convertible notes due April 21, 2000, and in
payment of accrued interest on the convertible notes, at an assumed
conversion price of $.9297 per share
o 5,812,028 shares that they may acquire upon exercise of warrants,
including 3,700,000 shares offered by our prospectus dated May 27, 1998,
which is superseded by this prospectus
o 325,000 shares that they may acquire upon exercise of options
o 125,000 shares acquired for consulting services
The common stock is quoted on the Nasdaq National Market under the symbol
"AIPN".
The common stock is a speculative investment and involves a high degree of risk.
You should read the description of certain risks under the caption "Risk
Factors" commencing on page 3 before purchasing the common stock.
Our executive offices are at 444 Madison Avenue, New York, New York 10022, and
our telephone number is 212-688-3333.
These securities have not been approved or disapproved by the SEC or any state
securities commission nor has the SEC or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is __________, 1999
Information Contained Herein Is Subject to Completion or Amendment. A
Registration Statement Relating to These Securities Has Been Filed With The
Securities And Exchange Commission. These Securities May Not Be Sold Nor May
Offers to Buy Be Sold Nor May Offers to Buy Be Accepted Prior to The Time The
Registration Statement Becomes Effective. This Prospectus Shall Not Constitute
an Offer to Sell or the Solicitation of an offer to Buy Nor Shall There Be Any
Sale of These Securities in Any State in Which Such Offer, Solicitation or Sale
Would Be Unlawful Prior to Registration or Qualification under the Securities
Laws of Any State.
<PAGE>
Table of Contents
Page
----
Risk Factors ........................................................... 3
Forward Looking Statements ............................................. 9
Selling Securityholders ................................................ 10
Plan of Distribution ................................................... 11
Information About the Company .......................................... 12
Legal Matters .......................................................... 13
Experts ................................................................ 13
---------------
This prospectus is part of a registration statement we filed with the SEC. You
should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide you with different
information. The common stock will not be offered in any state where an offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the cover of this prospectus.
-2-
<PAGE>
Need For Additional Financing. During 1999, we may require additional financing
to supplement anticipated cash flows from our refinery operations in Lake
Charles, Louisiana in order to meet operating and certain other funding
obligations. In the event we are unable to obtain the necessary financing to
meet these obligations, our ability to continue operations at current levels
will be materially and adversely effected. In addition, our oil and gas license
in Kazakhstan could be revoked. We may need to raise additional funds through
public or private financings, including equity financings, that may be dilutive
to stockholders. We cannot give you any assurance that we will be able to raise
additional funds if our capital resources are exhausted, or that funds will be
available on terms acceptable to us or at all.
Lack of Proven Reserves of Gas or Oil. Although we have identified structures
within our Kazakstan license area, we have only just begun to drill these
prospects and accordingly, we do not have any proven reserves of oil and gas. In
order to establish such reserves, we will have to incur all of the risks
associated with such exploration described below.
Risk of Capital Losses Due to Speculative Nature of Oil and Gas Industry. Oil
and gas exploration is extremely speculative, involving a high degree of risk.
Even if reserves are found as a result of drilling, profitable production from
reserves cannot be assured. We may not recover any oil or gas from drilling and
if we do recover oil or gas, market conditions may be unfavorable and we may not
be able to recover the costs of the drilling or receive any profits. In
addition, our current financial condition and available cash resources may
prevent our ability to drill offset wells.
Exposure to Losses From Drilling And Other Hazards. Unusual or unexpected
formation pressures, down-hole fires or other hazardous conditions may be
encountered in drilling oil and gas wells and in the refining of oil. If we
encounter such hazards, completion of wells may be substantially delayed and the
costs significantly increased. Even though a well is completed and is found to
be productive, water or other deleterious substances may be encountered, which
may impair or prevent production of oil or gas, and which may adversely affect
our operations. In addition, floods and adverse weather conditions can hinder or
delay feedstock and product movements at our refinery in Lake Charles, Louisiana
and drilling and production operations. Labor disputes, work stoppages,
shortages of equipment and materials or the unavailability of oil barges and
drilling rigs can also disrupt drilling and production operations.
-3-
<PAGE>
Environmental Hazards. Our operations are subject to all of the environmental
risks normally incident to oil and gas exploration, drilling, and refining
activities, which include, but are not limited to, blowouts, pollution and
fires. Any of these occurrences could result in environmental damage or
destruction, including the discharge of hazardous materials into the
environment. Although we maintain comprehensive and general liability coverage
as is customary in the oil and gas industry, and coverage against certain risks,
we are not fully covered for damages incurred as a consequence of environmental
mishaps. To the extent we are covered, the coverage may not be adequate
protection in the event of an environmental problem.
Potential Cost Increases And Delays Due to Possible Shortages of Personnel And
Drilling Equipment. It is possible that field personnel, drilling rigs, pipes,
casing, or other tubular goods will not be available when needed for the
drilling, completion or operation of our prospects and wells. This possibility
could result in drilling or completion delays and, in some instances, result in
additional costs beyond normal drilling and completion costs, which could
adversely effect us.
Intense Competition And Uncertain Markets. The oil and gas industry is highly
competitive. Many companies are likely to compete against us for producing
properties and most of these companies have greater experience and financial
resources than us. Our success is dependent not only on the productivity of
the producing properties and the ultimate sale of said production, but also on:
o market prices for oil and gas, which are highly unstable
o operating costs incurred in producing the oil and/or gas
o transportation costs
o the cost of crude oil feedstocks
Energy Market Subject to Fluctuation. The revenues generated from our oil and
gas operations and the carrying value of our oil and gas properties are highly
dependent on the prices for oil and natural gas. The price we receive for our
oil is dependent upon numerous factors which are beyond our control and are
unpredictable. Some of these factors are:
o the quantity and quality of the oil or gas produced
o the overall supply of domestic and foreign oil or gas from currently
producing and subsequently discovered fields
o the extent of importation of foreign oil or gas
o the marketing and competitive position of other fuels, including
alternative fuels, as well as other sources of energy
o the proximity, capacity and cost of oil or gas pipelines and other
facilities for the transportation of oil or gas
o the regulation of allowable production by governmental authorities
-4-
<PAGE>
o international political developments, including nationalization of oil
wells and political unrest or upheaval in the areas of the world in
which we have an interest or plans to conduct operations
Government Legislation May Limit Revenues or Increase Costs. Our exploration in
western Kazakstan is subject to regulations imposed by the Kazakstan government.
The Kazakstan government may limit oil and gas production and impose taxes on
oil and gas when sold. We cannot predict, whether such governmental actions may
occur, nor anticipate the ultimate effect of governmental policies and contracts
upon us. We will also be subject to the laws of jurisdictions through which oil
and gas pipelines traverse. We cannot predict what policies these jurisdictions
may follow, nor the impact of local regulations on our business.
Political and Economic Situation in Kazakstan. A favorable political climate in
Kazakstan and the openness of its markets to United States trade is essential to
our success in Kazakstan. The Confederation of Independent States ("CIS"), of
which Kazakstan is part, have embraced political and economic reforms, but,
there remains political and economic instability the result of which could be
detrimental to our operations there.
Because the CIS countries are in the early stages of development of a market
economy, the commercial framework in still developing along with commercial
laws, their applications and the enforcement of these laws. Although Kazakstan's
laws regarding foreign investment provide for protection against
nationalization and confiscation, there is little or no judicial precedent in
this area. Foreign firms operating in this region may be subject to numerous
other risks that are not present in domestic operations, including political
strife, the possibility of expropriation, inadequate distribution facilities,
restrictions on royalties, dividends and currency remittances, inflation,
fluctuations of foreign currencies, high and unpredictable levels of taxation,
requirements for governmental approvals for new ventures and local participation
in operations.
Currency Risks. Trading in CIS currencies has been characterized by significant
declines in value and considerable volatility. Although in recent months, CIS
currencies have experienced relative stability against the U.S. dollar, there is
a risk of further declines in value and continued volatility in the future.
Where major capital expenditures involve importation of equipment and the like,
current law permits the conversion of CIS revenues into foreign currency to make
such payments. CIS currencies are generally not convertible outside CIS
countries. If we discover oil or gas in the license area, and sell the oil or
gas in a CIS country, currency liquidity and restrictions may adversely effect
us. However, we may receive and hold U.S. Dollars within the CIS countries,
which may mitigate the currency risk there. A market exists within CIS countries
for the conversion of CIS currencies into other currencies, but it is limited in
size and is subject to rules limiting the purposes for which conversion may be
effected. The limited availability of other currencies may tend to inflate their
values relative to CIS currencies and we cannot give you any assurance that such
a market will continue to exist. Moreover, the banking systems in CIS countries
are not yet as developed as its Western counterparts and considerable delays may
occur in the transfer of funds within, and the remittance of funds out of these
countries. Any delay in converting CIS currencies into a foreign currency in
order to make a payment or delay in the transfer of such foreign currency could
have a material adverse effect on us.
-5-
<PAGE>
Currency Controls; Restrictions on Repatriation of Payments. While applicable
legislation in the CIS currently permits the repatriation of profits and capital
and the making of other payments in hard currency, our ability to repatriate
such profits and capital and to make such other payments is dependent upon the
continuation of the existing legal regimes for currency control and foreign
investment, administrative policies and practices in the enforcement of such
legal regimes and the availability of foreign exchange in sufficient quantities
in those countries.
Limited Operating History of Refinery for Production of Asphalt. Since the first
quarter of 1998, we have been engaged in the production and sale of asphalt
products at our refinery in Lake Charles, Louisiana. Our refinery operation is
subject to all of the risks and hazards associated with the establishment of a
new business. Problems that can occur in the early stages of a business include
delays, unanticipated expenses, marketing uncertainties, ability to obtain
market acceptance of products, competition and production problems. Asphalt is a
petroleum product and its production and sale is subject to many of the risks
associated with oil and gas operations, including availability of transportation
facilities, environmental hazards, cost increases, shortages of equipment and
personnel, competition, fluctuation in the costs of crude oil supplies for the
refinery, fluctuations in the price of finished products and transportation,
government regulation, labor disputes, fire, adverse weather and inability to
adequately and fully insure potential casualty losses.
Dependence on Key Personnel. Our success is dependent upon the efforts,
abilities and expertise of our Chief Executive Officer, Dr. George N. Faris, as
well as other key management personnel. Dr. Faris is employed pursuant to an
employment agreement which renews automatically each year until written notice
of termination is given by either Dr. Faris or us not later than 180 days prior
to May 1 of any renewal term. We also maintain a $2,000,000 key man life
insurance policy on the life of Dr. Faris. Our future success also is dependent,
in part, on our ability to attract and retain qualified personnel. We cannot
give you any assurance that we will be able to attract and retain qualified
individuals. As compared to other publicly traded oil and gas companies, we have
fewer resources to attract and/or retain key personnel, and we do not have the
depth of managerial employees to rely upon in the event of the loss of any
single employee. Accordingly, the loss of any key employee could have a material
adverse affect on the operations of our business.
-6-
<PAGE>
Continued Listing Requirements for Nasdaq Securities. Our securities are traded
on the Nasdaq National Market System ("Nasdaq-NMS"). Continued listing on
Nasdaq-NMS requires, among other criteria, a company to have tangible assets of
at least $4,000,000 and that the listed security(s) (other than those owned by
directors, officers, and other beneficial owners of more than 10% of such
securities) have a market value of at least $5,000,000 and a minimum bid price
of $1.00. Recently, the market price of our common stock has been as low as
$.94. We cannot give you any assurance as to our continued listing on Nasdaq.
If we were delisted from Nasdaq, we would seek to have our securities listed on
a securities exchange, subject to our ability to satisfy the eligibility
criteria for listing. If we were unable to obtain such listing, trading, if any,
in our securities would thereafter have to be conducted in the OTC Bulletin
Board. As a result, an investor might find it more difficult to dispose of the
common stock due to our reduced visibility on the market.
Risks Relating to Low-Priced Stocks. The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
Nasdaq, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system. The penny
stock rules, particularly Rule 15g-9 under the Securities Exchange Act, require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prepared by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. Bid and offer quotations, and the broker dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation. In addition, the
penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules.
If the common stock were no longer traded on Nasdaq, the common stock, depending
on its market price, would be subject to the penny stock rules. If the common
stock becomes subject to the penny stock rules, investors may find it more
difficult to sell the common stock.
-7-
<PAGE>
Possible Adverse Effect of Future Sales of Common Stock on the Market Price of
the Common Stock. As of February 22, 1999, there were 66,216,889 shares of
common stock outstanding, of which 63,156,927 shares are transferable without
restriction under the Securities Act. The remaining 3,059,962 shares are
restricted securities which may be publicly sold only if registered under the
Securities Act or sold in accordance with an applicable exemption from
registration, such as Rule 144. An additional
o 3,312,547 shares may be acquired upon conversion of our 14% convertible
notes, at an assumed conversion price of $0.9297 per share. The actual
conversion price is computed by reference to 85% of the lowest five
consecutive daily weighted average sales price of the common stock on
the Nasdaq National Market for the 40-day trading period preceding the
date of conversion.
o 7,751,938 shares may be acquired upon conversion of our 5% convertible
debentures, at an assumed conversion price of $1.29 per share. The
actual conversion price is computed by reference to the lesser of $1.288
and 85% of the average of the lowest 3 daily weighted average sale
prices for the 20 trading days prior to the date of conversion.
o 5,419,250 shares may be acquired upon exercise of stock options granted
pursuant to our employee stock option plans at exercise prices ranging
from $.50 to $2.00 per share.
o 8,558,746 shares may be acquired upon exercise of warrants having
exercise prices ranging from $.40 to $3.00 per share.
Substantially all of such shares, when issued, may be immediately resold in the
public market pursuant to effective registration statements under the
Securities Act. We cannot give you any assurance as to the effect, if any, that
future sales of common stock, or the availability of shares of common stock for
future sales, will have on the market price of the common stock from time to
time. Sales of substantial amounts of common stock, or the possibility of such
sales, could adversely affect the market price of the common stock and also
impair our ability to raise capital through an offering of equity securities in
the future.
Forward Looking Statements
Some of the information in this prospectus and the documents we
incorporate by reference may contain forward-looking statements. Such statements
can be identified by the use of forward-looking terminology such as may, "will,"
"expect," "believe," "intend," "anticipate," "estimate," "continue" or similar
words. These statements discuss future expectations, estimate the happening of
future events or our financial condition or state other "forward-looking"
information. When considering such forward-looking statements, you should keep
in mind the risk factors and other cautionary statements in this prospectus and
the documents that we incorporate by reference. The risk factors noted in this
section and other factors noted throughout this prospectus, including certain
risks and uncertainties, could cause our actual results to differ materially
from those contained in any forward-looking statement.
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<PAGE>
Selling Securityholders
The following table sets forth the names of the selling securityholders, the
number of shares of common stock beneficially owned by each selling
securityholder as of February 22, 1999, and the number of shares that each
selling securityholder may offer, and the number of shares of common stock
beneficially owned by each selling securityholder upon completion of the
offering, assuming all of the shares are sold. None of the selling
securityholders has, or within the past three years has had, any position,
office or other material relationship with American International Petroleum
Corporation or any of its predecessors or affiliates.
The selling securityholders are offering up to 9,574,575 shares by this
prospectus, including
o 3,312,547 shares that they have acquired or may acquire upon conversion
of, and in payment of accrued interest on, our 14% convertible notes, at an
assumed conversion price of $.9297, representing 85% of the lowest five
consecutive daily weighted average sales price of the common stock on the Nasdaq
National Market System for the 40-day trading period preceding December 31,
1998.
o 5,812,028 shares that they may acquire upon exercise of warrants,
including 3,700,000 shares offered by our prospectus dated May 27, 1998,
which is superseded by this prospectus
o 325,000 shares that they may acquire upon exercise of options
o 125,000 shares acquired for consulting services
The number of shares listed below as beneficially owned before the offering by
each selling securityholder owning convertible notes has been computed, in part,
based upon the terms of the convertible notes, which provide that the number of
shares that the selling securityholders may acquire upon conversion may not
exceed that number which would render those selling securityholders, as a group,
the beneficial owners of more than 9.99% of the then issued and outstanding
shares of common stock. As of February 22, 1999, we had 66,216,889 shares of
common stock outstanding.
For purposes of computing the number and percentage of shares beneficially owned
by each selling securityholder as of February 22, 1999, any shares which such
person has the right to acquire within 60 days after such date are deemed to be
outstanding, but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other selling securityholder. Each of the
selling securityholders specifically disclaims beneficial ownership of the
shares of common stock owned (or that it may acquire upon exercise or conversion
of any derivative securities owned) by the other selling securityholders and, as
such, the number of shares of common stock indicated does not reflect any shares
of common stock beneficially owned by any other selling securityholder.
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
of Common Stock Before Shares of Common of Common Stock
Offering Stock Offered After Offering
Name of Selling ------------------------- ---------------- --------------------
Securityholder Number Percent Number Percent
- -------------- ------ ----------- ------ -------
<S> <C> <C> <C> <C> <C>
Holders of convertible
notes and warrants:
IEO Holdings 1,351,365 2.0% 1,721,705 0 --
Limited (1)
Hunkins Waterfront Plaza
Main Street, P.O. Box 556
Charlestown, Nevis, West Indies
Summit Capital Limited 668,857 1.0% 860,853 0 --
Hunkins Waterfront Plaza
Main Street, P.O. Box 556
Charlestown, Nevis, West Indies
Glacier Capital Limited 668,857 1.0% 860,853 0 --
Hunkins Waterfront Plaza
Main Street, P.O. Box 556
Charlestown, Nevis, West Indies
Infinity Investors Limited 4,226,610 5.9% 5,165,114 0 --
Hunkins Waterfront Plaza
Main Street, P.O. Box 556
Charlestown, Nevis, West Indies
Other Securityholders:
LKB Financial LLC 380,050(2) * 316,050(2) 64,000 *
4555 Mansell Road,
Suite 300
Alpharetta, Georgia 30202
Continental Capital & 325,000(3) * 325,000(3) 0 --
Equity Corporation
195 Wekiva Springs Road
Suite 200
Longwood, Florida 32779
Stephen B. Booke 62,500(4) * 62,500(4) 0 --
355 Lexington Avenue
New York, New York 10017
Gerald A. Amato 62,500(4) * 62,500(4) 0 --
355 Lexington Avenue
New York, New York 10017
GCA Strategic
Investment Fund Limited 200,000(5) * 200,000(5) 0 --
c/o Prime Management Ltd.
12 Church St.
Hamilton, Bermuda HM11
</TABLE>
- -------------------
* Less than one percent (1%).
(1) IEO Holdings Limited is a wholly owned subsidiary of Infinity Emerging
Opportunities Limited.
(2) Includes 316,050 shares that may be acquired upon exercise of outstanding
warrants.
(3) Includes 125,000 shares acquired for consulting services and 200,000
shares that may be acquired upon exercise of outstanding options.
(4) Represents 62,500 shares that may be acquired upon exercise of
outstanding options.
(5) Represents 200,000 shares that may be acquired upon exercise of outstanding
warrants.
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<PAGE>
The shares of common stock offered by this prospectus have been registered
pursuant to registration rights granted to the selling securityholders. We have
agreed to pay all of the registration and filing fees, printing expenses, blue
sky fees, if any, fees and disbursements of our counsel, and in the case of the
selling securityholders who are holders of the convertible notes and warrants,
certain fees and disbursements of one counsel for those selling securityholders
(not to exceed $25,000). The selling securityholders have agreed to pay any
underwriting discounts and selling commissions. In addition, we have agreed to
indemnify the selling securityholders who are holders of the convertible notes
and warrants, underwriters who may be selected by them and certain affiliated
parties, against certain liabilities, including liabilities under the Securities
Act, in connection with the offering. Those selling securityholders also have
agreed, at our request, to indemnify our officers, directors and persons
controlling American International Petroleum Corporation against such
liabilities. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or persons
controlling American International Petroleum Corporation pursuant to the
foregoing provisions, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Plan of Distribution
The selling securityholders (or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest) may sell
shares from time to time in public transactions, on or off the Nasdaq National
Market, or private transactions, at prevailing market prices or at privately
negotiated prices, including but not limited to the following types of
transactions:
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer.
The selling securityholders also may sell shares that qualify under Section 4(1)
of the Securities Act or Rule 144.
In effecting sales, brokers or dealers engaged by the selling securityholders
may arrange for other brokers or dealers to participate in the resales. The
selling securityholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling securityholders also may sell shares short and
deliver the shares to close out such short positions. The selling
securityholders also may enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the shares,
which the broker-dealer may resell pursuant to this prospectus. The selling
securityholders also may pledge the shares to a broker or dealer and upon a
default, the broker or dealer may effect sales of the pledged shares pursuant to
this prospectus.
-10-
<PAGE>
Brokers, dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling securityholders in amounts to be
negotiated in connection with the sale. The selling securityholders and any
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting
compensation.
Information as to whether underwriters who may be selected by the selling
securityholders, or any other broker-dealer, is acting as principal or agent for
the selling securityholders, the compensation to be received by underwriters who
may be selected by the selling securityholders, or any broker-dealer, acting as
principal or agent for the selling securityholders and the compensation to be
received by other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions, will, to the
extent required, be set forth in a supplement to this prospectus. Any dealer or
broker participating in any distribution of the shares may be required to
deliver a copy of this prospectus, including a prospectus supplement, if any, to
any person who purchases any of the shares from or through such dealer or
broker.
We have advised the selling securityholders that during such time as they may be
engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Securities Exchange Act. With certain
exceptions, Regulation M precludes any selling securityholders, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock.
Information About The Company
At American International Petroleum Corporation, we, through our wholly
owned subsidiaries:
o Produce, process and market conventional and technologically advanced
polymer asphalt, vacuum gas, oil and other products at our refinery in
Lake Charles, Louisiana utilizing low-cost, low-gravity, high sulphur
crudes.
o Blend and market asphalt to the Florida and Georgia asphalt markets
utilizing our refinery in St. Marks Florida as a distribution facility.
o Engage in oil and gas exploration and development in western Kazakstan,
where we own a 70% working interest in a 20,000 square kilometer
exploration block.
We also are seeking other oil and gas projects in the United States, Russia and
Central Asia.
<PAGE>
We file reports, proxy statements and other information with the SEC. You
may read and copy any document we file at the Public Reference Room of the SEC
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New York,
New York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. Our filings also are available to the public from the
SEC's website at www.sec.gov. We distribute to our stockholders annual reports
containing audited financial statements.
Information Incorporated by Reference
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act until
the offering is completed:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
including any amendment to that report.
2. Proxy Statement dated May 15, 1998.
3. Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998, including any amendment to those
reports.
4. Current Report on Form 8-K dated March 1, 1999.
5. The description of the common stock contained in our Registration
Statement on Form 8-A (File No. 0-14905) under Section 12 of the Securities
Exchange Act, including any amendment or report updating that description.
You may request a copy of these filings, at no cost, by writing or calling us
at:
-11-
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
444 Madison Avenue
New York, New York 10022
Attention: Corporate Secretary
Telephone: (212) 688-3333
Recent Development
On December 14, 1998, we received 25% of the outstanding shares of Zao
Nafta, a Russian closed-end company with which we had planned to form a joint
venture. Zao Nafta has 17 oil and gas licenses covering approximately 877,000
acres in the Samara and Saratov regions of Southwestern Russia.
We had agreed to pay $11 million for a 75% working interest in the
proposed joint venture, and paid a $300,000 advance on the purchase price.
In June 1998 we withdrew from negotiations with Zao Nafta after we could
not reach agreement on operational control of the proposed joint venture. We
received the shares of Zao Nafta after Zao Nafta breached its obligation to
return our $300,000 advance.
Legal Matters
The validity of the shares of common stock offered by the prospectus has been
passed upon by Snow Becker Krauss P.C., 605 Third Avenue, New York, New York
10158. Snow Becker Krauss P.C. and an affiliated investment partnership hold
586,205 shares of common stock, all of which were issued for legal fees and
disbursements.
Experts
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 1997, have been so
incorporated in reliance upon the report (which contains an explanatory
paragraph relating to our ability to continue as a going concern as described in
Note 2 to the financial statements) of Hein + Associates LLP, independent
certified public accountants, given upon the authority of said firm as experts
in accounting and auditing for the years ended December 31, 1996 and 1997, in
reliance upon the report (which contains an explanatory paragraph relating to
our ability to continue as a going concern as described in Notes 2 and 11 to the
financial statements) of PricewaterhouseCoopers LLP, independent certified
public accountants, given upon the authority of said firm as experts in
accounting and auditing for the year ended December 31, 1995, and in reliance
upon the report of Bernardo Villegas Perez, independent auditor, given upon the
authority of said firm as an expert in accounting and auditing for the year
ended December 31, 1995.
-12-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses which will be paid by the
Registrant in connection with the issuance and distribution of the shares of
Common Stock being registered hereby:
Securities and Exchange Commission registration fee............. $ 1,876.77
Legal fees and expenses......................................... 10,000.00
Accounting fees................................................. 2,500.00
Printing........................................................ 3,000.00
Miscellaneous................................................... $ 2,623.23
----------
Total................................... $20,000.00
==========
Item 15. Indemnification of Directors and Officers
Under Section 78.751 of the Nevada Corporation Law ("NCL"), directors and
officers may be indemnified against judgments, fines and amounts paid in
settlement and reasonable expenses (including attorneys' fees), actually and
reasonably incurred as a result of specified actions or proceedings (including
appeals), whether civil or criminal (other than an action by or in the right of
the corporation - a "derivative action") if they acted in good faith and for a
purpose which they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to amounts paid in settlement and reasonable
expenses (including attorneys' fees) actually and reasonably incurred by them in
connection with the defense or settlement of such an action (including appeals),
except in respect of a claim, issue or matter as to which such person shall have
been finally adjudged to be liable to the corporation, unless and only to the
extent a court of competent jurisdiction deems proper.
In accordance with Section 78.037(1) of the NCL, Article VIII of the
Registrant's Certificate of Incorporation, as amended, eliminates the personal
liability of the Registrant's directors to the Registrant or its shareholders
for monetary damages for breach of their fiduciary duties as directors, with
certain limited exceptions set forth in said Article VIII and Section 78.037(1).
Article VII of the Registrant's Bylaws provides for indemnification of
directors, officers and others as follows:
"On the terms, to the extent, and subject to the condition prescribed by statute
and by such rules and regulations, not inconsistent with statute, as the Board
of Directors may in its discretion impose in general or particular cases or
classes of cases, (a) the Corporation shall indemnify any person made, or
threatened to be made, a party to an action or proceeding, civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
joint venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees of any such action or proceeding, or any appeal
therein, and (b) the Corporation may pay, in advance of final disposition of any
such action or proceeding, expenses incurred by such person in defending such
action or proceeding. On the terms, to the extent, and subject to the conditions
prescribed by statute and by such rules and regulations, not inconsistent with
statute, as the Board of Directors may in its discretion impose in general or
particular cases or classes of cases, (a) the Corporation shall indemnify any
person made a party to
II-1
<PAGE>
an action by or in the right of the Corporation to procure a judgment in its
favor, by reason of the fact that he, his testator or intestate, is or was a
director or officer of the Corporation, against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action, or in connection with an appeal
therein, and (b) the Corporation may pay, in advance of final disposition of any
such action, expenses incurred by such person in defending such action or
proceeding."
The Registrant maintains insurance, at its expense, to reimburse itself and
directors and officers of the Registrant and of its direct and indirect
subsidiaries against any expense, liability or loss arising out of
indemnification claims against directors and officers and to the extent
otherwise permitted under the NCL.
Section 2.7(a) of the Registration Rights Agreement among the Registrant and the
selling securityholders provides for indemnification by the Registrant of the
selling securityholders, any underwriters who participate in the distribution of
the shares of common stock offered hereby on behalf of the selling
securityholders, the directors, officers and any persons who control the selling
securityholders against certain liabilities under the Securities Act. In
addition, Section 2.7(b) of the Registration Rights Agreement provides that, at
the request of the Registrant, the selling securityholders will indemnify the
Registrant and its directors, officers and any persons who control the
Registrant against certain liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
II-2
<PAGE>
Item 16. Exhibits
4.1* Form of 14% Convertible Note due April 21, 2000
4.2* Form of Warrant issued pursuant to the Securities Purchase Agreement
dated as of April 21, 1998.
4.3** Form of Warrant issued pursuant to the Securities Purchase
Agreement dated as of October 9, 1997.
4.4* Securities Purchase Agreement dated as of April 21, 1998.
4.5* Agreement and First Amendment dated as of April 21, 1998 to
Securities Purchase Agreement dated as of October 9, 1997.
4.6* Registration Rights Agreement dated as of April 21, 1998.
4.7 Letter Agreement dated January 22, 1999 amending Securities Purchase
Agreement dated as of April 21, 1998.
4.8*** Form of Closing Warrant issued pursuant to the Equity Financing
Agreement dated as of April 21, 1998.
4.9 Form of Warrant issued to GCA Strategic Investment Fund Limited on
January 22, 1999
5.1 Opinion of Snow Becker Krauss P.C.
10.1 Form of Option Agreement with Continental Capital & Equity Corporation
10.2 Form of Option Agreement with Stephen B. Booke and Gerald A. Amato
23.1 Consent of Snow Becker Krauss P.C. (contained in Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Hein + Associates LLP.
23.4 Consent of Bernardo Villagas Perez
24.1 Powers of Attorney (included on the signature page of this
Registration Statement)
- ---------------
* Incorporated by reference to the Registrant's Registration Statement
on Form S-3 (Registration No. 333-52859), declared effective
on May 27, 1998.
** Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1997.
*** Incorporated by reference to the Registrant's Registration Statement
on Form S-3 (Registration No. 333-56981), filed on June 16, 1998.
II-3
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that it will:
(a) (1) File, during any period in which it offers or sells the securities
offered hereby, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act.
(ii) Reflect in the prospectus any facts or events which, individually or
in the aggregate, represents a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) For determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) Remove from registration by means of a post-effective amendment any of
the securities being registered that remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
Registrant pursuant to any arrangement, provision or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on March 8, 1999.
American International Petroleum Corporation
<TABLE>
<CAPTION>
<S> <C>
By: /s/ George N. Faris By: /s/ Denis J. Fitzpatrick
------------------------------------ ---------------------------------
Dr. George N. Faris Denis J. Fitzpatrick
Chief Executive Officer and President Chief Financial Officer
(principal executive officer) (principal financial and accounting officer)
</TABLE>
POWER OF ATTORNEY
Each of the undersigned hereby authorizes George N. Faris and/or Denis J.
Fitzpatrick as his attorneys-in-fact to execute in the names of each such person
and to file such amendments (including post-effective amendments) to this
registration statement as the Registrant deems appropriate and appoints such
persons as attorneys-in-fact to sign on his behalf individually and in each
capacity stated below and to file all amendments, exhibits, supplements and
post-effective amendments to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons on March 8, 1999 in the
capacities stated.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ George N. Faris
- --------------------------- Chief Executive Officer, President and Chairman of the
George N. Faris Board of Directors (principal executive
officer)
/s/ Denis J. Fitzpatrick
- --------------------------- Vice President, Chief Financial Officer and
Denis J. Fitzpatrick Secretary (principal financial and accounting
officer)
/s/ Donald G. Rynne
- --------------------------- Director
Donald G. Rynne
/s/ Daniel Y. Kim
- --------------------------- Director
Daniel Y. Kim
/s/ William R. Smart
- --------------------------- Director
William R. Smart
/s/ Richard Murphy
- --------------------------- Director
Richard Murphy
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1* Form of 14% Convertible Note due April 21, 2000
4.2* Form of Warrant issued pursuant to the Securities Purchase Agreement
dated as of April 21, 1998.
4.3** Form of Warrant issued pursuant to the Securities Purchase Agreement
dated as of October 9, 1997.
4.4* Securities Purchase Agreement dated as of April 21, 1998.
4.5* Agreement and First Amendment dated as of April 21, 1998 to
Securities Purchase Agreement dated as of October 9, 1997.
4.6* Registration Rights Agreement dated as of April 21, 1998.
4.7 Letter Agreement dated January 22, 1999 amending Securities Purchase
Agreement dated as of April 21, 1998.
4.8*** Form of Closing Warrant issued pursuant to the Equity Financing
Agreement dated as of April 21, 1998.
4.9 Form of Warrant issued to GCA Strategic Investment Fund Limited on
January 22, 1999.
5.1 Opinion of Snow Becker Krauss P.C.
10.1 Form of Option Agreement with Continental Capital & Equity Corporation
10.2 Form of Option Agreement with Stephen B. Booke and Gerald A. Amato
23.1 Consent of Snow Becker Krauss P.C. (contained in Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Hein + Associates LLP.
23.4 Consent of Bernardo Villagas Perez
24.1 Powers of Attorney (included on the signature page of this
Registration Statement)
- ------------
* Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 1997.
** Incorporated by reference to the Registrant's Registration Statement
on Form S-3 (Registration No. 333-52859), declared effective
on May 27, 1998.
*** Incorporated by reference to the Registrant's Registration Statement
on Form S-3 (Registration No. 333-56981), filed on June 16, 1998.
II-6
<PAGE>
Exhibit 4.7
January 22, 1999
American International Petroleum Corporation
444 Madison Avenue
New York, NY 10022
Attn: Mr. George Faris
Chairman and Chief Executive Officer
Re: Amendment to Certain Terms of Prior Agreements
Dear Mr. Faris:
HW Partners, L.P. ("HW Partners"), as the investment advisor to certain
investment funds (collectively, the "Funds") which owns certain securities of
American International Petroleum Corporation (the "Company"), and the Company
hereby agree as follows:
1. Reference. Reference is hereby made to that certain Securities Purchase
Agreement dated as of April 21, 1998 by and among the Company and certain of the
Funds (the "April Agreement"). Capitalized terms used herein and not otherwise
defined shall have meanings ascribed thereto in the April Agreement.
2. Financings. The definition of Financings is hereby amended, as of the
date hereof, by deleting therefrom the exception for "other than Permitted
Financings" at the end of such definition. The Company and the Funds hereby
amend the mandatory prepayment provisions specified in Section 3.4 of the April
Agreement upon the consummation of one or more Financings such that (i) the
Company shall be authorized to retain 100% of the Net Cash Proceeds not to
exceed an aggregate of $1.8 million attributable to all Financings consummated
on or before May 31, 1999 (the "Initial Basket"), (ii) the aggregate Net Cash
Proceeds in excess of the Initial Basket from all Financings consummated on or
before May 31, 1999 shall be used as follows: a minimum 20% of such aggregate
Net Cash Proceeds shall be used to repay the Convertible Notes at the applicable
Formula Price and (iii) 100% of the aggregate Net Cash Proceeds from all
Financings consummated after May 31, 1999 shall be used to repay the Convertible
Notes at the applicable Formula Price.
3. Equity Agreement Warrants. The 1,595,978 Closing Warrants issued to the
Funds in connection with the execution of the Equity Agreement are hereby fully
vested and shall remain issued and outstanding to the Funds.
4. Exercise Price of Warrants. The Exercise price of all common stock
purchase warrants previously issued to the Funds, including, without limitation,
(i) the common stock purchase warrants issued in connection with all financing
transactions preceding the April Agreement, and (ii) the common stock purchase
warrants issued in connection with the April Agreement and Equity Agreement, is
hereby reset at two dollars ($2.00) per share (subject to the remaining
provisions contained therein for adjustments based upon stock splits,
reorganizations and related events).
5. Registration Statement. The Company is in the process of filing with the
Commission an additional Registration Statement covering shares of Common Stock
issuable upon conversion of the Convertible Notes (or as interest thereon). Such
Registration Statement shall be filed with the
<PAGE>
commission consistent with the terms of the Registration Rights Agreement;
provided, (i) the Company shall register thereunder a minimum of 8.5 million
shares issuable upon conversion of (or interest under) the Convertible Notes,
and (ii) the Registrable Securities to be included within such Registration
Statement shall include all common stock purchase warrants previously issued by
the Company to the Funds and not previously registered under effective
registration statements, including, without limitation, the 1,595,978 Closing
Warrants. Further, either in connection with such Registration Statement or as
an amendment to any existing registration statements, the Company shall, to the
extent required by applicable law, reflect the revised exercise price of all
common stock purchase warrants as set forth herein. In addition, for purposes of
this Registration Statement, the Required Effectiveness Date shall be April 30,
1999, and the failure of the Registration Statement to be declared by the
Required Effectiveness Date shall result in the Company paying to the Funds the
Default Fee specified in the April Agreement.
6. Binding Agreement. Upon execution of this letter by the Company and HW
Partners, this letter will represent the legally binding agreement of the
Company and the Funds (by virtue of the signature of HW Partners on behalf of
the Funds as their investment advisor). Except as modified herein, all terms
of the April Agreement, and the remaining agreements between the Company and the
Funds, shall remain unaltered and in full force and effect. The Company and the
Funds shall, to the extent deemed necessary by the Funds, use reasonable good
faith efforts in preparing a more definitive document specifying the terms set
forth herein; provided, the failure of either party to execute any such more
definitive agreement shall in no way alleviate the binding nature of this
letter.
<PAGE>
American International Petroleum Corporation
January 22, 1999
Page 3
Very truly yours,
HW PARTNERS, L.P.,
On behalf of the Funds
By: /s/HW FINANCE, L.L.C.,
Its general partner
ACKNOWLEDGED AND AGREED:
/s/AMERICAN INTERNATIONAL PETROLEUM CORPORATION
<PAGE>
Exhibit 4.9
EXHIBIT B
FORM OF COMMON STOCK PURCHASE WARRANT
<PAGE>
- --------------------------------------------------------------------------------
[OBJECT OMITTED]
- --------------------------------------------------------------------------------
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT ("PURCHASE
AGREEMENT"), DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH
LIMIT THE EXERCISE RIGHTS OF THE HOLDER AND SPECIFY MANDATORY REDEMPTION
OBLIGATIONS OF THE COMPANY.
---------------------------------------
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
COMMON STOCK PURCHASE WARRANT
- --------------------------------------------------------------------------------
No. 1
Number of shares: 200,000 Holder: GCA Strategic Investment
Fund Limited
106 Colony Park Drive
Suite 900
Cumming, GA 30040
For identification only. The governing terms of this
Warrant are set forth below.
- --------------------------------------------------------------------------------
American International Petroleum Corporation, a Nevada corporation (the
"Company"), hereby certifies that, for value received, GCA Strategic Investment
Fund Limited or assigns, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time after the date hereof
and prior to the fifth anniversary hereof (the "Exercise Period"), at the
Purchase Price hereinafter set forth, Two Hundred Thousand (200,000) shares of
the fully paid and nonassessable shares of Common Stock of the Company. The
number and character of such shares of Common Stock and the Purchase Price are
subject to adjustment as provided herein.
<PAGE>
The purchase price per share of Common Stock issuable upon exercise of
this Warrant (the "Purchase Price") shall initially be equal to 102% of the
simple average of the weighted average sales price as published by Bloomberg,
L.P. of the Common Stock on the NASDAQ Stock Market for the ten (10) completed
trading days immediately preceding the date hereof; provided, however, that the
Purchase Price shall be adjusted from time to time as provided herein.
Capitalized terms used herein not otherwise defined shall have the
meanings ascribed thereto in the Purchase Agreement. As used herein the
following terms, unless the context otherwise requires, have the following
respective meanings:
(a) The term "Company" shall include American International
Petroleum Corporation and any corporation that shall succeed or assume
the obligations of such corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's common
stock, par value $.08 per share, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or
after such date, the Holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and
the Holders of which shall ordinarily, in the absence of contingencies,
be entitled to vote for the election of a majority of directors of the
Company (even though the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) that the Holder of this warrant at any
time shall be entitled to receive, or shall have received, on the
exercise of this Warrant, in lieu of or in addition to Common Stock, or
that at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.
<PAGE>
1. Exercise of Warrant.
1.1 Method of Exercise.
(a) This warrant may be exercised in whole or in part (but not
as to a fractional share of Common Stock), at any time and from time to
time during the Exercise Period by the Holder hereof by delivery of a
notice of exercise (a "Notice of Exercise") substantially in the form
attached hereto as Exhibit A via facsimile to the Company. Promptly
thereafter the Holder shall surrender this Warrant to the Company at
its principal office, accompanied by payment of the Purchase Price
multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made, at the option of the Holder, (i) by check
or bank draft payable to the order of the Company, (ii) by wire
transfer to the account of the Company, or (iii) by presentation and
surrender of this Warrant to the Company for cashless exercise (a
"Cashless Exercise"), which such surrender being deemed a waiver of the
Holder's obligation to pay all or any portion of the Exercise Price. In
the event the Holder elects a Cashless Exercise (which such election
shall be irrevocable) the Holder shall exchange this Warrant for that
number of shares of Common Stock determined by multiplying the number
of shares of Common Stock being exercised by a fraction, the numerator
of which shall be the difference between the then current Market Value
of the Common Stock and the Purchase Price, and the denominator of
which shall be the then current Market Value of the Common Stock. If
the amount of the payment received by the Company is less than the
Exercise Price, the Holder will be notified of the deficiency and shall
make payment in that amount within five (5) business days. In the event
the payment exceeds the Exercise Price, the Company will promptly
refund the excess to the Holder. Upon exercise, the Holder shall be
entitled to receive, promptly refund the excess to the Holder. Upon
exercise, the Holder shall be entitled to receive, promptly after
payment in full, one or more certificates, issued in the Holder's name
or in such name or names as the Holder may direct, subject to the
limitations on transfer contained herein, for the number of shares of
Common Stock so purchased. The shares of Common Stock so purchased
shall be deemed to be issued as of the close of business on the date on
which the Company shall have received from the Holder payment in full
of the Exercise Price (the "Exercise Date").
(b) Notwithstanding anything to the contrary set forth herein,
upon exercise of all or a portion of this Warrant in accordance with
the terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on a
ledger substantially in the form of Annex B attached hereto (a copy of
which shall be delivered to the Company or transfer agent with each
Notice of Exercise). It is specifically contemplated that the Holder
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Holders shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following an exercise of a portion of
this Warrant, the number of shares of Common Stock represented by this
Warrant will be the amount indicated on Annex B attached hereto (which
may be less than the amount stated on the face hereof).
1.2 Regulation D Restrictions. The Holder hereof represents
and warrants to the Company that it has acquired this Warrant and anticipates
acquiring the shares of Common Stock issuable upon exercise of the Warrant
solely for its own account for investment purposes and not with a view to or for
resale of such securities unless such resale has been registered with the
Commission or an applicable exemption is available therefor. At the time this
Warrant is exercised, the Company may require the Holder to state in the Notice
of Exercise such representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the Securities Act.
<PAGE>
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon request of the Holder hereof, acknowledge in
writing its continuing obligation to afford to such Holder the registration
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the provisions of a Registration Rights Agreement dated the date
hereof (the "Registration Rights Agreement"). If the Holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford such Holder any such rights.
1.4 Limitation on Exercise. Notwithstanding the rights of the
Holder to exercise all or a portion of this Warrant as described herein, such
exercise rights shall be limited, solely to the extent set forth in the Purchase
Agreement as if such provisions were specifically set forth herein. In addition,
the number of shares of Common Stock issuable upon exercise of this Warrant is
subject to reduction as specified in Section 10.3 of the Purchase Agreement.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within five (5)
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue, stamp or transfer taxes) will cause to be issued in
the name of and delivered to the Holder thereof, or, to the extent permissible
hereunder, to such other person as such Holder may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such Holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
applicable Purchase Price, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Extraordinary Events. The Purchase Price to be paid
by the Holder upon exercise of this Warrant, and the consideration to be
received upon exercise of this Warrant, shall be adjusted in case at any time or
from time to time pursuant to Article XI of the Purchase Agreement as if such
provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
unassessable shares of stock on the exercise of this Warrant, and (c) will not
transfer all or substantially all of its properties and assets to any other
person (corporate or otherwise), or consolidate with or merge into any other
person or permit any such person to consolidate with or merge into the Company
(if the Company is not the surviving person), unless such other person shall
expressly assume in writing and will be bound by all the terms of this Warrant.
<PAGE>
5. Accountant's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of this Warrant, the Company at its expense will
promptly cause independent certified public accountants of national standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of this Warrant, and will, on the written request at
any time of the Holder of this Warrant, furnish to such Holder a like
certificate setting forth the Purchase Price at the time in effect and showing
how it was calculated.
6. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the
Holders of any class or securities for the purpose of determining the
Holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
<PAGE>
then and in each such event the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the Holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for then and in each such event the
Company will mail or cause to be mailed to the Holder of this Warrant a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount of character of
such dividend, distribution or right, and (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the Holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other Securities)
for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 20
days prior to the date specified in such notice on which any action is to be
taken.
7. Reservation of Stock, etc. Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
8. Exchange of Warrant.
(a) On surrender for exchange of this Warrant, properly
endorsed and in compliance with the restrictions on transfer set forth in the
legend on the face of this Warrant, to the Company, the Company at its expense
will issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face of the Warrant so surrendered.
(b) Upon written notice from the Purchasers pursuant to
Section 2.5(b)(iii) of the Purchase Agreement that the Purchasers have elected
to transfer amongst each other a portion of this Warrant, and on surrender for
amendment and restatement of this Warrant, the Company at its expense will issue
and deliver to or on the order of the Holder thereof a new Warrant of like
tenor, in the name of such Holder as the Purchasers (on payment by such Holder
of any applicable transfer taxes) may direct, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock as set forth in
such notice reflecting such transfer.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
10. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
<PAGE>
11. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each Holder or owner hereof by the taking hereof consents
and agrees:
(a) title to this Warrant may be transferred by endorsement
and delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(b) any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of such bona fide purchaser,
and each such bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby;
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary; and
(d) notwithstanding the foregoing, this Warrant may be sold,
transferred or assigned except pursuant to an effective registration statement
under the Securities Act or pursuant to an applicable exemption therefrom.
12. Registration Rights. The Company is obligated to register the
shares of Common Stock issuable upon exercise of this Warrant in accordance with
the terms of the Registration Rights Agreement.
13. Notices, etc. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid, at such address as may have been furnished
to the Company in writing by such Holder or, until any such Holder furnishes to
the Company any address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of New York. The headings in this
Warrant are for the purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
[Signature Page Follows]
<PAGE>
DATED as of January __, 1999.
AMERICAN INTERNATIONAL PETROLEUM
CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
[Corporate Seal]
Attest:
By:
--------------------
Secretary
<PAGE>
EXHIBIT A
FORM OF NOTICE EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To ____________________________________________
The undersigned registered Holder of the accompanying Warrant, hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
__________(1) shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the date
written below. The undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and delivered to _____, whose address is
- ---------------------------------------------------------- .
The Exercise Price is paid as follows:
[] Bank draft payable to the Company in the amount of $_____________.
[] Wire transfer to the account of the Company in the amount
of $___________.
[] Cashless exercise. Surrender of ___________ shares purchasable
under this Warrant for such shares of Common Stock issuable in
exchange therefor pursuant to the Cashless Exercise provisions
of the Warrant, as provided in Section 1.1(iv) thereto.
Upon exercise pursuant to this Notice of Exercise, the Holder will be
in compliance with the Limitation on Exercise (as defined in the Securities
Purchase Agreement pursuant to which this Warrant was issued).
Date:
-------------------------------- ---------------------------------------
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address of Holder:
--------------------
--------------------
--------------------
Date of exercise:
--------------------
- ------------------
(1)Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial exercise, a
new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the Holder surrendering the
same.
<PAGE>
ANNEX B
WARRANT EXERCISE LEDGER
<TABLE>
<CAPTION>
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
Original Number of Warrants Exercise Price New Balance Issuer Holder
Date Warrants Exercised Paid of Warrants Initials Initials
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
- --------------- ------------------------ ------------------ ------------------- --------------------- --------------- --------------
</TABLE>
<PAGE>
EXHIBIT 5.1
March 8, 1999
American International Petroleum Corporation
444 Madison Avenue
New York, New York 10022
Gentlemen:
We are counsel to American International Petroleum Corporation, a Nevada
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), of a registration statement on Form S-3 (the
"Registration Statement") relating to the offer and sale of 6,750,978 shares of
the Company's common stock by the selling securityholders named in the
Registration Statement, including
o 4,505,000 shares that they acquired or may acquire upon conversion of
the Company's convertible notes due April 21, 2000 or in payment of
accrued interest on the convertible notes
o 1,795,978 shares that they may acquire upon exercise of outstanding
warrants
o 325,000 shares that they may acquire upon exercise of outstanding
options
o 125,000 shares issued for consulting services
We have examined such corporate documents and records and other certificates,
and we have made such investigations of law as we have deemed necessary or
appropriate in order to render the opinions hereinafter set forth. Based on the
foregoing, we are of the opinion that:
1. The Company has been duly organized, is validly existing
and in good standing under the laws of the State of Nevada.
2. The shares of common stock to be issued upon conversion of
the convertible notes or in payment of accrued interest on
the convertible notes, have been duly authorized, and when
duly issued upon conversion of the convertible notes in
accordance with the terms thereof or in payment of accrued
interest on the convertible notes, will be legally issued,
fully paid and non-assessable.
3. The shares of common stock to be issued upon the exercise
of the options and warrants have been duly authorized, and
when duly issued in accordance with the terms thereof,
will be legally issued, fully paid and non-assessable.
4. The shares of common stock issued for consulting services
have been duly authorized, validly issued, and are fully
paid and non-assessable.
Our firm owns 147,000 shares of Common Stock, and an investment nominee of our
firm owns 225,905 shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference in the Registration Statement to
this firm under the heading "Legal Matters." In giving this consent, we do not
hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Snow Becker Krauss P.C.
-----------------------------
SNOW BECKER KRAUSS P.C.
<PAGE>
Exhibit 10.1
STOCK OPTION AGREEMENT
AGREEMENT made as of the 24th day of August, 1998 by and between
American International Petroleum Corporation, a Nevada corporation having its
principal place of business at 444 Madison Avenue, Suite 3203, New York, New
York 10022 ("Grantor"), and ___________________, having an office at
__________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee has agreed to provide certain public relation
services ("PR Services") on behalf of Grantor and is not an employee of Grantor;
and
WHEREAS, Grantor is desirous of retaining Optionee to provide PR
Services and compensating Optionee in part by delivering this Option.
NOW, THEREFORE, in consideration of the mutual covenants set
forth in this Agreement and for other good and valuable consideration, the
Grantor hereby grants the Optionee options to purchase Common Stock of the
Grantor on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee outside of its 1998
Stock Option Plan, a non-qualified stock option (the "Option"), not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to purchase, subject to Section 4 hereof and terminating as of 5:00
p.m. on August 24, 1999 (the "Term"), Two Hundred Thousand (200,000) fully paid
and non-assessable shares of the Common Stock of the Grantor, par value $.08 per
share, subject to the terms and conditions of this Agreement.
2. Purchase Price.
The purchase price ("Option Price") for the Option Shares (as
defined herein) to acquire Two Hundred Thousand (200,000) shares of the Common
Stock of Grantor shall be $2.00 per share. The Grantor shall pay all original
issue or transfer taxes on the exercise of this option and all other fees and
expenses necessarily incurred by the Grantor in connection therewith.
3. Exercise of Option.
<PAGE>
At any time after the conditions of Section 4(B) of the Service
Agreement dated August 24, 1998 between the Grantor and Optionee, attached
hereto as Exhibit A, are met, the Optionee may notify the Grantor by registered
or certified mail, return receipt requested, addressed to its principal office
as to the number of shares which he desires to purchase under the options herein
granted, which notice shall be accompanied by payment (by (i) cash, (ii)
certified check, (iii) tendering to the Grantor a number of shares of the
Grantor's Common Stock equal to the portion of the aggregate Option Price being
paid by the tendering of such stock divided by the NASDAQ closing price, or the
closing price on the exchange or market then traded, of the Grantor's Common
Stock on the date of exercise, and/or (iv) surrendering a number of the Options
granted hereunder equal to the Option Price for the portion of the aggregate
Option Price being paid by the surrendering of Option and the Option price of
the Options being surrendered divided by the excess of the NASDAQ closing price,
or the closing price on the exchange or market then traded, of the Grantor's
Common Stock on the date of exercise and the respective Option Prices of the
Options being exercised and surrendered) of the respective Option Price
therefore as specified in Paragraph 2 above. As soon as practicable thereafter,
the Grantor shall at its principal office tender to Optionee certificates issued
in the Optionee's name evidencing the shares purchased by the Optionee.
4. Option Conditioned On Continued Service.
If the Optionee terminates their PR services before one year
they will return a proportionate percent of the options granted.
5. Divisibility and Non-Assignability of the Options.
(a) The Optionee may exercise the options herein granted from
time to time during the periods of their respective effectiveness with respect
to any whole number of shares included therein, but in no event may an option be
exercised as to less than one hundred (100) shares at any one time, except for
the remaining shares covered by the option if less than one hundred (100).
(b) The Optionee may not give, grant, sell, exchange, transfer
legal title, pledge, assign or otherwise encumber or dispose of the options
herein granted or any interest therein, otherwise than by will or by the laws of
descent and distribution, and these options, or any of them, shall be
exercisable during Optionee's lifetime only by the Optionee.
6. Stock as Investment.
<PAGE>
By accepting this option, the Optionee agrees for Optionee, and
Optionee's heirs and legatees, that except to the extent the shares to be
received upon the exercise of the options are subject to a current registration
statement filed by the Grantor with the Securities and Exchange Commission, and
all shares purchased hereunder shall be acquired for investment and not for
distribution, and upon the issuance of any or all of the shares subject to the
option granted hereunder the Optionee, and Optionee's heirs and legatees
receiving such shares, shall deliver to the Grantor a representation in writing,
that such shares are being acquired in good faith for investment and not for
distribution. Grantor may place a "stop transfer" order with respect to such
shares with its transfer agent and place an appropriate restrictive legend on
the stock certificate.
7. Restrictive Period
In no event may the Option Shares (as defined herein), whether
or not the Option Shares are registered, be sold before January 31, 1999.
8. Restriction on Issuance of Shares.
The Grantor shall not be required to issue or deliver any
certificate for shares of its Common Stock purchased upon the exercise of any
option unless (a) the issuance of such shares has been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or counsel to the Grantor shall have given an opinion that such registration is
not required; (b) approval, to the extent required, shall have been obtained
from any state regulatory body having jurisdiction thereof, and (c) permission
for the listing of such shares shall have been given by any national securities
exchange on which the Common Stock of the Grantor is at the time of issuance
listed.
9. Adjustment on Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
changed after the date hereof by reason of recapitalization, reclassification,
stock split-up, combination or exchange of shares of Common Stock or the like,
or by the issuance of dividends payable in shares of Common Stock, an
appropriate adjustment shall be made by the Board of Directors, as determined by
the Board of Directors and/or the Committee, in the aggregate number of shares
of Common Stock issuable upon exercise of the outstanding Options, and the
Option Price per share. In the event of any consolidation or merger of the
Grantor with or into another company where the Grantor is not the survivor, or
the conveyance of all or substantially all of the assets of the Grantor to
another company, each then outstanding Option shall upon exercise thereafter
entitle the holder thereof to such number of shares of Common Stock or other
securities or property to which a holder of shares of Common Stock of the
Grantor would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Grantor (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Grantor or its successor entity. In the event of the proposed dissolution or
liquidation of the Grantor, all outstanding Options will automatically
terminate, unless otherwise provided by the Board of Directors of the Grantor or
any authorized committee thereof.
(b) Notwithstanding the above, this option may, at the
discretion of the Board of Directors of the Grantor and said other corporation,
be exchanged for options to purchase shares of capital stock of another
corporation which the Grantor, and/or a subsidiary thereof is merged into,
consolidated with, or all or a substantial portion of the property or stock of
which is acquired by said other corporation or separated or reorganized into.
The terms, provisions and benefits to the Optionee of such substitute option(s)
shall in all respects be identical to the terms, provisions and benefits of
Optionee under his Option(s) prior to said substitution.
(c) Any adjustment in the number of shares of Common Stock shall
apply proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock, so long as such increase does not result in the holder
of the option being deemed to own more than 5% of the total combined voting
power or value of all classes of stock of the Grantor or its subsidiaries.
<PAGE>
(d) Notwithstanding the above, no adjustment shall be made with
respect to stock dividends or splits which do not exceed 10% in any fiscal year,
cash dividends or the issuance to stockholders of the Grantor of rights to
subscribe for additional shares of Common Stock or other securities.
10. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of
shares as to which the option granted hereunder shall not have been exercised
and payment made as herein provided.
11. Effect Upon Services.
This Agreement does not give the Optionee any right to provide
continued services to the Grantor.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors, legal representatives and assigns.
13. Notice of Certain Events. In case at any time any of the
following occur:
(a) The Grantor shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Grantor; or
(b) The Grantor shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Grantor or securities
convertible into or exchangeable for shares of capital stock of the Grantor, or
any option, right or warrant to subscribe therefor; or
(c) The Grantor shall take any action to effect any
reclassification or change of outstanding shares of Common Stock or any
consolidation, merger, sale, lease or conveyance of property, described in
Section 8; or
(d) The Grantor shall take any action to effect any liquidation,
dissolution or winding-up of the Grantor or a sale of all or substantially all
of its property, assets and business;
<PAGE>
then, and in any one or more of such cases, the Grantor shall give written
notice thereof, by registered mail, postage prepaid, to the Optionee at the
Optionee?s address as it appears above, or if different, as such place as
Optionee shall direct in writing given to Grantor, mailed at least ten (10) days
prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such offer to holders of Common Stock is made, or (iii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up is expected to become effective and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up.
14. Registration Rights.
(a) Commencing on the date hereof, the Grantor shall
advise the Optionee, but not any transferee or assignees thereof, by written
notice at least 45 days prior to the filing of any registration statement or
post-effective amendment thereto ("Registration Statement") under the Act,
covering a public offering of equity securities of the Grantor solely for cash
(other than a registration relating solely to the sale of securities to
participants in a stock plan of the Grantor, or a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the shares underlying
the options (?Option Shares) and shall, except as otherwise provided herein,
register in any such Registration Statement the number of Option Shares that the
Optionee shall notify the Grantor within twenty (20) days after mailing of such
notice by the Grantor that he desires to register and shall include in any such
Registration Statement such information as may be required to permit a public
offering of such Option Shares, provided, however, that the Optionee notify the
Grantor that it desires to register all of his Option Shares then vested. The
Grantor shall supply prospectuses and other documents as the Optionee may
reasonably request in order to facilitate the public sale or other disposition
of the Option Shares. The Grantor shall bear the entire cost and expense of a
registration of securities initiated by it under this subsection (a). The
Optionee shall, however, bear any transfer taxes and underwriting discounts or
commissions applicable to the Option Shares sold by him and any legal fees
incurred by him. The Grantor may include other securities in any such
Registration Statement. The Grantor shall do any and all other acts and things
which may be necessary or desirable to enable the Optionee to consummate the
public sale or other disposition of the Option Shares, and furnish
indemnification in the manner as set forth in subsection (c) of this Section 14,
but shall not be required to qualify as a foreign corporation to qualify the
Option Shares for sale under the securities laws of any state. The Optionee
shall furnish information and indemnification as set forth in subsection (c)(1)
of this Section 14. All decisions as to whether and when to proceed with any
Registration Statement shall be made solely by the Grantor.
In connection with any offering involving an underwriting of
shares of the Grantor's securities, the Grantor shall not be required to include
any of the Option Shares in such underwriting unless the Optionee accept the
terms of the underwriting as agreed upon between the Grantor and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Grantor. If the total amount of securities requested by selling stockholders to
be included in such offering exceeds the amount of securities to be sold, other
than by the Grantor, that the underwriters determine in their sole discretion
that such amount will jeopardize the success of the offering, then the Grantor
shall be required to include in the offering only that number of such Option
Shares which the underwriters determine in their sole discretion will not
jeopardize the success of the offering. Except as otherwise limited under any
other registration right granted by the Grantor before, on or after the date
hereof, the securities so included are to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder (or in such other proportions
as shall mutually be agreed to by such selling stockholders).
<PAGE>
(b) Notwithstanding the foregoing subsection (a), in the event
that there is an underwritten offering of the Grantor's securities offered
pursuant to said Registration Statement, the underwriters shall have the right
to refuse to permit any Option Shares, or to limit the amount of Option Shares,
to be sold by the Optionee to such underwriters as such underwriter(s) may
determine in its discretion and the Optionee shall refrain from selling such
remainder of his Option Shares covered by such Registration Statement for the
period of days following the effective date and shall also refrain at any time
when notified by the Grantor that an amendment or supplement to the prospectus
is required. The Grantor shall not be obligated to keep any Registration
Statement effective for a continuous period of the lesser of 120 days or until
such time as all Option Shares included in the Registration Statement have been
sold.
(c)(1) Whenever pursuant to this Section 14 (a) Registration
Statement relating to the Option Shares is filed under the Act or amended or
supplemented thereto, the Grantor will indemnify and hold harmless the Optionee
if covered by such Registration Statement, amendment or supplement (such
Optionee being hereinafter called the "Distributing Holder"), against any
losses, claims, damages or liabilities, joint or several, to which the
Distributing Holder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading and will reimburse the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action, provided, however, that the Grantor
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by the Distributing Holder or underwriter for use in the preparation
thereof.
(c)(2) To the extent permitted by law, the Distributing Holder
will indemnify and hold harmless the Grantor, each of its directors, each of its
officers who have signed said Registration Statement and such amendments and
supplements thereto, each person, if any, who controls the Grantor (within the
meaning of the Act) and the Grantor's underwriters) and each person, if any, who
controls such underwriters (within the meaning of the Act) against any losses,
claims, damages or liabilities to which the Grantor or any such director,
officer, underwriter or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in said Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof and
will reimburse the Grantor or underwriter or any such director, officer or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
<PAGE>
(c)(3) Promptly after receipt by an indemnified party under this
subsection (c) of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party, otherwise than under this
subsection (c).
(c)(4) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and to the
extent that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
subsection (c) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(c)(5) The Grantor's agreements with respect to Option Shares in
this Section 14 shall continue in effect, regardless of the exercise or
surrender of the Option, for a period not to exceed one year from the date of
Grant or the date Optionee would be entitled to dispose of any Option shares
received upon exercise of the Option under an exemption from the registration
thereof (i.e, Rule 144).
(c)(6) The Optionee shall not have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 14.
14. Withholding.
Optionee agrees to cooperate with the Grantor to take all steps
necessary or appropriate for any required withholding of taxes by the Grantor
under law or regulation in connection therewith.
15. Miscellaneous.
This Agreement shall be construed under the laws of the State of
New York. Headings have been included herein for convenience of reference only,
and shall not be deemed a part of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
By:
-----------------------------------------
ACCEPTED AND AGREED TO:
-----------------------------------------
<PAGE>
Exhibit 10.2
STOCK OPTION AGREEMENT
AGREEMENT made as of the 22nd day of April, 1998 by and between
American International Petroleum Corporation, a Nevada corporation having its
principal place of business at 444 Madison Avenue, Suite 3203, New York, New
York 10022 ("Grantor"), and ________________________, having an office at
___________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee has agreed to provide public relation services
("PR Services") on behalf of Grantor and is not an employee of Grantor; and
WHEREAS, Grantor is desirous of retaining Optionee to provide PR
Services and compensating Optionee in part by delivering this Option.
NOW, THEREFORE, in consideration of the mutual covenants set
forth in this Agreement and for other good and valuable consideration, the
Grantor hereby grants the Optionee options to purchase Common Stock of the
Grantor on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee outside of its 1998
Stock Option Plan, non-qualified stock options, not intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
purchase, subject to Section 4 hereof and terminating as of 5:00 p.m. on April
21, 2003 (the "Term"), up to Sixty-Two Thousand Five Hundred (62,500) fully paid
and non-assessable shares of the Common Stock of the Grantor, par value $.08 per
share, subject to the terms and conditions of this Agreement.
2. Purchase Price.
The purchase price ("Option Price") (x) for options to acquire
Fifty Thousand (50,000) shares of the Common Stock of Grantor shall be $2.60 per
share (?$2.60 Options?) and (y) for options to acquire Twelve Thousand Five
Hundred (12,500) shares of the Common Stock of the Grantor shall be $3.00 per
share (?3.00 Options?). The Grantor shall pay all original issue or transfer
taxes on the exercise of this option and all other fees and expenses necessarily
incurred by the Grantor in connection therewith.
3. Exercise of Option.
<PAGE>
The Optionee shall notify the Grantor by registered or certified
mail, return receipt requested, addressed to its principal office as to the
number of shares which he desires to purchase under the options herein granted,
which notice shall be accompanied by payment (by (i) cash, (ii) certified check,
(iii) tendering to the Grantor a number of shares of the Grantor's Common Stock
equal to the portion of the aggregate Option Price being paid by the tendering
of such stock divided by the NASDAQ closing price, or the closing price on the
exchange or market then traded, of the Grantor's Common Stock on the date of
exercise, and/or (iv) surrendering a number of the Options granted hereunder
equal to the Option Price for the portion of the aggregate Option Price being
paid by the surrendering of Option and the Option price of the Options being
surrendered divided by the excess of the NASDAQ closing price, or the closing
price on the exchange or market then traded, of the Grantor's Common Stock on
the date of exercise and the respective Option Prices of the Options being
exercised and surrendered) of the respective Option Price therefore as specified
in Paragraph 2 above. As soon as practicable thereafter, the Grantor shall at
its principal office tender to Optionee certificates issued in the Optionee's
name evidencing the shares purchased by the Optionee.
4. Option Conditioned On Continued Service.
If the Optionee terminates their PR services before one year
they will return a proportionate percent of the options granted.
5. Divisibility and Non-Assignability of the Options.
(a) The Optionee may exercise the options herein granted from
time to time during the periods of their respective effectiveness with respect
to any whole number of shares included therein, but in no event may an option be
exercised as to less than one hundred (100) shares at any one time, except for
the remaining shares covered by the option if less than one hundred (100).
(b) The Optionee may not give, grant, sell, exchange, transfer
legal title, pledge, assign or otherwise encumber or dispose of the options
herein granted or any interest therein, otherwise than by will or by the laws of
descent and distribution, and these options, or any of them, shall be
exercisable during Optionee's lifetime only by the Optionee.
6. Stock as Investment.
<PAGE>
By accepting this option, the Optionee agrees for Optionee, and
Optionee's heirs and legatees, that except to the extent the shares to be
received upon the exercise of the options are subject to a current registration
statement filed by the Grantor with the Securities and Exchange Commission, and
all shares purchased hereunder shall be acquired for investment and not for
distribution, and upon the issuance of any or all of the shares subject to the
option granted hereunder the Optionee, and Optionee's heirs and legatees
receiving such shares, shall deliver to the Grantor a representation in writing,
that such shares are being acquired in good faith for investment and not for
distribution. Grantor may place a "stop transfer" order with respect to such
shares with its transfer agent and place an appropriate restrictive legend on
the stock certificate.
7. Restriction on Issuance of Shares.
The Grantor shall not be required to issue or deliver any
certificate for shares of its Common Stock purchased upon the exercise of any
option unless (a) the issuance of such shares has been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or counsel to the Grantor shall have given an opinion that such registration is
not required; (b) approval, to the extent required, shall have been obtained
from any state regulatory body having jurisdiction thereof, and (c) permission
for the listing of such shares shall have been given by any national securities
exchange on which the Common Stock of the Grantor is at the time of issuance
listed.
8. Adjustment on Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
changed after the date hereof by reason of recapitalization, reclassification,
stock split-up, combination or exchange of shares of Common Stock or the like,
or by the issuance of dividends payable in shares of Common Stock, an
appropriate adjustment shall be made by the Board of Directors, as determined by
the Board of Directors and/or the Committee, in the aggregate number of shares
of Common Stock issuable upon exercise of the outstanding Options, and the
Option Price per share. In the event of any consolidation or merger of the
Grantor with or into another company where the Grantor is not the survivor, or
the conveyance of all or substantially all of the assets of the Grantor to
another company, each then outstanding Option shall upon exercise thereafter
entitle the holder thereof to such number of shares of Common Stock or other
securities or property to which a holder of shares of Common Stock of the
Grantor would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Grantor (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Grantor or its successor entity. In the event of the proposed dissolution or
liquidation of the Grantor, all outstanding Options will automatically
terminate, unless otherwise provided by the Board of Directors of the Grantor or
any authorized committee thereof.
(b) Notwithstanding the above, this option may, at the
discretion of the Board of Directors of the Grantor and said other corporation,
be exchanged for options to purchase shares of capital stock of another
corporation which the Grantor, and/or a subsidiary thereof is merged into,
consolidated with, or all or a substantial portion of the property or stock of
which is acquired by said other corporation or separated or reorganized into.
The terms, provisions and benefits to the Optionee of such substitute option(s)
shall in all respects be identical to the terms, provisions and benefits of
Optionee under his Option(s) prior to said substitution.
(c) Any adjustment in the number of shares of Common Stock shall
apply proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock, so long as such increase does not result in the holder
of the option being deemed to own more than 5% of the total combined voting
power or value of all classes of stock of the Grantor or its subsidiaries.
<PAGE>
(d) Notwithstanding the above, no adjustment shall be made with
respect to stock dividends or splits which do not exceed 10% in any fiscal year,
cash dividends or the issuance to stockholders of the Grantor of rights to
subscribe for additional shares of Common Stock or other securities.
9. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of
shares as to which the option granted hereunder shall not have been exercised
and payment made as herein provided.
10. Effect Upon Services.
This Agreement does not give the Optionee any right to provide
continued services to the Grantor.
11. Binding Effect.
Except as herein otherwise expressly provided, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors, legal representatives and assigns.
12. Notice of Certain Events. In case at any time any of the
following occur:
(a) The Grantor shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Grantor; or
(b) The Grantor shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Grantor or securities
convertible into or exchangeable for shares of capital stock of the Grantor, or
any option, right or warrant to subscribe therefor; or
(c) The Grantor shall take any action to effect any
reclassification or change of outstanding shares of Common Stock or any
consolidation, merger, sale, lease or conveyance of property, described in
Section 8; or
(d) The Grantor shall take any action to effect any liquidation,
dissolution or winding-up of the Grantor or a sale of all or substantially all
of its property, assets and business;
<PAGE>
then, and in any one or more of such cases, the Grantor shall give written
notice thereof, by registered mail, postage prepaid, to the Optionee at the
Optionee?s address as it appears above, or if different, as such place as
Optionee shall direct in writing given to Grantor, mailed at least ten (10) days
prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such offer to holders of Common Stock is made, or (iii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up is expected to become effective and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up.
13. Registration Rights.
(a) Commencing on the date hereof, the Grantor shall
advise the Optionee, but not any transferee or assignees thereof, by written
notice at least 45 days prior to the filing of any registration statement or
post-effective amendment thereto ("Registration Statement") under the Act,
covering a public offering of equity securities of the Grantor solely for cash
(other than a registration relating solely to the sale of securities to
participants in a stock plan of the Grantor, or a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the shares underlying
the options (?Option Shares) and shall, except as otherwise provided herein,
register in any such Registration Statement the number of Option Shares that the
Optionee shall notify the Grantor within twenty (20) days after mailing of such
notice by the Grantor that he desires to register and shall include in any such
Registration Statement such information as may be required to permit a public
offering of such Option Shares, provided, however, that the Optionee notify the
Grantor that it desires to register all of his Option Shares then vested. The
Grantor shall supply prospectuses and other documents as the Optionee may
reasonably request in order to facilitate the public sale or other disposition
of the Option Shares. The Grantor shall bear the entire cost and expense of a
registration of securities initiated by it under this subsection (a). The
Optionee shall, however, bear any transfer taxes and underwriting discounts or
commissions applicable to the Option Shares sold by him and any legal fees
incurred by him. The Grantor may include other securities in any such
Registration Statement. The Grantor shall do any and all other acts and things
which may be necessary or desirable to enable the Optionee to consummate the
public sale or other disposition of the Option Shares, and furnish
indemnification in the manner as set forth in subsection (c) of this Section 13,
but shall not be required to qualify as a foreign corporation to qualify the
Option Shares for sale under the securities laws of any state. The Optionee
shall furnish information and indemnification as set forth in subsection (c)(1)
of this Section 13. All decisions as to whether and when to proceed with any
Registration Statement shall be made solely by the Grantor.
In connection with any offering involving an underwriting of
shares of the Grantor's securities, the Grantor shall not be required to include
any of the Option Shares in such underwriting unless the Optionee accept the
terms of the underwriting as agreed upon between the Grantor and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Grantor. If the total amount of securities requested by selling stockholders to
be included in such offering exceeds the amount of securities to be sold, other
than by the Grantor, that the underwriters determine in their sole discretion
that such amount will jeopardize the success of the offering, then the Grantor
shall be required to include in the offering only that number of such Option
Shares which the underwriters determine in their sole discretion will not
jeopardize the success of the offering. Except as otherwise limited under any
other registration right granted by the Grantor before, on or after the date
hereof, the securities so included are to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder (or in such other proportions
as shall mutually be agreed to by such selling stockholders).
<PAGE>
(b) Notwithstanding the foregoing subsection (a), in the event
that there is an underwritten offering of the Grantor's securities offered
pursuant to said Registration Statement, the underwriters shall have the right
to refuse to permit any Option Shares, or to limit the amount of Option Shares,
to be sold by the Optionee to such underwriters as such underwriter(s) may
determine in its discretion and the Optionee shall refrain from selling such
remainder of his Option Shares covered by such Registration Statement for the
period of days following the effective date and shall also refrain at any time
when notified by the Grantor that an amendment or supplement to the prospectus
is required. The Grantor shall not be obligated to keep any Registration
Statement effective for a continuous period of the lesser of 120 days or until
such time as all Option Shares included in the Registration Statement have been
sold.
(c)(1) Whenever pursuant to this Section 13 (a) Registration
Statement relating to the Option Shares is filed under the Act or amended or
supplemented thereto, the Grantor will indemnify and hold harmless the Optionee
if covered by such Registration Statement, amendment or supplement (such
Optionee being hereinafter called the "Distributing Holder"), against any
losses, claims, damages or liabilities, joint or several, to which the
Distributing Holder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading and will reimburse the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action, provided, however, that the Grantor
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by the Distributing Holder or underwriter for use in the preparation
thereof.
(c)(2) To the extent permitted by law, the Distributing Holder
will indemnify and hold harmless the Grantor, each of its directors, each of its
officers who have signed said Registration Statement and such amendments and
supplements thereto, each person, if any, who controls the Grantor (within the
meaning of the Act) and the Grantor's underwriters) and each person, if any, who
controls such underwriters (within the meaning of the Act) against any losses,
claims, damages or liabilities to which the Grantor or any such director,
officer, underwriter or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in said Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof and
will reimburse the Grantor or underwriter or any such director, officer or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
<PAGE>
(c)(3) Promptly after receipt by an indemnified party under this
subsection (c) of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party, otherwise than under this
subsection (c).
(c)(4) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and to the
extent that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
subsection (c) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(c)(5) The Grantor's agreements with respect to Option Shares in
this Section 13 shall continue in effect, regardless of the exercise or
surrender of the Option, for a period not to exceed five years from the date of
Grant or the date Optionee would be entitled to dispose of any Option shares
received upon exercise of the Option under an exemption from the registration
thereof (i.e, Rule 144).
(c)(6) The Optionee shall not have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 13.
14. Withholding.
Optionee agrees to cooperate with the Grantor to take all steps
necessary or appropriate for any required withholding of taxes by the Grantor
under law or regulation in connection therewith.
15. Miscellaneous.
This Agreement shall be construed under the laws of the State of
New York. Headings have been included herein for convenience of reference only,
and shall not be deemed a part of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
By:
-----------------------------------------
ACCEPTED AND AGREED TO:
-----------------------------------------
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated April 9, 1996 appearing on page F-2 of American International Petroleum
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
March 4, 1999
<PAGE>
Exhibit 23.3
Independent Auditors Consent
The Board of Directors
American International Petroleum Corporation:
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3, and the accompanying Prospectus, of our
report dated March 17, 1998, appearing on page F-1 of American International
Petroleum Corporation's Annual Report on Form 10-K/A for the year ended December
31, 1997. We also consent to the reference to us under the heading "Experts" in
the Prospectus filed herewith.
HEIN + ASSOCIATES LLP
Houston, Texas
March 5, 1999
<PAGE>
Exhibit 23.4
BERNARDO VILLEGAS PEREZ
CONTADOR PUBLICO
MATRICULA 4962-A
March 5, 1999
CONSENT OF INDEPENDENT AUDITOR
I hereby consent to the incorporation by reference in the prospectus
constituting part of this Registration Statement on Form S-3 of my report dated
March 15, 1996 appearing on page F-2 and F-3 of American International Petroleum
Corporation's Annual Report on Form 10-K for the year ended December 31, 1995.
I also consent to the reference to me under the heading "Expert" in such
Prospectus.
/s/ Bernardo Villegas Perez
- ----------------------------------
Bernardo Villegas Perez
Auditor
Professional Card No. 4962-A
